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                                                                   EXHIBIT 99.1

                                  RISK FACTORS

   You should carefully consider the risks described below before making a
decision to invest in our common stock and our senior subordinated notes. The
risks and uncertainties described below are not the only ones facing us.
Additional risks and uncertainties not presently known to us, or that we
currently deem immaterial, may also impair our business operations. If any of
the following risks actually occur, our business, financial condition or
results of operations could be materially adversely affected. In that case, the
trading price of our common stock and our senior subordinated notes could
decline, and you may lose all or part of your investment.

BECAUSE GASOLINE SALES COMPRISE A SUBSTANTIAL PORTION OF OUR REVENUES,
INTERRUPTIONS IN THE SUPPLY OF GASOLINE OR VOLATILITY IN THE COST OF GASOLINE
COULD ADVERSELY AFFECT OUR BUSINESS

   Gasoline profit margins have a significant impact on our earnings because
gasoline revenue has averaged 60.3% of our total revenue over the past three
fiscal years. Several factors beyond our control that may affect the volume of
gasoline we sell and the gasoline profit margins we achieve are:

    .  the supply and demand for gasoline

    .  geo-political factors that may disrupt supply or impact demand in world
       crude oil markets

    .  any volatility in the wholesale gasoline market

    .  the pricing policies of competitors in local markets

   In addition, volatility in the cost of gasoline could adversely affect the
demand for gasoline and our business, financial condition or results of
operations if gasoline sales volume is reduced as a result. We face this
particular risk because:

    .  higher gasoline retail prices may impact customer demand and gasoline
       gallon volume

    .  we typically have no more than a seven-day supply of gasoline

    .  our gasoline contracts do not guarantee an uninterrupted, unlimited
       supply of gasoline in the event of a shortage

    .  the supply of gasoline for our unbranded locations could be adversely
       impacted in the event of a shortage

   Reductions in volume of gasoline sold or our gasoline profit margins could
have a material adverse effect on our results of operations. In addition,
because gasoline sales generate customer traffic to our stores, decreases in
gasoline sales could impact merchandise sales.

IF WE ARE UNABLE TO PASS ALONG PRICE INCREASES OF TOBACCO PRODUCTS TO OUR
CUSTOMERS, OUR BUSINESS COULD BE ADVERSELY AFFECTED BECAUSE TOBACCO SALES
COMPRISE A SUBSTANTIAL PORTION OF OUR REVENUES

   Sales of tobacco products have averaged approximately 13.9% of our total
revenue over the past three fiscal years. National and local campaigns to
discourage smoking in the United States, as well as increases in taxes on
cigarettes and other tobacco products, may have an adverse effect on our sales
of, and margins for, tobacco products. The consumer price index on tobacco
products increased approximately 9% in fiscal 2001. In general, we have passed
price increases on to our customers. However due to competitive pricing in our
markets, we were unable to pass along all the cost increases we encountered in
fiscal 2001.

   Major cigarette manufacturers periodically offer monthly rebates to
retailers and historically we have passed along these rebates to our customers.
We cannot assure you that major cigarette manufacturers will continue to offer
these rebates or that any resulting increase in prices to our customers will
not have a material adverse effect on our cigarette sales and gross profit
dollars. A reduction in the amount of cigarettes we are able to sell could
adversely affect our business, financial condition and results of operations.

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VIOLATIONS OF, OR CHANGES TO, REGULATIONS GOVERNING THE SALE OF TOBACCO AND
ALCOHOL COULD ADVERSELY AFFECT OUR BUSINESS

   State laws regulate the sale of alcohol and tobacco products. A violation or
change of these laws could adversely affect our business, financial condition
and results of operations because state and local regulatory agencies have the
power to approve, revoke, suspend or deny applications for, and renewals of,
permits and licenses relating to the sale of these products or to seek other
remedies.

INCREASES IN FEDERAL MINIMUM WAGE RATES COULD ADVERSELY AFFECT OUR BUSINESS

   Any appreciable increase in the statutory minimum wage rate would result in
an increase in our labor costs and such cost increase, or the penalties for
failing to comply with such statutory minimums, could adversely affect our
business, financial condition and results of operations.

PROPOSED REGULATIONS, IF ADOPTED, COULD ADVERSELY AFFECT OUR BUSINESS

   From time to time, regulations are proposed which, if adopted, could have an
adverse effect on our business, financial condition or results of operations.
One example is the possibility of the introduction of a mandated system of
health insurance. If such a system were adopted and applied to us, our labor
costs could increase significantly and any violations of such regulation could
result in fines or other penalties, which could also adversely affect our
business, financial condition and results of operations.

RECENT ACTION BY THE SOUTH CAROLINA LEGISLATURE BANNING VIDEO POKER HAS HAD AN
ADVERSE EFFECT ON OUR BUSINESS

   In 1999, the South Carolina legislature passed a law which makes it illegal
to own or operate video poker machines. Accordingly, effective July 1, 2000,
video poker was banned in South Carolina, which adversely impacted our results
of operations for fiscal 2000 and 2001.

OUR GROWTH AND OPERATING RESULTS COULD SUFFER IF WE ARE UNABLE TO IDENTIFY AND
ACQUIRE SUITABLE COMPANIES, OBTAIN FINANCING OR INTEGRATE ACQUIRED STORES OR IF
WE DISCOVER PREVIOUSLY UNDISCLOSED LIABILITIES ASSOCIATED WITH OUR ACQUIRED
STORES

   An important part of our historical growth strategy has been to acquire
other convenience stores that complement our existing stores or broaden our
geographic presence. From April 1997 through September 2001, we acquired 1,159
convenience stores in more than 20 transactions. While the pace may be slower,
we expect to continue our growth strategy through acquisitions which, by their
nature, involve risks that could cause our actual growth or operating results to
differ compared to our expectations or the expectations of security analysts.
For example:

    .  Our senior credit facility limits our expenditures to acquire stores to
       $3.0 million in fiscal 2002 and $15.0 million in 2003

    .  We may not be able to identify suitable acquisition candidates or
       acquire additional convenience stores on favorable terms.

    .  Competition for suitable acquisition candidates may increase and could
       result in decreased availability or increased price for suitable
       acquisition candidates. In addition, it is difficult to anticipate the
       timing and availability of acquisition candidates.

    .  During the acquisition process we may fail or be unable to discover some
       of the liabilities of companies or businesses which we acquire.

    .  We may not be able to obtain the capital necessary, on favorable terms
       or at all, to finance our potential acquisitions.

    .  We may fail to successfully integrate or manage acquired convenience
       stores.

    .  Acquired convenience stores may not perform as we expect or we may not
       be able to obtain the cost savings and financial improvements we
       anticipate.

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WE HAVE GROWN RAPIDLY AND OUR FAILURE TO EFFECTIVELY MANAGE OUR GROWTH AND
REALIZE ANTICIPATED EFFICIENCIES AS A RESULT OF OUR RESTRUCTURING AND
ACQUISITION PLANS MAY ADVERSELY AFFECT OUR BUSINESS

   We have grown from total revenue of $384.8 million in fiscal 1996 to $2.6
billion in fiscal 2001. Our ability to manage the growth of our operations will
require us to continue to improve our operational, financial and human resource
management information systems and our other internal systems and controls. We
have recently completed our plan designed to strengthen our organizational
structure and reduce our operating costs by centralizing corporate
administrative functions. As part of the plan we closed an administrative
facility located in Jacksonville, Florida, and integrated key marketing, finance
and administrative activities into our corporate headquarters located in
Sanford, North Carolina. In addition, we have achieved more efficient and
streamlined operations through the merger of Lil' Champ Food Stores, Inc. into
The Pantry, during fiscal, 2001.

   Failure to make adequate improvements to our systems and controls or to
achieve the expected efficiencies of our recently completed plan may adversely
affect our business, financial condition and results of operations.

   In addition, our growth will increase our need to attract, develop, motivate
and retain both our management and professional employees. The inability of our
management to manage our growth effectively, or the inability of our employees
to achieve anticipated performance or utilization levels, could have an adverse
effect on our business, financial condition and results of operations.

RESTRICTIVE COVENANTS IN OUR DEBT AGREEMENTS MAY RESTRICT OUR ABILITY TO
IMPLEMENT OUR GROWTH STRATEGY, RESPOND TO CHANGES IN INDUSTRY CONDITIONS,
SECURE ADDITIONAL FINANCING OR ENGAGE IN ACQUISITIONS

   Restrictive covenants contained in our existing senior credit facility and
indenture could limit our ability to finance future acquisitions, new locations
and other expansion of our operations. Credit facilities entered into in the
future likely will contain similar restrictive covenants. These covenants may
require us to achieve specific financial ratios and to obtain lender consent
prior to completing acquisitions. Any of these covenants could become more
restrictive in the future. Our ability to respond to changing business
conditions and to secure additional financing may be restricted by these
covenants. We also may be prevented from engaging in transactions, including
acquisitions which are important to our growth strategy. Any breach of these
covenants could cause a default under our debt obligations and result in our
debt becoming immediately due and payable which would adversely affect our
business, financial condition and results of operations. For the twelve month
period ending September 27, 2001, we did not satisfy two financial covenants
required by our senior credit facility. We have since received a waiver from our
senior credit group and executed an amendment to the senior credit facility that
includes, among other things, a modification to financial covenants and certain
increases in the floating interest rate.

WE DEPEND ON ONE PRINCIPAL SUPPLIER FOR THE MAJORITY OF OUR MERCHANDISE AND
LOSS OF THIS SUPPLIER COULD HAVE AN ADVERSE IMPACT ON OUR COST OF GOODS AND OUR
BUSINESS

   We purchase over 50% of our general merchandise, including most tobacco
products and grocery items, from a single wholesale grocer, McLane Company,
Inc., a wholly-owned subsidiary of Wal-Mart. In addition, McLane supplies
health and beauty aids, toys and seasonal items to all of our stores. We have a
contract with McLane until 2003, but we may not be able to renew the contract
upon expiration. We believe that our arrangements with vendors, including
McLane, have enabled us to decrease the operating expenses of acquired
companies after we complete an acquisition. Therefore, a change of suppliers
could have a material adverse effect on our business, cost of goods, financial
condition and results of operations.

WE ARE SUBJECT TO EXTENSIVE ENVIRONMENTAL REGULATION, AND INCREASED REGULATION
OR OUR FAILURE TO COMPLY WITH EXISTING REGULATIONS COULD REQUIRE SUBSTANTIAL
CAPITAL EXPENDITURES OR ADVERSELY AFFECT OUR BUSINESS

   Our business is subject to extensive environmental requirements,
particularly environmental laws regulating underground storage tanks.
Compliance with these regulations may require significant capital expenditures.

   Federal, state and local regulations governing underground storage tanks
were phased in over a period ending in December 1998. These regulations
required us to make expenditures for compliance with corrosion

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protection and leak detection requirements and required spill/overfill equipment
by December 1998. We believe we are in compliance with the December 1998 upgrade
requirements. Failure to comply with any environmental regulations or an
increase in regulations could affect our business, financial condition and
results of operations.

WE MAY INCUR SUBSTANTIAL LIABILITIES FOR REMEDIATION OF ENVIRONMENTAL
CONTAMINATION AT OUR LOCATIONS

   Under various federal, state and local laws, ordinances and regulations, we
may, as the owner or operator of our locations, be liable for the costs of
removal or remediation of contamination at these or our former locations,
whether or not we knew of, or were responsible for, the presence of such
contamination. The failure to properly remediate such contamination may subject
us to liability to third parties and may adversely affect our ability to sell
or rent such property or to borrow money using such property as collateral.
Additionally, persons who arrange for the disposal or treatment of hazardous or
toxic substances may also be liable for the costs of removal or remediation of
such substances at sites where they are located, whether or not such site is
owned or operated by such person. Although we do not typically arrange for the
treatment or disposal of hazardous substances, we may be deemed to have
arranged for the disposal or treatment of hazardous or toxic substances and,
therefore, may be liable for removal or remediation costs, as well as other
related costs, including governmental fines, and injuries to persons, property
and natural resources.

   We estimate that our future expenditures for remediation of current
locations net of reimbursements will be approximately $1.8 million for which
reserves have been established on our financial statements. In addition, we
estimate that up to $10.4 million may be expended for remediation on our behalf
by state trust funds established in our operating areas or other responsible
third parties including insurers. To the extent third parties do not pay for
remediation as we anticipate, we will be obligated to make these payments, which
could materially adversely affect our financial condition and results of
operations. Reimbursements from state trust funds will be dependent on the
continued viability of these funds.

   We may incur additional substantial expenditures for remediation of
contamination that has not been discovered at existing locations or locations
which we may acquire in the future. We cannot assure you that we have
identified all environmental liabilities at all of our current and former
locations; that material environmental conditions not known to us do not exist;
that future laws, ordinances or regulations will not impose material
environmental liability on us; or that a material environmental condition does
not otherwise exist as to any one or more of our locations.

THE LARGE AMOUNT OF OUR TOTAL OUTSTANDING DEBT AND OUR OBLIGATION TO SERVICE
THAT DEBT AND MEET THE RELATED FINANCIAL COVENANTS COULD DIVERT NECESSARY FUNDS
FROM OPERATIONS, LIMIT OUR ABILITY TO OBTAIN FINANCING FOR FUTURE NEEDS, EXPOSE
US TO INTEREST RATE RISKS AND EXPOSE US TO LIQUIDITY RISKS WITH THE POTENTIAL OF
ACCELERATED PRINCIPAL AMORTIZATION

   We are highly leveraged, which means that the amount of our outstanding debt
is large compared to the net book value of our assets, and have substantial
repayment obligations under our outstanding debt. As of September 27, 2001, we
had:

    .  Total consolidated debt including capital lease obligations of
       approximately $559.6 million

    .  Shareholders' equity of approximately $111.1 million

   As of September 27, 2001, our borrowing availability under our senior credit
facility was approximately $25.0 million.

   Our senior credit facility contains numerous financial and operating
covenants that limit our ability, and the ability of most of our subsidiaries,
to engage in activities such as acquiring or disposing of assets, engaging in
mergers or reorganizations, making investments or capital expenditures and
paying dividends. These covenants require that we meet interest coverage, net
worth and leverage tests. The indenture governing our senior subordinated notes
and our senior credit facility permit us and our subsidiaries to incur or
guarantee additional debt, subject to limitations.

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   Our level of debt and the limitations imposed on us by our debt agreements
could have other important consequences to our stockholders, including the
following:

    .  We will have to use a portion of our cash flow from operations for debt
       service, rather than for our operations or to implement our growth
       strategy

    .  We may not be able to obtain additional debt financing for future
       working capital, capital expenditures, acquisitions or other corporate
       purposes

    .  We are vulnerable to increases in interest rates because the debt under
       our senior credit facility is at a variable interest rate and although in
       the past we have on occasion entered into certain hedging instruments in
       an effort to manage our interest rate risk, we cannot assure you that we
       will continue to do so, on favorable terms or at all, in the future

CHANGES IN TRAFFIC PATTERNS AND THE TYPE, NUMBER AND LOCATION OF COMPETING
STORES COULD RESULT IN THE LOSS OF CUSTOMERS AND A CORRESPONDING DECREASE IN
REVENUES FOR AFFECTED STORES

   The convenience store and retail gasoline industries are highly competitive
and we may not be able to compete successfully. Changes in traffic patterns and
the type, number and location of competing stores could result in the loss of
customers and a corresponding decrease in revenues for affected stores. Major
competitive factors include, among others, location, ease of access, gasoline
brands, pricing, product and service selections, customer service, store
appearance, cleanliness and safety. In addition, inflation, increased labor and
benefit costs and the lack of availability of experienced management and hourly
employees may adversely affect the profitability of the convenience store
industry. Any or all of these factors could create heavy competitive pressures
and have an adverse effect on our business, financial condition and results of
operations.

   We compete with numerous retail formats including other convenience stores,
gasoline service stations, supermarket chains, super stores and warehouse
stores, drug stores, fast food operations and other similar retail outlets. In
some of our markets our competitors have been in existence longer and have
greater financial, marketing and other resources than us. As a result, our
competitors may be able to respond better to changes in the economy and new
opportunities in our industry.

BECAUSE SUBSTANTIALLY ALL OF OUR STORES ARE LOCATED IN THE SOUTHEASTERN UNITED
STATES, OUR REVENUES COULD SUFFER IF THE ECONOMY OF THAT REGION DETERIORATES

   Substantially all of our stores are located in the Southeast region of the
United States. As a result, our results of operations are subject to general
economic conditions in that region. In the event of an economic downturn in the
Southeast, our business, financial condition and results of operations could be
adversely impacted.

UNFAVORABLE WEATHER CONDITIONS COULD ADVERSELY AFFECT OUR BUSINESS

   Weather conditions in our operating area impact our business, financial
condition and results of operations. During the spring and summer vacation
season, customers are more likely to purchase higher profit margin items at our
stores, such as fast foods, fountain drinks and other beverages, and more
gasoline at our gasoline locations. As a result, we typically generate higher
revenues and gross margins during warmer weather months in the Southeast, which
fall within our third and fourth quarters. If weather conditions are not
favorable during these periods, our operating results and cash flow from
operations could be adversely affected.

   In addition, approximately 37% of our stores are concentrated in coastal
areas in the southeastern United States, and are therefore exposed to damage
associated with hurricanes, tropical storms and other weather conditions in
these areas.

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IF OUR HISTORY OF LOSSES CONTINUES, WE MAY BE UNABLE TO COMPLETE OUR GROWTH
STRATEGY AND FINANCING PLANS

   We have experienced losses during two out of our most recent four fiscal
years. Our net losses were $3.3 million in fiscal 1998 and $2.7 million in
fiscal 2001. In fiscal 1999, we had net income of $10.4 million and in fiscal
2000 we had net income of $14.0 million. We incurred interest expense of $41.3
million in fiscal 1999, $52.3 million in fiscal 2000 and $58.7 million in fiscal
2001. In fiscal 2001, we incurred unusual charges of $9.0 million related to our
fiscal 2001 restructuring plan ($4.8 million) and non-cash charges related to
the change in fair value ($4.2 million) of certain interest rate derivative
instruments. We also incurred an extraordinary loss of $3.6 million (net of
taxes) in fiscal 1999, related to the early extinguishment of debt.

   If we incur net losses in future periods, we may not be able to implement
our growth strategy in accordance with our present plans. Continuation of our
net losses may also require us to secure additional financing sooner than
anticipated. Such financing may not be available in sufficient amounts, or on
terms acceptable to us, and may dilute existing stockholders. If we do achieve
profitability, we may not sustain or increase profitability in the future. This
may, in turn, cause our stock price to decline.

THE INTERESTS OF FREEMAN SPOGLI & CO., OUR CONTROLLING STOCKHOLDER, MAY
CONFLICT WITH OUR INTERESTS AND THE INTERESTS OF OUR OTHER STOCKHOLDERS

   As a result of its stock ownership and board representation, Freeman Spogli
will be in a position to affect our corporate actions such as mergers or
takeover attempts in a manner that could conflict with the interests of our
other stockholders. As of December 12, 2001, Freeman Spogli owned 10,329,524
shares of common stock and warrants to purchase 2,346,000 shares of common
stock, or approximately 62.0% of our common stock on a fully diluted basis. In
addition, four of the eight members of our board of directors are
representatives of Freeman Spogli.

BECAUSE WE DEPEND ON OUR SENIOR MANAGEMENT'S EXPERIENCE AND KNOWLEDGE OF OUR
INDUSTRY, WE WOULD BE ADVERSELY AFFECTED IF SENIOR MANAGEMENT LEFT THE PANTRY

   We are dependent on the continued efforts of our senior management team,
including our President and Chief Executive Officer, Peter Sodini. Mr. Sodini's
employment contract terminates in September 2001. If, for any reason, our
senior executives do not continue to be active in management, our business,
financial condition or results of operations could be adversely affected. We
cannot assure you that we will be able to attract and retain additional
qualified senior personnel as needed in the future. In addition, we do not
maintain key personnel life insurance on our senior executives and other key
employees.

FUTURE SALES OF ADDITIONAL SHARES INTO THE MARKET MAY DEPRESS THE MARKET PRICE
OF THE COMMON STOCK

   If our existing stockholders sell shares of common stock in the public
market, including shares issued upon the exercise of outstanding options and
warrants, or if the market perceives such sales could occur, the market price
of our common stock could decline. These sales also might make it more
difficult for us to sell equity or equity-related securities in the future at a
time and price that we deem appropriate or to use equity as consideration for
future acquisitions.

   As of December 12, 2001, there are 18,107,597 outstanding shares of our
common stock outstanding. Of these shares, 6,250,000 shares are freely tradable.
12,627,951 shares are held by affiliate investment funds of Freeman Spogli and
affiliates of J.P. Morgan Partners L.L.C. ("J.P. Morgan"), who may be deemed to
be affiliates of The Pantry. Pursuant to Rule 144 under the Securities Act of
1993, as amended, our affiliates can resell up to 1% of the aggregate our
outstanding common stock during any three month period. In addition, Freeman
Spogli and J.P. Morgan have registration rights allowing them to require us to
register the resale of their shares. If Freeman Spogli and J.P. Morgan exercise
their registration rights and sell shares of common stock in the public market,
the market price of our common stock could decline.

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OUR CERTIFICATE OF INCORPORATION INCLUDES PROVISIONS WHICH MAY HAVE THE EFFECT
OF PREVENTING OR HINDERING A CHANGE IN CONTROL AND ADVERSELY AFFECTING THE
MARKET PRICE OF OUR COMMON STOCK

   Our certificate of incorporation gives our board of directors the authority
to issue up to five million shares of preferred stock and to determine the
rights and preferences of the preferred stock, without obtaining shareholder
approval. The existence of this preferred stock could make more difficult or
discourage an attempt to obtain control of The Pantry by means of a tender
offer, merger, proxy contest or otherwise. Furthermore, this preferred stock
could be issued with other rights, including economic rights, senior to our
common stock, and, therefore, issuance of the preferred stock could have an
adverse effect on the market price of our common stock. We have no present
plans to issue any shares of our preferred stock.

   Other provisions of our certificate of incorporation and bylaws and of
Delaware law could make it more difficult for a third party to acquire us or
hinder a change in management even if doing so would be beneficial to our
stockholders. These governance provisions could affect the market price of our
common stock.

   We may, in the future, adopt other measures that may have the effect of
delaying, deferring or preventing an unsolicited takeover, even if such a
change in control were at a premium price or favored by a majority of
unaffiliated stockholders. These measures may be adopted without any further
vote or action by our stockholders.

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