SECURITIES  AND  EXCHANGE COMMISSION
                                   WASHINGTON,  D.C.  20549


                                         FORM 10-K
(Mark  One)

   X       ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF  THE SECURITIES
           EXCHANGE ACT OF 1934 FOR THE FISCAL YEAR ENDED JUNE 29, 1997.
           Transition report pursuant to Section 13 or 15(d) of the Securities
           Exchange Act of 1934 for the transition period from      to      .

                              COMMISSION  FILE NUMBER  0-12919

                                 PIZZA INN, INC.
               (Exact  name of registrant as specified in its charter)

                    MISSOURI                                47-0654575
                    (State or jurisdiction of          (I.R.S.  Employer
                    incorporation or organization)    Identification  No.)

                    5050  QUORUM  DRIVE
                    SUITE  500
                    DALLAS, TEXAS                                75240
                   (Address  of  principal executive offices)   (Zip  Code)

      Registrant's  telephone  number, including  area  code: (972) 701-9955
      Securities Registered Pursuant to Section  12(b)  of  the  Act:  NONE
       Securities  Registered Pursuant  to  Section  12(g)  of  the  Act:
                       COMMON STOCK,  PAR  VALUE  $.01  EACH
                                     (Title  of  Class)

           At  September  8,  1997,  there  were  12,768,685  shares  of  the
registrant's  Common  Stock  outstanding,  and  the  aggregate market value of
registrant's  Common  Stock held by non-affiliates was $41,366,347, based upon
the  average  of  the  bid  and  ask  prices.

           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 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   x

                 APPLICABLE  ONLY TO REGISTRANTS INVOLVED IN BANKRUPTCY
                    PROCEEDINGS  DURING  THE PRECEDING FIVE  YEARS:

           Indicate  by  check  mark  whether  the  registrant  has  filed all
documents  and  reports required to be filed by Section 12, 13 or 15(d) of the
Securities  Exchange  Act of 1934 subsequent to the distribution of securities
under  a  plan  confirmed  by  a  court.   Yes  x  No      

                         DOCUMENTS INCORPORATED BY REFERENCE

           Portions  of  the  registrant's  definitive  Proxy Statement, to be
filed  pursuant  to  Section  14(a)  of the Securities Exchange Act of 1934 in
connection  with  the  registrant's annual meeting of shareholders in December
1997,  have  been  incorporated  by  reference  in  Part  III  of this report.

                                 PART I

ITEM  1  -  BUSINESS

GENERAL

     Pizza  Inn,  Inc. (the "Company"), a Missouri corporation incorporated in
1983,  is  the  successor  to  a  Texas  company  of  the  same name which was
incorporated  in  1961.    The  Company  is the franchisor and food and supply
distributor  to  a system of restaurants operating under the trade name "Pizza
Inn"  .

     On  September  8,  1997,  the  Pizza  Inn  system consisted of 494 units,
including  five Company operated units (which are used for product testing and
franchisee  training,  in  addition  to  serving customers) and 489 franchised
units.    The  domestic  units  are  comprised  of  323 full service units, 35
delivery/carry-out  units  and  71 Express units.  The international units are
comprised of 33 full service units, 12 delivery/carry-out units and 20 Express
units.    Pizza  Inn  units  are currently located in 18 states and 19 foreign
countries.    Domestic units are located predominantly in the southern half of
the  United  States,  with  Texas,  North Carolina and Arkansas accounting for
approximately  30%,  15%  and  11%,  respectively,  of  the  total.    Norco
Manufacturing  and  Distributing Company ("Norco"), a division of the Company,
distributes  food  products,  equipment,  and  other  supplies to units in the
United  States  and,  to  the  extent  feasible,  in  other  countries.

PIZZA  INN  RESTAURANTS

     Full  service  restaurants  ("Full-Service")  offer dine-in and carry-out
service  and,  in  most cases, also offer delivery service.  These restaurants
serve  pizza on three different crusts (The Original Thin Crust, New York Pan,
and  Italian  Crust,  with  standard  toppings  and  special  combinations  of
toppings.    They also offer pasta, salad, sandwiches, desserts and beverages,
including beer and wine in some locations.  They are generally located in free
standing  buildings  in  close  proximity  to  offices,  shopping  centers and
residential  areas.  The current standard Full-Service units are between 3,300
and  4,400  square  feet  in size and seat 130 to 180 customers.  The interior
decor  is  designed  to  promote  a  contemporary,  family  style  atmosphere.

     Restaurants that offer delivery and carry-out service only ("Delcos") are
growing  in  popularity  and number.  Delcos typically are located in shopping
centers or other in-line arrangements, occupy approximately 1,000 square feet,
and  offer  limited  or  no  seating.  Delcos generally offer the same menu as
Full-Service units, except for buffet and dine-in service.  The decor of these
units  is  designed  to  be bright and highly visible, featuring neon, lighted
displays  and  awnings.

     A  third  version,  Pizza  Inn  Express  units ("Express"), are typically
located  in  a  convenience  store,  college campus, airport terminal or other
commercial  facility.    They  have  limited  or  no  seating  and offer quick
carry-out  service  of a limited menu of pizza and other foods and beverages. 
An Express unit typically occupies approximately 200 to 400 square feet and is
operated  by  the  same  person  who  owns  the  commercial facility or who is
licensed  at  one  or  more  locations  within  the  facility.

FRANCHISING

     The  Pizza  Inn  concept  was first franchised in 1963.  Since that time,
industry franchising concepts and development strategies have changed, so that
present  franchise  relationships  are  evidenced  by a variety of contractual
forms.    Common  to  those forms are provisions which: (i) provide an initial
franchise  term of 20 years and a renewal term, (ii) require the franchisee to
follow  the  Pizza  Inn  system  of restaurant operation and management, (iii)
require  the  franchisee  to pay a franchise fee and continuing royalties, and
(iv)  prohibit  the  development  of one unit within a specified distance from
another.

     The  Company's  current  form of franchise agreement provides for:  (i) a
franchise  fee  of  $20,000  for  a  Full-Service unit, $7,500 for a Delco and
$3,500  for  an Express unit, (ii) an initial franchise term of 20 years for a
Full-  Service  unit, 10 years for a Delco, plus a renewal term of 10 years in
both  cases,  and  an  initial  term of five years for an Express unit, plus a
renewal  term of five years, (iii) contributions equal to 1% of gross sales to
the  Pizza  Inn  Advertising  Plan  or  to  the Company, discussed below, (iv)
royalties  equal  to  4%  of gross sales for a Full-Service or Delco and 5% of
gross  sales for an Express unit, and (v) required advertising expenditures of
at  least 4% of gross sales for a Full-Service unit, 5% for a Delco and 2% for
an  Express  unit.

     The  Company  has  adopted  a  franchising strategy which has three major
components:    continued  development  within existing Pizza Inn market areas,
development  of selected new domestic territories, and continued growth in the
international  arena.   As a cornerstone of this approach, the Company offers,
to certain experienced restaurant operators, area developer rights in both new
and  existing  domestic  markets.   An area developer pays a negotiated fee to
purchase  the  right  to operate or develop, along with the Company, Pizza Inn
restaurants  within a defined territory, typically for a term of 20 years plus
renewal  options  for  10  years.    The  area developer agrees to a new store
development  schedule  and  assists the Company in local franchise service and
quality  control.   In return, half of the franchise fees and royalties earned
on  all  units  within the territory are retained by the area developer during
the term of the agreement.  The Company offers similar master franchise rights
to develop Pizza Inn restaurants in certain foreign countries, with negotiated
fees,  development  schedules  and  ongoing  royalties.

     As  with  area developers, a master licensee for a foreign country pays a
negotiated  fee  to  purchase  the  right  to  develop  and  operate Pizza Inn
restaurants  within  a  defined  foreign territory, typically for a term of 20
years plus renewal options for ten years.  The master licensee agrees to a new
store  development  schedule  and  the  Company  trains the master licensee to
monitor and assist franchisees in their territory with local franchise service
and  quality  control,  with  support from the Company.  In return, the master
licensee  typically retains half the franchise fees and approximately half the
royalties on all units within the territory during the term of the agreement. 
While  all Pizza Inn restaurants opened in an area developer's territory enter
into  franchise  agreements  with  the  Company,  a  master  licensee may open
restaurants  owned  and  operated  by  the  master  licensee, or they may open
sub-franchised  restaurants  owned  and  operated  by  third  parties  through
agreement  with  the  master  licensee.

     In  July  1997, the Company repurchased the area developer rights for the
majority  Tennessee  and  portions  of  Kentucky  for approximately $986,000. 
Restaurants  operating  or developed in the repurchased territory will now pay
all  royalties  and  franchisee  fees  directly  to  Pizza  Inn,  Inc.

FOOD  AND  SUPPLY  DISTRIBUTION

     The  Company's  Norco  division  offers substantially all of the food and
paper  products, equipment and other supplies necessary to operate a Pizza Inn
restaurant.    Franchisees  are  required  to purchase from Norco certain food
products  which are proprietary to the Pizza Inn system.  The vast majority of
franchisees  also  purchase  other  supplies  and  equipment  from  Norco.

     Norco  operates  its central distribution facility six days per week, and
it  delivers  to  all  domestic  units on a weekly basis, utilizing a fleet of
refrigerated tractor-trailer units operated by Company drivers and independent
owner-operators.    Norco  also  ships products and equipment to international
franchisees.  The food, equipment, and other supplies distributed by Norco are
generally  available  from  several  sources, and the Company is not dependent
upon  any  one  supplier or limited group of suppliers.  The Company contracts
with  established  food  processors  for  the  production  of  its proprietary
products.    The  Company  does  not  anticipate  any  difficulty in obtaining
supplies  in  the  foreseeable  future.




ADVERTISING

     The Pizza Inn Advertising Plan ("PIAP") is a non-profit corporation which
creates  and  produces print advertisements, television and radio commercials,
and promotional materials for use by its members.  Each operator of a domestic
Full-Service  or  Delco unit, including the Company, is entitled to membership
in  PIAP.    Nearly  all  of  the  Company's existing franchise agreements for
Full-Service  and  Delco  units  require  the franchisees to become members of
PIAP.  Members contribute 1% of their gross sales.  PIAP is managed by a Board
of  Trustees,  comprised  of franchisee representatives who are elected by the
members each year.  The Company does not have any ownership interest in PIAP. 
The  Company  provides certain administrative, marketing and other services to
PIAP and is paid by PIAP for such services.  On September 8, 1997, the Company
and  substantially  all  of  its  domestic  franchisees were members of PIAP. 
Operators  of  Express  units  do  not  participate  in  PIAP;  however,  they
contribute  up  to 1% of their gross sales to the Company to help fund Express
unit  marketing materials and similar expenditures. International operators do
not  participate  in  PIAP;  however,  like  all  other  franchisees, they are
required  to  conduct  local area advertising.  The Company works with foreign
master  licensees  on  local  advertising and reserves the right to review all
such  advertising  before  publication  or  broadcast.

     Groups of franchisees in many of the Pizza Inn system's market areas have
formed  local  advertising  cooperatives.    These  cooperatives, which may be
formed  voluntarily  or  may  be  required  by the Company under the franchise
agreements, establish contributions to be made by their members and direct the
expenditure  of  these contributions on local advertising and promotions using
materials  developed  by  PIAP  and  the  Company.

     The  Company and its franchisees conduct independent marketing efforts in
addition  to  their  participation  in  PIAP  and  local  cooperatives.

TRADEMARKS  AND  QUALITY  CONTROL

     The  Company  owns  various  trademarks,  including the name "Pizza Inn",
which  are  used  in  connection with the restaurants and have been registered
with  the  United  States  Patent  and Trademark Office.  The duration of such
trademarks  is  unlimited, subject to continued use.  In addition, the Company
has  obtained  trademark  registrations  in  several foreign countries and has
applied  for  registration  in others.  The Company believes that it holds the
necessary  rights  for protection of the trademarks essential to its business.

     The  Company  requires  all  units  to  satisfy certain quality standards
governing  the  products  and  services  offered  through use of the Company's
trademarks.    The  Company  has  a  staff  of  field  representatives,  whose
responsibilities  include  periodic  visits  to provide advice in operational,
sales building and cost control activities and to evaluate compliance with the
Company's  quality  standards.

TRAINING

     The  Company  offers training programs for the benefit of franchisees and
their  restaurant  managers.    The  training  programs, taught by experienced
Company  employees,  focus  on  food  preparation,  service,  cost  control,
sanitation,  local store marketing, personnel management, and other aspects of
restaurant operation.  The training programs include group classes, supervised
work  in Company operated units and the Company's training center, and special
field  seminars.  Training programs are offered free of charge to franchisees,
who  pay  their  own  travel  and lodging expenses.  Restaurant managers train
their  staff  through  on-the-job  training, utilizing video tapes and printed
materials  produced  by  the  Company.

WORKING  CAPITAL  PRACTICES

     The Company's Norco division maintains a sufficient inventory of food and
other  consumable supplies which it distributes to Pizza Inn units on a weekly
basis,  plus certain other items ordered on an irregular basis.  The Company's
accounts  receivable  consist  primarily  of  receivables from food and supply
sales  and  accrued  franchise  royalties.

GOVERNMENT  REGULATION

     The  Company  is  subject to registration and disclosure requirements and
other  restrictions  under  federal  and  state franchise laws.  The Company's
Norco  division is subject to various federal and state regulations, including
those  regarding  transportation of goods, food labeling and distribution, and
vehicle  licensing.

     The  development and operation of Pizza Inn units are subject to federal,
state  and  local  regulations,  including  those pertaining to zoning, public
health,  and alcoholic beverages, where applicable.  Some restaurant employees
are paid at rates related to the minimum wage established by federal and state
law.  Increases  in  the federal minimum wage can result in higher labor costs
for  the  Company  and its franchisees, which may be partially offset by price
increases  or  operational  efficiencies.

EMPLOYEES

     On  September  8,  1997,  the  Company  had  approximately 274 employees,
including  64 in the Company's corporate office, 79 at its Norco division, and
57  full-time and 74 part-time employees at the Company operated restaurants. 
None of the Company's employees are currently covered by collective bargaining
agreements.    The Company believes that its employee relations are excellent.


COMPETITION

     The  restaurant  business  is  highly  competitive.   The Company and its
franchisees compete with other national and regional pizza chains, independent
pizza restaurants, and other restaurants which serve moderately priced foods. 
The  Company  believes  that Pizza Inn units compete primarily on the basis of
the  quality  and  overall  value  of their menu, the consistency and level of
service,  and the location and attractiveness of their restaurant facilities. 
Because  of  the  importance of brand awareness, the Company has increased its
emphasis  on  market  penetration  and cooperative advertising by franchisees.

     The  Company's  Norco  division  competes  with  both  national and local
distributors  of  food,  equipment  and  other  restaurant  supplies.    The
distribution  industry  is  very  competitive.   The Company believes that the
principal  competitive  factors  in  the  distribution  industry  are quality,
service  and  price.    Norco  is  the  sole  authorized  supplier  of certain
proprietary  products  which  are  required to be used by all Pizza Inn units.

     In the sale of franchises, the Company competes with franchisors of other
restaurant  concepts  and  franchisors  of  a  variety  of  other products and
services.    The  Company  believes  that  the  principal  competitive factors
affecting  the  sale  of  franchises  are  product quality and value, consumer
acceptance, franchisor experience and support, and the relationship maintained
between  the  franchisor  and  its  franchisees.

SEASONALITY

     Historically,  sales  at  Pizza Inn restaurants have been somewhat higher
during  the  warmer  months and somewhat lower during the colder months of the
year.  The Company believes that the increasing popularity of delivery service
and  expansion  into  the  high  impulse buying market of Express units should
lessen  the  seasonal  impact  on  future  chainwide  sales.


ITEM  2  -  PROPERTIES

     The  Company leases 23,402 square feet in Dallas, Texas for its corporate
office  and 76,700 square feet in Grand Prairie, Texas for its Norco warehouse
and office facilities.  The leases expire in 2003 and 2001, respectively.  The
Company  also  leases  2,736  square  feet  in Addison, Texas for its training
facility  with  a  term  expiring  in  2001.

     On  September  8,  1997,  all  five  of  the  Company  operated Pizza Inn
restaurants  (all  located  in  Texas) were leased.  The Company also owns one
restaurant  property  which  it  leases  to  a former franchisee.  The Company
operated units range in size from approximately 1,000 to 4,000 square feet and
incur  annual  minimum rent between $6.80 and $20.00 per square foot.  Most of
the leases require payment of additional rent based upon a percentage of gross
sales  and  require  the Company to pay for repairs, insurance and real estate
taxes.




ITEM  3  -  LEGAL  PROCEEDINGS

     On  September  21,  1989,  the  Company,  Pizza  Inn,  Inc.  (a  Delaware
corporation)  and  Memphis  Pizza  Inns,  Inc.  filed for protection under the
United  States  Bankruptcy  Code in the United States Bankruptcy Court for the
Northern  District  of Texas, Dallas Division.  The plan of reorganization, as
confirmed  by  the  court,  became  effective on September 5, 1990.  The court
retained  jurisdiction  to  help  ensure  that  the plan of reorganization was
carried  out  and to hear any disputes that arose during the five year term of
the  plan.  In  May  1996,  the  court issued its final order finding that the
proceedings  have  been  completed  and  closing  the  bankruptcy  cases.

     On  August  5,  1997,  the  Company  entered  into a settlement agreement
regarding  a  lawsuit  against  Choyung International, Inc. ("Choyung") in the
Seoul  District  Court  in  Korea.    Pursuant to the terms of the settlement,
Choyung  agreed  to  comply with its post-termination obligations of returning
all  trademarks  to  the  Company  and  de-identifying  all  former  Pizza Inn
restaurant  locations.    The  Company  and  Choyung  also entered into mutual
releases  and  dismissed  all  pending  litigation.

     Certain  other  pending legal proceedings exist against the Company which
the Company believes are not material or have arisen in the ordinary course of
its  business.

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

     No matters were submitted to a vote of security holders during the fourth
quarter  of  the  Company's  fiscal  year  1997.


<PAGE>
                                   PART II

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

     On  September  8,  1997,  there  were 3,016 stockholders of record of the
Company's  Common  Stock.

     The  Company's  Common  Stock  is  listed  on the Small-Cap Market of the
National  Association  of  Securities  Dealers  Automated Quotation ("NASDAQ")
system  under  the  symbol  "PZZI".  The following table shows the highest and
lowest  bid  price  per share of the Common Stock during each quarterly period
within  the  two  most  recent  fiscal  years,  as  reported  by  the National
Association  of  Securities  Dealers.    Such  prices  reflect  inter-dealer
quotations,  without adjustment for any retail markup, markdown or commission.

<TABLE>
<CAPTION>
                                                    Bid
                                             ------------------
                                               High      Low
                                             --------   -------
<S>                                          <C>        <C>

1996
            First Quarter Ended 9/24/95      4  1/16    3  3/16
            Second Quarter Ended 12/24/95    4  1/2     3  5/8
            Third Quarter Ended 3/24/96      4  7/8     3  3/4
            Fourth Quarter Ended 6/30/96     5  3/16    4  1/8 

1997
            First Quarter Ended 9/29/96      4  13/16   3  11/16
            Second Quarter Ended 12/29/96    5          4  1/4
            Third Quarter Ended 3/30/97      4  7/8     3  7/8
            Fourth Quarter Ended 6/29/97     4  1/4     3  1/4

</TABLE>

     On  August  21,  1997  the  Board  of Directors of the Company declared a
quarterly  cash  dividend of $.06 per share payable October 24 to shareholders
of record on October 10, 1997.  Any determination to pay cash dividends in the
future  will be at the discretion of the Company's Board of Directors and will
be  dependent  upon  the Company's results of operations, financial condition,
capital  requirements,  contractual  restrictions  and  other  factors  deemed
relevant.


<PAGE>
 ITEM  6  -  SELECTED  FINANCIAL  DATA

The  following  table contains certain selected financial data for the Company
for  each  of  the last five fiscal years through June 29, 1997, and should be
read  in  conjunction with the financial statements and schedules in Item 8 of
this  report.

<TABLE>

<CAPTION>

                                                                         Year Ended
                                               ----------------------------------------------------------------
                                               June 29,   June 30,   June 25,        June 26,         June 27,
                                                 1997       1996       1995            1994             1993
                                               ---------  ---------  ---------       ---------       ----------
                                                           (In thousands, except per share amounts)
<S>                                            <C>        <C>        <C>            <C>        <C>  <C>        <C>

SELECTED INCOME STATEMENT DATA:

    Total revenues                             $  69,123  $  69,441  $  62,044       $  57,378       $  53,468
    Income before income taxes
       and extraordinary item                      6,860      5,921      4,845           3,899           2,444
    Income before extraordinary item               4,528      3,908      3,198           2,573           1,406
    Income before extraordinary       
       item per common share                         .33        .28        .22             .18             .11
    Net income                                     4,528      3,908      3,198           2,573           2,186  (1)
    Income per common share                          .33        .28        .22             .18             .17

SELECTED BALANCE SHEET DATA:
    Total assets                                  24,310     24,419     25,803          27,234          26,018 
    Long-term debt and capital                     7,789      7,902     11,039          14,538          15,600 
      lease obligations
    Redeemable Preferred Stock                         -          -          -               -  (2)      3,371 
<FN>

(1)      Includes  an  extraordinary  gain  of  $780,000  from the utilization of operating loss carryforwards.
(2)      During  fiscal  1994,  the  Company  redeemed  all outstanding shares of Redeemable Preferred Stock in
          exchange  for  Common  Stock  and  cash.
</TABLE>


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

                             RESULTS OF OPERATIONS

FISCAL  1997  COMPARED  TO  FISCAL  1996

     Earnings  per  share for fiscal year ended June 29, 1997 grew 18% to $.33
from  $.28.  Net income increased 16% to $4.5 million from $3.9 million in the
prior  year.    Pre-tax  income  also  increased 16% to $6.9 million from $5.9
million.    The Company considers pre-tax income to be the best measure of its
performance  due  to  the  significant  benefit  of  its  net  operating  loss
carryforwards.    These  carryforwards,  which total $20.6 million at June 29,
1997,  reduce  the income taxes paid by the Company from the 34% rate expensed
on  its  statements  of  operations  to  approximately  2%.

     Results  of  operations  for fiscal 1997 include 52 weeks versus 53 weeks
for fiscal 1996.  The effect of the additional week on prior year revenues and
net  income  was  an  increase  of  approximately  2%.

     Food  and  supply  sales  by  the Company's distribution division were up
slightly from  last  year.    Increased  market  share  on  the  sale  of non-
proprietary food, supplies and  equipment  offset the decrease  resulting from
the  additional  week  in  the  prior  fiscal  year.

     Franchise revenue, which includes royalties, license fees and income from
area development and foreign master license (collectively, "Territory") sales,
decreased  9%  or  $662,000  in  fiscal 1997.  This was primarily due to lower
income  from  Territory  sales  in  the current year.  Proceeds from Territory
sales  vary  depending on size, demographics and current market development in
the  Territories.    The  timing  and  recognition of Territory sales may vary
significantly  from  year  to  year.    Current  year  sales  include  partial
recognition of proceeds from the sale of new Territory rights for South Korea,
the Philippines, Brazil, the Palestinian territories and Puerto Rico.  Current
year  royalties  also decreased 5% or $270,000, primarily due to the effect of
the  additional  week  of  operations  in  fiscal 1996, as well as the closure
during  fiscal 1996 of all 39 units in Korea upon termination of the Company's
agreement  with  its  former  master  licensee.

     Restaurant  sales,  which consist of sales from Company operated training
units,  decreased  8% or $238,000 during the current year.  This was primarily
the  result  of  the closing during the third quarter of fiscal 1996 of one of
the  Company  operated  units.

     Cost  of  sales decreased 1% during fiscal 1997.  While product purchases
increased  as  a  result  of  slightly  higher  food  and  supply sales to the
Company's  franchises,  this  was  offset by cost efficiencies in other areas.
Fleet  modernization  and  improvements in routing have reduced transportation
costs,  warehouse  productivity  is  up,  and  the  Company  continues to find
opportunities  to  improve  the  purchasing  process.

     Franchise  expenses include selling, general and administrative expenses,
primarily wages and travel expenses,  directly related to the sale and service
of franchises and Territories.  These costs have remained at the same level as
last  year.

     General  and  administrative  expenses  decreased  9%  or $474,000 in the
current  year. In fiscal 1997 the Company incurred fewer legal fees related to
international  litigation. In addition, fiscal 1996 included a one-time charge
of $95,000 to write down assets to market value at two Company operated units.

     Interest  expense decreased 24% or $213,000 in fiscal 1997, as the result
of  lower  debt  balances  and  lower  average  interest  rates.

     During  fiscal  1997,  a  total  of 67 new Pizza Inn franchise units were
opened  for  business.    Domestically, 31 units were closed by franchisees or
terminated  by  the  Company typically  because of unsatisfactory standards of
operation  or  performance.   In addition, 20 international units were closed,
including  all  19  units operated by the Company's former licensee in Taiwan.

FISCAL  1996  COMPARED  TO  FISCAL  1995

     Net  income  for  fiscal  year  ended June 30, 1996 increased 22% to $3.9
million  from  $3.2 million in the prior year.  Earnings per share grew 27% to
$.28  from $.22.  Excluding the effect of a prior year non-recurring gain, net
income increased 37% and earnings per share grew 40%. Pre-tax income increased
22%  to  $5.9  million  from  $4.8  million  in  the  prior  year.

     Results  of  operations  for fiscal 1996 include fifty-three weeks versus
fifty-two  weeks for fiscal 1995.  The effect of the additional week on fiscal
1996  revenues  and  net  income  was  an  increase  of  approximately  2%.

     Revenues for fiscal 1996 were up 12% to $69.4 million from $62 million in
fiscal  1995.   Food and  supply  sales  grew  14% in fiscal 1996.   This  was
partially the  result of continued growth in domestic  chainwide retail sales,
which grew 5%.    Additional factors contributing to growth in food and supply
sales  were  increased   market   share  on  sales  of   non-proprietary  food
ingredients and equipment, as well as increases in the market price of certain
commodities.

     Franchise revenue, which includes royalties, license fees and income from
area development and foreign master license (collectively, "Territory") sales,
increased  8% or $523,000 in fiscal 1996 due to higher royalties and Territory
sales,  partially  offset  by lower license fees.  Fiscal 1996 Territory sales
include installments on the sale of Territory rights for Arkansas, portions of
Missouri,  North  Carolina  and  South  Carolina, as well as the  Philippines.
Revenue  from  royalties  was  up  due to growth  in domestic retail sales and
international store openings at higher effective royalty rates  than  existing
units.   The  increase  in revenue occurred despite the closing during fiscal 
1996 of all units in Korea, which paid less than $150,000 in annual royalties.
 Fiscal 1996 license fees were down because more stores opened in Territories.

     Restaurant sales decreased $219,000 in fiscal 1996 as a result of closing
one  of the Company operated units that was not required for training or other
purposes.

     Other  income  consists  primarily  of  interest income and non-recurring
revenue  items.  Other income increased because fiscal 1996 includes a lawsuit
settlement  and  a  gain  on  the  sale  of  a  sublease.

     Cost  of  sales  increased  11%  or  $5.4  million  in fiscal 1996.  This
increase  is  directly  related  to the growth in food and supply sales to the
Company's  franchisees.    It  includes  the  direct cost of increased product
volume,  as  well  as  proportionate  increases  in  direct transportation and
warehouse  costs.   As a percentage of food and supply sales, cost of sales is
slightly  lower  during  fiscal 1996 due to cost improvements achieved through
fleet modernization and routing efficiencies, increased labor productivity and
improved  buying  power  through  volume  purchasing.

     Franchise  expenses  include selling, general and administrative expenses
directly  related  to the sale  and  service of  franchises and  Territories. 
These  costs increased 10% or $282,000 in fiscal 1996.  This increase reflects
investments  in  additional training and field service personnel and increases
in  related  costs  of  providing  services  to  franchisees.

     General  and  administrative expenses increased 11% in fiscal 1996.  This
was  due  to  the  implementation  of a new computer system, which resulted in
additional  expenses  related to hardware, software, programming and support. 
Expenses  for  fiscal  1996 also include a one-time charge of $95,000 to write
down  assets  to  market  value  at  two  Company  operated  units.

     During  fiscal  1995,  certain  sales  and  property tax liabilities were
settled for amounts lower than estimated in previous years.  A one-time credit
of  $531,000  ($350,000  net of tax) reflects the adjustment of the excess tax
accrual.

     Interest  expense  decreased 32% or $417,000 during fiscal 1996.  Average
debt  balances  were  25%  lower as the Company made $2.1 million in scheduled
principal  payments  and  $1.4  million  in voluntary principal payments.  The
average  interest  rate  was  also  slightly  lower  in  fiscal  1996.

     During  fiscal  1996,  a  total  of 73 new Pizza Inn franchise units were
opened  for  business,  an  11%  increase  over the 66 locations opened during
fiscal  1995.  A total of 32 units were closed by franchisees or terminated by
the  Company  in fiscal 1996, typically because of unsatisfactory standards of
operation  or  poor  performance,  compared  to  33  units in fiscal 1995.  In
addition, all 39 units operated by the Company's former licensee in Korea were
closed  during fiscal 1996, after the Company terminated the license following
extensive efforts to resolve problems by mutual agreement.  In September 1996,
the  Company  granted  a  new  license  to a Seoul, Korea-based firm to be the
Company's  exclusive  operator  and  subfranchisor  in  Korea.

                             FINANCIAL CONDITION

     Cash  and  cash equivalents increased $1.4 million in fiscal 1997, as the
Company  generated  cash  flow  from  operations beyond that required for debt
repayment, capital expenditures and open market purchases of the Company's own
common  stock.    Scheduled  debt  payments  of $2 million in the current year
reduced  debt  from  $8.9  million  to  $6.9 million at June 29, 1997.  During
fiscal  1997, the Company also used $1.9 million in working capital to acquire
421,700  shares  of  its  own  common  stock  at prevailing prices on the open
market.

     At  June  28, 1993, upon adoption of SFAS 109, the Company recorded a net
deferred  tax  asset  of  $15.4 million, primarily representing the benefit of
pre-reorganization net operating loss carryforwards which expire in 2005.  The
net  deferred  tax  asset  was  recorded  as a reduction of intangibles to the
extent  available  ($13.7  million),  and  then  as  an increase in additional
paid-in  capital ($1.7 million).  At June 29, 1997, the net deferred tax asset
balance  was  $8.5  million.

     Management  believes  that  future  operations  will  generate sufficient
taxable  income,  along  with  the reversal of temporary differences, to fully
realize  the  deferred tax asset, net of a valuation allowance of $1.4 million
related  to  the  potential  expiration  of certain tax credit carryforwards. 
Future  taxable  income  at  the  same level as fiscal 1997 would be more than
sufficient  for  full  realization  of the net tax asset.  Management believes
that,  based  on  recent  growth  trends  and  future projections, maintaining
current  levels  of  taxable income is achievable.  Expansion of the Company's
franchise   base,  through  the  sale  of  new  franchises  and   Territories 
with agreements containing minimum required development schedules,is  expected
 to cause  future  growth  in the  Company's  royalties,  franchise  fees and 
distribution sales.  These  factors are  expected to  contribute  to growth in
future taxable income and should be more than sufficient to enable the Company
to  realize  its  deferred tax asset without reliance on material, non-routine
income.

     While  the  Company  expects  to  realize  substantial  benefit  from the
utilization  of  its  net  operating loss carryforwards (which currently total
$20.6 million and expire in 2005) to reduce its federal tax liability, current
accounting  standards  dictate  that  this benefit can not be reflected in the
Company's results of operations.  Carryforwards resulting from losses incurred
after  the  Company's  reorganization  in  September 1990 were reflected as an
extraordinary  item, reducing a portion of income tax expense on the statement
of  operations  for  the  first  three  quarters  of  fiscal  1993.    When
post-reorganization  carryforwards were exhausted, the Company began utilizing
its  pre-reorganization  carryforwards,  which  require a different accounting
treatment.              In accordance with SFAS 109, these carryforwards, when
utilized, are reflected as a reduction of the deferred tax asset rather than a
reduction  of  income  tax  expense.   Beginning in the last quarter of fiscal
1993,  this has caused the Company to reflect an amount for federal income tax
expense  at  the  corporate  rate of 34% on its statement of operations.  This
rate  is  significantly  different  from  the  alternative minimum tax that it
actually  pays  (approximately  2%  of  taxable  income).

     Historically,  the  differences  between  pre-tax  earnings for financial
reporting  purposes  and  taxable  income  for  tax purposes have consisted of
temporary  differences arising from the timing of depreciation, deductions for
accrued  expenses and deferred revenues, as well as permanent differences as a
result  of goodwill amortization deducted for financial reporting purposes but
not  for  income  tax  purposes.

     Under  the  Internal  Revenue Code, the utilization of net operating loss
and  credit  carryforwards could be limited if certain changes in ownership of
the  Company's  Common  Stock  were  to  occur.    The  Company's  Articles of
Incorporation  contain  certain  restrictions which are intended to reduce the
likelihood  that  such  changes  in  ownership  would  occur.

                          LIQUIDITY AND CAPITAL RESOURCES

     Cash  provided  by operations totaled $5.4 million in fiscal 1997 and was
used  primarily to service debt, to acquire the Company's common stock, and to
fund  capital  expenditures.

     The  Company  reduced its term loan balance from $8.9 million at June 30,
1996  to $6.9 million at June 29, 1997.  In August 1997, the Company signed an
agreement  with  its current lender to refinance its existing debt under a new
revolving  credit  facility.    The  new  $9.5  million  revolving credit line
combines  the  Company's  existing  $6.9 million term loan with its $1 million
revolving  credit  line,  plus  an  additional  $1.6  million revolving credit
commitment.    The  new  agreement  extends  through  August  1999.

     During  fiscal  1997,  the  Company  purchased  421,700 shares of its own
common  stock  on  the open market for a total price of $1.9 million, bringing
the  number  of  shares  purchased  over the  last three  years to  1,790,416,
including  662,094  shares purchased on favorable terms from a former lender. 
All  reacquired  shares  will  be  held  as  treasury  stock  until  retired.

     Capital  expenditures  during  fiscal  1997 included remodels for several
Company  operated  training  restaurants,  leasehold  improvements  for  a new
corporate  training center and testing facility, and updating the distribution
division  offices.    During  fiscal 1997, the Company entered into leases for
five new distribution trailers, which were classified as operating leases, and
retired  five  older  trailers.

     The  Company's  future  requirements  for  cash  relate primarily to debt
repayment,  the   periodic   purchase  of  its  own  common   stock,   capital
expenditures  and  payment  of dividends on its common stock. Although the new
loan  agreement  does  not  require  the  Company  to  make any scheduled debt
reductions,  the  Company plans to continue using excess cash to retire debt. 
The  Company currently considers its common stock to be undervalued, and plans
to continue purchasing its own shares on the open market.  Anticipated capital
expenditures  include warehouse improvements and information systems updates. 
In  August  1997,  the  Board of Directors of the Company declared a quarterly
dividend  on the Company's common stock.  The dividends are payable in October
1997  and  will  require  approximately  $800,000 or $0.06 per share in cash. 
Declaration  of  future  dividends  will  be at the discretion of the Board of
Directors.

     In  July  1997, the Company repurchased the area developer rights for the
majority  of  Tennessee  and  Kentucky  for  approximately  $986,000 in cash. 
Restaurants  operating  or developed in the repurchased territory will now pay
all  royalties  and  franchise  fees  directly  to  Pizza  Inn,  Inc.

     The  Company's  primary  sources  of cash are royalties, license fees and
Territory  sales,  as  well as sales from the distribution division.  Existing
area development and master license agreements contain development commitments
that  should  result  in future chainwide growth.  Related growth in royalties
and  distribution  sales  are  expected to provide adequate working capital to
supply  the needs described above.  The signing of any new area development or
master  license  agreements,  which  cannot be predicted with certainty, would
also  provide  significant  infusions  of  cash.





                               ECONOMIC FACTORS

     The  costs of operations, including labor, supplies, utilities, financing
and  rental  costs,  to  the  Company  and  its franchisees, are significantly
affected by inflation and other economic factors.  Increases in any such costs
would  result in higher costs to the Company and its franchisees, which may be
partially offset by price increases and increased efficiencies in operations. 
The Company's revenues are also affected by local economic trends in Texas and
other  markets  where  units  are concentrated.  The Company intends to pursue
franchise development in new markets in the United States and other countries,
which  would  mitigate  the  impact  of  local  economic  factors.

     "Management's  Discussion and Analysis of Financial Condition and Results
of  Operations"  contains  certain  projections  and  other  forward-looking
statements  that are not historical facts and are subject to various risks and
uncertainties,  including  but not limited to, changes in demand for Pizza Inn
products  or franchises, the impact of competitors' actions, changes in prices
or  supplies  of food ingredients, and restrictions on international trade and
business.

<PAGE>
                                PIZZA INN, INC.



ITEM  8  -  FINANCIAL  STATEMENTS  AND  SUPPLEMENTARY  DATA


Index  to  Financial  Statements  and  Schedules:



FINANCIAL  STATEMENTS                                                 PAGE NO.


Report  of  Independent  Accountants.                                       15

Consolidated  Statements  of  Operations  for  the  years  ended
     June  29,  1997,  June  30,  1996,  and  June  25,  1995.              16

Consolidated  Balance  Sheets  at  June  29,  1997  and  June 30, 1996.     17

Consolidated  Statements  of  Shareholders'  Equity  for  the  years
     ended  June  29,  1997,  June  30,  1996,  and  June  25,  1995.       18

Consolidated  Statements  of  Cash  Flows  for  the  years  ended
     June  29,  1997,  June  30,  1996,  and  June  25,  1995.              19

Notes  to  Consolidated  Financial  Statements.                             21



     FINANCIAL  STATEMENT  SCHEDULES


     Schedule  II     -  Consolidated Valuation and Qualifying Accounts     32

     All  other  schedules  are  omitted  because they are not applicable, not
     required  or  because  the  required  information  is  included  in  the
     consolidated financial  statements  or  notes  thereto.



<PAGE>







                     REPORT OF INDEPENDENT ACCOUNTANTS


To  the  Board  of  Directors
and  Shareholders  of  Pizza  Inn,  Inc.

In  our  opinion,  the  consolidated  financial  statements  listed  in  the
accompanying  index  present  fairly,  in all material respects, the financial
position  of  Pizza Inn, Inc. (the "Company") and its subsidiaries at June 29,
1997  and  June  30,  1996, and the results of their operations and their cash
flows  for  each  of  the  three  years  in the period ended June 29, 1997, in
conformity  with  generally  accepted  accounting principles.  These financial
statements  are  the  responsibility  of  the  Company's  management;  our
responsibility is to express an opinion on these financial statements based on
our  audits.    We conducted our audits of these statements in accordance with
generally  accepted  auditing standards which 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, assessing the accounting principles used and significant estimates
made  by  management,  and  evaluating  the  overall  financial  statement
presentation.    We believe that our audits provide a reasonable basis for the
opinion  expressed  above.






PRICE  WATERHOUSE  LLP

Dallas,  Texas
August  21,  1997
                                      









<PAGE>
PIZZA INN, INC.
CONSOLIDATED  STATEMENTS  OF  OPERATIONS
(In thousands, except per share amounts)
<TABLE>

<CAPTION>

                                                      Year Ended
                                          ----------------------------------
                                          June 29,     June 30,    June 25,
                                            1997         1996        1995
                                          ---------  ------------  ---------
<S>                                       <C>        <C>           <C>

REVENUES:
     Food and supply sales                $  59,557  $    58,823   $  51,820
     Franchise revenue                        6,750        7,412       6,889
     Restaurant sales                         2,696        2,934       3,153
     Other income                               120          272         182
                                          ---------  ------------  ---------
                                             69,123       69,441      62,044
                                          ---------  ------------  ---------
COSTS AND EXPENSES:
     Cost of sales                           53,744       54,273      48,881
     Franchise expenses                       2,978        3,019       2,737
     General and administrative expenses      4,879        5,353       4,820
     Non-recurring gain                           -            -        (531)
     Interest expense                           662          875       1,292
                                          ---------  ------------  ---------
                                             62,263       63,520      57,199
                                          ---------  ------------  ---------

INCOME BEFORE INCOME TAXES                    6,860        5,921       4,845
     Provision for income taxes               2,332        2,013       1,647
                                          ---------  ------------  ---------
NET INCOME                                $   4,528  $     3,908   $   3,198
                                          =========  ============  =========

NET INCOME PER COMMON SHARE               $    0.33  $      0.28   $    0.22
                                          =========  ============  =========
<FN>

See  accompanying  Notes  to  Consolidated  Financial  Statements
</TABLE>


<PAGE>
PIZZA INN, INC.
CONSOLIDATED  BALANCE  SHEETS
(In thousands)
<TABLE>

<CAPTION>

                                                          June 29,      June 30,
                                                            1997          1996
                                                          ---------     ---------
<S>                                                      <C>           <C>

ASSETS
----------------------------------------------------                      

CURRENT ASSETS
     Cash and cash equivalents                            $   2,037    $      653
     Restricted cash and short-term investments,
          (including $0 and $230, respectively, pledged 
            as collateral for certain letters of credit)        295           360
     Accounts receivable, less allowance for doubtful
          accounts of $939 and $781, respectively             6,711         5,875
     Notes receivable, less allowance for doubtful 
          accounts of $60 and $119, respectively                593           777
     Inventories                                              2,224         1,919
     Prepaid expenses and other                                 452           536
                                                          ---------     ---------
               Total current assets                          12,312        10,120

PROPERTY, PLANT AND EQUIPMENTS, net                           2,044         1,866
     
PROPERTY UNDER CAPITAL LEASES, net                              934         1,107

DEFERRED TAXES, net                                           8,492        10,687

OTHER ASSETS
     Long-term notes receivable, less allowance
          for doubtful accounts of $122
          and $63, respectively                                 149           149
     Deposits and other                                         379           490
                                                          ---------     ---------

                                                          $  24,310     $  24,419
                                                          =========     =========

LIABILITIES AND SHAREHOLDERS' EQUITY
----------------------------------------------------                      

CURRENT LIABILITIES
     Current portion of long-term debt                    $       -     $   2,000
     Current portion of capital lease obligations               115           109
     Accounts payable - trade                                 1,482         2,331
     Accrued expenses                                         2,917         3,158
                                                          ---------     ---------
                Total current liabilities                     4,514         7,598

LONG-TERM LIABILITIES
     Long-term debt                                           6,910         6,910
     Long-term capital lease obligations                        879           992
     Other long-term liabilities                                786           813

COMMITMENTS AND CONTINGENCIES (See Note I)

SHAREHOLDERS' EQUITY
     Common Stock, $.01 par value; 26,000,000
         shares authorized; outstanding 12,713,562
         and 12,876,801 shares, respectively (after
         deducting shares in treasury:
         1997 - 1,790,416; 1996 - 1,360,567)                    127           129
     Additional paid-in capital                               4,061         3,684
     Retained earnings                                        7,033         4,293
                                                          ---------     ---------
                Total shareholders' equity                   11,221         8,106
                                                          ---------     ---------

                                                          $  24,310     $  24,419
                                                          =========     =========
<FN>

See  accompanying  Notes  to  Consolidated  Financial  Statements
</TABLE>


<PAGE>
PIZZA INN, INC.
CONSOLIDATED  STATEMENTS  OF  SHAREHOLDERS'  EQUITY
(In thousands)
<TABLE>

<CAPTION>

                                                                                 Retained
                                                                 Additional      Earnings
                                                Common Stock       Paid-In     (Accumulated
                                              Shares    Amount     Capital        Deficit)      Total
                                             -------  --------   ------------  --------------  --------
<S>                                          <C>      <C>        <C>           <C>             <C>           

BALANCE, JUNE 26, 1994                       13,807       138         4,749             256       5,143 

Stock options exercised                         121         1           177               -         178 
Management shares issued                         18         -            49               -          49 
Purchase of treasury stock                     (419)       (4)       (1,001)           (161)     (1,166)
Net income                                        -         -             -           3,198       3,198 
                                              -------  --------   ------------  --------------  -------- 

BALANCE, JUNE 25, 1995                       13,527       135         3,974           3,293       7,402 

Stock options exercised                         291         3           491               -         494 
Purchases of treasury stock                    (941)       (9)         (781)         (2,908)     (3,698)
Net income                                        -         -             -           3,908       3,908 
                                              -------  --------   ------------  --------------  --------  

BALANCE, JUNE 30, 1996                       12,877   $   129   $     3,684   $       4,293     $ 8,106 
                                            
Stock options exercised                         267         2           503               -         505 
Purchases of treasury stock                    (430)       (4)         (126)         (1,788)     (1,918)
Net income                                        -         -             -           4,528       4,528 
                                             -------  --------   ------------  --------------  ---------
BALANCE, JUNE 29, 1997                       12,714    $  127   $     4,061    $      7,033     $11,221
                                             =======  ========   ============  ==============  =========

<FN>

See  accompanying  Notes  to  Consolidated  Financial  Statements
</TABLE>


<PAGE>
PIZZA INN, INC.
CONSOLIDATED  STATEMENTS  OF  CASH  FLOWS
(In thousands)
<TABLE>

<CAPTION>

                                                                        Year Ended
                                                          ---------------------------------------
                                                           June 29,        June 30,     June 25,
                                                             1997            1996         1995
                                                          ----------     ------------  ----------
<S>                                                       <C>            <C>           <C>

CASH FLOWS FROM OPERATING ACTIVITIES:

Net income                                                $   4,528      $   3,908   $   3,198 
Adjustments to reconcile net income to cash provided
  by operating activities:
     Depreciation and amortization                              707            595         500 
     Provision for doubtful accounts and notes receivable       110              -           - 
     Utilization of pre-reorganization net operating                                       
       loss carryforwards                                     2,195          1,895       1,550
     Non-recurring gain                                           -              -        (531)
Changes in assets and liabilities:
     Restricted cash and other short-term investments            65             (7)        (64)
     Notes and accounts receivable                             (762)        (1,002)       (495)
     Inventories                                               (305)          (329)        196 
     Accounts payable - trade                                  (849)         1,147        (333)
     Accrued expenses                                           (94)           (83)       (238)
     Deferred franchise revenue                                (147)          (100)       (901)
     Prepaid expenses and other                                 (23)           195        (125)
                                                          ----------     ----------  ----------
Cash provided by operating activities                         5,425          6,219       2,757 
                                                          ----------     ----------  ----------

CASH FLOWS FROM INVESTING ACTIVITIES:

     Capital expenditures                                      (628)          (639)       (955)
     Proceeds from sales of assets                                -             84         420 
                                                          ----------     ----------  ----------
Cash used for investing activities                             (628)          (555)       (535)
                                                          ----------     ----------  ----------

CASH FLOWS FROM FINANCING ACTIVITIES:

     Repayments of debt                                      (2,000)        (3,479)     (2,487)
     Proceeds from exercise of stock options                    505            494         179 
     Purchases of treasury stock                             (1,918)        (3,698)     (1,166)
                                                          ----------    -----------  ----------

Cash used for financing activities                           (3,413)        (6,683)     (3,474)
                                                          ----------    -----------  ----------

Net increase (decrease) in cash and cash equivalents          1,384         (1,019)     (1,252)
Cash and cash equivalents, beginning of period                  653          1,672       2,924 
                                                          ----------     ----------  ----------
Cash and cash equivalents, end of period                  $   2,037    $       653   $   1,672 
                                                          ==========     ==========  ==========

SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION


                                                                      Year Ended
                                                          ------------------------------------
                                                           June 29,     June 30,     June 25,
                                                             1997         1996         1995 
                                                          ----------  ------------  ----------
<S>                                                       <C>         <C>           <C>

CASH PAYMENTS FOR:
     Interest                                             $     612   $       880   $   1,320 
     Income taxes                                               150           110          60 

NONCASH FINANCING AND INVESTING ACTIVITIES:
     Notes received upon sale of assets and area                  -             -         511 
        development territories
     Capital lease obligations incurred                           -           477         659 
<FN>

See  accompanying  Notes  to  Consolidated  Financial  Statements
</TABLE>


<PAGE>

                                PIZZA INN, INC.
                  NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



NOTE  A  -  ORGANIZATION  AND  SUMMARY  OF  SIGNIFICANT  ACCOUNTING  POLICIES:

DESCRIPTION  OF  BUSINESS:

Pizza  Inn, Inc. (the "Company"), a Missouri corporation incorporated in 1983,
is the successor to a Texas company of the same name which was incorporated in
1961.    The  Company  is  the franchisor and food and supply distributor to a
system  of  restaurants  operating  under  the  trade  name  "Pizza  Inn  ".

On  June  29,  1997 the Pizza Inn system consisted of 484 locations, including
five  Company  operated  units  and  479 franchised units.  They are currently
franchised  in 18 states and 19 foreign countries.  Domestic units are located
predominantly  in  the  southern  half of the United States, with Texas, North
Carolina  and  Arkansas  accounting  for  approximately  30%,  15%,  and  11%,
respectively,  of  the  total.    Norco Manufacturing and Distributing Company
("Norco"),  a  division  of the Company, distributes food products, equipment,
and  other supplies to units in the United States and, to the extent feasible,
in  other  countries.

PRINCIPLES  OF  CONSOLIDATION:

The  consolidated financial statements include the accounts of the Company and
its  wholly-owned  subsidiaries.    All  appropriate intercompany balances and
transactions  have  been  eliminated.    Certain  prior year amounts have been
reclassified  to  conform  with  current  year  presentation.

CASH  AND  CASH  EQUIVALENTS:

The Company considers all highly liquid investments purchased with an original
maturity  of  three  months  or  less  to  be  cash  equivalents.

RESTRICTED  CASH  AND  OTHER  SHORT-TERM  INVESTMENTS:

PIBCO, Ltd., a wholly owned insurance subsidiary of the Company, in the normal
course  of  operations,  arranged  for  the  issuance  of letters of credit to
reinsurers  to  secure  unearned premium and loss reserves.  At June 29, 1997,
these  letters  of  credit  were secured under the Company's revolving line of
credit.    At  June  30, 1996, time deposits and short-term investments in the
amount  of  $230,000  were pledged as collateral for these letters of credit. 
Unearned premium and loss reserves for approximately the same amount have been
recorded  by  PIBCO,  Ltd.  and  are  reflected  as current liabilities in the
Company's  financial  statements.

INVENTORIES:

Inventories,  which  consist  primarily  of food, paper products, supplies and
equipment  located  at  the  Company's  distribution center, are stated at the
lower  of  FIFO  (first-in,  first-out)  cost  or  market.

PROPERTY,  PLANT  AND  EQUIPMENT:

Property,  plant  and  equipment,  including property under capital leases, is
stated at cost less accumulated depreciation.  Depreciation is computed on the
straight-line  method  over  the useful lives of the assets or, in the case of
leasehold  improvements,  over  the term of the lease, if shorter.  The useful
lives  of  the  assets  range  from  seven  to  eight  years.


ACCOUNTS  RECEIVABLE:

Accounts  receivable  consist  primarily  of  receivables from food and supply
sales  and  accrued  franchise royalties.  The Company records a provision for
doubtful receivables to allow for any amounts which may be unrecoverable.  For
the  year ended June 29, 1997, a provision of $110,000 was included in cost of
sales in the statement of operations.  No provision was recorded for the years
ended  June  30,  1996  and  June  25,  1995.

NOTES  RECEIVABLE:

Notes  receivable primarily consist of notes from franchisees for the purchase
of  area  development  and  master  license territories and the refinancing of
existing trade receivables.  These notes generally have terms ranging from one
to five years, with interest rates of 8% to 12%.  The carrying amount of notes
receivable currently approximates fair value.  The Company records a provision
for doubtful receivables to allow for any amounts which may be unrecoverable. 
No provision was recorded for the years ended June 29, 1997, June 30, 1996 and
June  25,  1995.

INCOME  TAXES:

Under SFAS 109, deferred  tax  assets  and liabilities result from differences
between  the  financial  statement  carrying  amounts  of existing assets and 
liabilities compared to their respective tax bases.  Deferred tax assets  and 
liabilities are measured using enacted tax rates  expected to apply to taxable
income in the years in which those temporary differences are  projected to  be
recovered.

TREASURY  STOCK:

The  excess  of the cost of shares acquired for the treasury over par value is
allocated  to  additional  paid-in  capital  based  on the per share amount of
additional  capital  for  all  shares  in  the same issue, with any difference
charged  to  retained earnings.  All reacquired shares will be held in treasury
until  retired.

DISTRIBUTION  DIVISION  OPERATIONS:

The Company's Norco division sells food, supplies and equipment to franchisees
on trade accounts under terms common in the industry.  Revenue from such sales
is  recognized  upon  shipment.    Norco sales are reflected under the caption
"food  and  supply  sales."

FRANCHISE  REVENUE:

Franchise  revenue  consists  of income from license fees, royalties, and area
development  and  foreign  master  license (collectively, "Territory") sales. 
License  fees  are  recognized  as  income  when  there  has  been substantial
performance of the agreement by both the franchisee and the Company, generally
at  the  time  the  unit  is  opened.  Royalties are recognized as income when
earned.    For the years ended June 29, 1997, June 30, 1996 and June 25, 1995,
78%,  75%,  and  79%,  respectively,  of  franchise  revenue  was comprised of
recurring  royalties.

Territory sales are the fees paid by selected experienced restaurant operators
to  the  Company  for  the  right to develop Pizza Inn restaurants in specific
geographical  territories.    When  the  Company has no continuing substantive
obligations  of performance to the area developer or master licensee regarding
the  fee,  the  Company recognizes the fee to the extent of cash received.  If
continuing  obligations  exist,  fees  are  recognized  ratably  during  the
performance  of those obligations. Territory fees recognized as income for the
years  ended  June  29, 1997, June 30, 1996 and June 25, 1995 were $1,154,000,
$1,630,000  and  $1,054,000  respectively.

NON-RECURRING  GAIN:

During  the  year  ended  June 25, 1995, the Company settled certain sales and
property  tax  liabilities  for  amounts lower than previously estimated.  The
excess tax accruals, which had been classified as other long-term liabilities,
were  reversed  and  recorded  as  a  non-recurring  gain  in the statement of
operations.

NET  INCOME  PER  COMMON  SHARE:

Net  income  per common share is computed based on the weighted average number
of  common and equivalent shares outstanding during each period.  Common stock
equivalents  include  shares  issuable  upon  exercise  of the Company's stock
options.  For the years ended June 29, 1997, June 30, 1996, and June 25, 1995,
the  weighted  average  number  of  shares  considered  to be outstanding were
13,707,249  and  14,007,380  and  14,234,431,  respectively.    Fully  diluted
earnings  per  share  is  not  presented because the effect of considering any
potentially  dilutive  securities  is  immaterial.

DISCLOSURE  ABOUT  FAIR  VALUE  OF  FINANCIAL  INSTRUMENTS:

The carrying amounts of short-term investments, accounts and notes receivable,
and  debt  approximate  fair  value.

USE  OF  MANAGEMENT  ESTIMATES:

The  preparation of financial statements in conformity with generally accepted
accounting  principles  requires  management to make estimates and assumptions
that  affect  the  reported  amounts  of  assets  and liabilities, and related
revenues  and  expenses  and  disclosure of gain and loss contingencies at the
date  of  the  financial  statements.   Actual results could differ from those
estimates.

FISCAL  YEAR:

The  Company's fiscal year ends on the last Sunday in June.  Fiscal year ended
June 29, 1997 contained 52 weeks, fiscal year ended June 30, 1996 contained 53
weeks,  and  fiscal  year  ended  June  25,  1995  contained  52  weeks.

NEW  PRONOUNCEMENTS:

In  June  1997,  the  Financial  Accounting  Standards  Board issued SFAS 130,
"Reporting  Comprehensive  Income",  and SFAS 131, "Disclosures About Segments
of  an  Enterprise  and  Related  Information", which are effective for fiscal
years beginning after December 15, 1997.  The adoption of these pronouncements
is  not  expected  to  have  a  significant  effect  on  the  Company.
<PAGE>
NOTE  B  -  PROPERTY,  PLANT  AND  EQUIPMENT:

Property,  plant  and equipment and assets under capital leases consist of the
following  (in  thousands):
<TABLE>

<CAPTION>

                                    June 29,    June 30,
                                      1997        1996
                                   ----------  ----------
<S>                                <C>         <C>

Property, plant and equipment:
Equipment, furniture and fixtures  $   3,732   $   3,337 
Leasehold improvements                 1,224         992 
                                   ----------  ----------
                                       4,956       4,329 
Less: accumulated depreciation        (2,912)     (2,463)
                                   ----------  ----------
                                   $   2,044   $   1,866 
                                   ==========  ==========
Assets under capital leases:
Real Estate                        $     118   $     118 
Equipment                              1,396       1,396 
                                   ----------  ----------
                                       1,514       1,514 
Less: accumulated amortization          (580)       (407)
                                   ----------  ----------
                                   $     934   $   1,107 
                                   ==========  ==========
</TABLE>


Depreciation  and amortization expense was $707,000, $595,000 and $508,000 for
the years ended June 29, 1997, June 30, 1996, and June 25, 1995, respectively.

NOTE  C  -  ACCRUED  EXPENSES:
Accrued expenses consist of the following (in thousands):

<TABLE>

<CAPTION>

                                 June 29,   June 30,
                                   1997       1996
                                 ---------  ---------
<S>                              <C>        <C>

Compensation                     $   1,145  $   1,295
Taxes other than income                206        222
Insurance loss reserves                183        239
Legal and other professional fees      309        241
Deferred franchise revenue             624        772
Other                                  450        389
                                 ---------  ---------
                                 $   2,917  $   3,158
                                 =========  =========
</TABLE>


NOTE  D  -  LONG-TERM  DEBT:

The  following  table  summarizes  the  components  of  long-term  debt  (in
thousands):
<TABLE>

<CAPTION>

                                                June 29,    June 30,
                                                  1997        1996
                                               ----------  ----------
<S>                                            <C>         <C>

Note payable under a term loan facility        $       -   $   8,910 
Note payable under a revolving line of credit      6,910           - 
                                               ----------  ----------
                                               $   6,910   $   8,910 
Less current portion                                   -     ( 2,000)
                                               ----------  ----------
                                               $   6,910   $   6,910 
                                               ==========  ==========
</TABLE>


In  December  1994,  the  Company  entered  into  a  loan agreement (the "Loan
Agreement")  with  two  banks,  in  which  the Company refinanced its existing
indebtedness  of $14 million under a term loan facility which was to mature in
November  1998.    The Loan Agreement also provided for a $1 million revolving
credit  line, which was renewable in November 1997.  Interest on both the term
loan and the revolving credit line was payable monthly.  Interest was provided
for  at  a rate equal to prime plus an interest rate margin from 0.5% to 1.25%
or,  at the Company's option, at the Eurodollar rate plus 1.25% to 2.25%.  The
interest  rate  margin  was  based  on the Company's performance under certain
financial ratio tests.  A 0.5% annual commitment fee was payable on any unused
portion  of  the  revolving  credit  line.  As of June 29, 1997, the Company's
effective  interest  rate  was  6.94%  (with  a  Eurodollar  rate  basis).

Principal  payments  on  the  term loan were payable quarterly, with a balloon
payment  due  at  the end of the term.  The Loan Agreement contained covenants
which,  among  other things, required the Company to satisfy certain financial
ratios  and  restricted  additional debt and payment of dividends.  As of June
29,  1997,  the Company was in compliance with all of its debt covenants.  The
indebtedness  was  secured  by  essentially  all  of  the  Company's  assets.

In  August 1997, the Company signed a new agreement (the "New Loan Agreement")
with  its  current lender, Wells Fargo, to refinance its existing debt under a
new  revolving  credit  facility.   The new $9.5 million revolving credit line
combines  the  Company's  existing  $6.9 million term loan with its $1 million
revolving  credit  line,  plus  an  additional  $1.6  million revolving credit
commitment.    The revolving credit note matures in August 1999 and is secured
by  essentially  all  of  the  Company's  assets.

Interest  on  the  revolving  credit  line  is  payable  monthly.  Interest is
provided  for at a rate equal to prime plus an interest rate margin from -1.0%
to  0.0%  or,  at  the  Company's option, at the Eurodollar rate plus 1.25% to
2.25%.    The interest rate margin is based on the Company's performance under
certain financial ratio tests.  A 0.5% annual commitment fee is payable on any
unused  portion  of  the  revolving  credit  line.

The  New Loan Agreement contains covenants which, among other things, require
the Company to satisfy certain financial ratios and restrict additional debt. 
In  accordance with SFAS 6, "Classification of Short-Term Obligations Expected
to  be Refinanced", the entire balance outstanding under the Loan Agreement at
June  29,  1997  has been classified as long-term to reflect the provisions of
the  New  Loan  Agreement.

NOTE  E  -  INCOME  TAXES:

As  discussed  in Note A, the Company adopted SFAS 109, "Accounting for Income
Taxes",  effective  June  28, 1993, which changed its method of accounting for
income taxes from the deferred method to the liability method.  The cumulative
effect  of adoption of SFAS 109 was a balance sheet benefit of $15.4 million. 
At  June  29,  1997,  the  deferred  tax  asset  balance  was  $8.5  million.

Income tax expense for the three years ended June 29, 1997, June 30, 1996, and
June  25,  1995,  is computed by applying the applicable U.S. corporate income
tax  rate  of  34%  to  net  income  before  income  taxes.

Income tax expense consists of the following(in thousands):

<TABLE>

<CAPTION>

                                      Year Ended
                            -------------------------------
                            June 29,   June 30,   June 25,
                              1997       1996       1995
                            ---------  ---------  ---------
<S>                         <C>        <C>        <C>

Federal:
     Current                $     137  $     118  $      97
     Deferred                   2,195      1,895      1,550
                            ---------  ---------  ---------
Provision for income taxes  $   2,332  $   2,013  $   1,647
                            =========  =========  =========
</TABLE>

The  tax  effects of temporary differences which give rise to the net deferred
tax  assets  (liabilities)  consisted  of  the  following  (in  thousands):
<TABLE>

<CAPTION>
                               Year Ended
                          ------------------------
                           June 29,    June 30,   
                             1997        1996     
                          ----------  ----------  
<S>                       <C>         <C>         

Reserve for bad debt      $     422   $     368    
Depreciable assets              423         378    
PIBCO reserves                   84         113    
Deferred fees                   204         261    
Other reserves                 (221)         (6)   
NOL carryforwards             7,013       9,130    
Credit carryforwards          1,944       1,820    
                          ----------  ----------  

Gross deferred tax asset  $   9,869   $  12,064    

Valuation allowance          (1,377)     (1,377)
                          ----------  ----------

Net deferred tax asset    $   8,492   $  10,687
                          ==========  ==========
</TABLE>


As  of  June  29,  1997,  the  Company had $20.6 million of net operating loss
carryforwards  that  expire  in  2005.    The Company also had $1.5 million of
general  business  credit  carryforwards  expiring  between  1998 and 2001 and
$444,000 of minimum tax credits that can be carried forward indefinitely.  The
valuation  allowance  was  established  upon adoption of SFAS 109, since it is
more  likely  than  not  that  a  portion  of  the  general  business  credit
carryforwards  will  expire  before  they  can  be  utilized.

Under  the  Internal  Revenue  Code, the utilization of net operating loss and
credit  carryforwards  could be limited if certain changes in ownership of the
Company's Common Stock were to occur.  The Company's Articles of Incorporation
contain  certain restrictions which are intended to reduce the likelihood that
such  changes  in  ownership  would  occur.

NOTE  F  -  LEASES:

All  of  the  real  property  occupied  by the Company operated restaurants is
leased  for  initial  terms ranging from five to 25 years with renewal options
ranging  from  five  to 15 years.  Most of the lease agreements contain either
provisions  requiring  additional  rent  if sales exceed specified amounts, or
escalation  clauses  based  on  changes  in  the  Consumer  Price  Index.

The  Company  leases  23,402  square  feet  in Dallas, Texas for its corporate
office  and 76,700 square feet in Grand Prairie, Texas for its Norco warehouse
and office facilities.  The leases expire in 2003 and 2001, respectively.  The
Company  also  leases  2,736  square  feet  in Addison, Texas for its training
facility  with  a  term  expiring  in  2001.

The  Company's distribution division currently leases a significant portion of
its transportation equipment under leases with terms from five to seven years.
Some  of  the leases include fair market value purchase options at the end of
the  term.


<PAGE>
Future  minimum  rental  payments  under non-cancelable leases with initial or
remaining  terms  of  one  year  or  more  at June 29, 1997 are as follows (in
thousands):
<TABLE>

<CAPTION>

                                           Capital   Operating
                                           Leases      Leases
                                          ---------  ----------
<S>                                       <C>        <C>

1998                                      $    193   $      806
1999                                           193          723
2000                                           193          712
2001                                           193          581
2002                                           310          475
Thereafter                                     222          480
                                          ---------  ----------
                                          $  1,304   $    3,777
                                                     ==========
Less amount representing interest             (310)
                                          ---------            
Present value of total obligations under
     capital leases                            994 
Less current portion                          (115)
                                          ---------            
Long-term capital lease obligations       $    879 
                                          =========            
</TABLE>

Rental  expense  consisted  of  the  following  (in  thousands):
<TABLE>

<CAPTION>

                                   Year Ended              
                      -------------------------------------
                      June 29,      June 30,      June 25,
                        1997          1996          1995
                    ------------  ------------  ------------
<S>                 <C>           <C>           <C>

Minimum rentals     $     1,117   $     1,068   $     1,053 
Contingent rentals           11            11             8 
Sublease rentals            (90)         (127)         (166)
                    ------------  ------------  ------------
                    $     1,038   $       952   $       895 
                    ============  ============  ============
</TABLE>



NOTE  G  -  EMPLOYEE  BENEFITS:

 The  Company  has a tax advantaged savings plan which is designed to meet the
requirements of Section 401(k) of the Internal Revenue Code.  The current plan
is  a  modified  continuation  of  a  similar  savings plan established by the
Company  in  1985.  Employees who have completed six months of service and are
at  least  21  years of age are eligible to participate in the plan.  The plan
provides  that participating employees may elect to have between 1% and 15% of
their compensation deferred and contributed to the plan.  Effective January 1,
1993,  the  Company  contributes  on  behalf of each participating employee an
amount  equal  to  50%  of  the  first 3% and 25% of next 3% of the employee's
contribution.   Separate accounts are maintained with respect to contributions
made  on  behalf  of  each participating employee.  The plan is subject to the
provisions  of  the  Employee  Retirement  Income Security Act and is a profit
sharing  plan  as  defined  in  Section  401  of the Code.  The Company is the
administrator  of  the  plan.    Employees  may  direct  investment  of  all
contributions  to  a variety of funds or to purchase shares of Common Stock of
the  Company.

For  the  years  ended  June  29, 1997, June 30, 1996 and June 25, 1995, total
matching  contributions  to  the tax advantaged savings plan by the Company on
behalf  of  participating  employees  were  $58,774,  $60,394  and  $56,738,
respectively.



NOTE  H  -  STOCK  OPTIONS:

On September 1, 1992, the Company adopted the 1992 Stock Award Plan (the "1992
Plan").  All officers, employees and elected outside directors are eligible to
participate.   The Company's 1992 Plan is a combined nonqualified stock option
and  stock  appreciation rights arrangement.  A total of two million shares of
Pizza  Inn,  Inc.  Common Stock were originally authorized to be awarded under
the  1992  Plan.    A total of 973,073 options were actually granted under the
1992  Plan  through December 1993.  In January 1994, the 1993 Stock Award Plan
(the  "1993  Plan")  was  approved  by  the Company's shareholders with a plan
effective date of October 13, 1993.  Officers and employees of the Company are
eligible to receive stock options under the 1993 Plan.  Options are granted at
market value of the stock on the date of grant, are subject to various vesting
and  exercise  periods, and may be designated as incentive options (permitting
the  participant  to  defer  resulting  federal income taxes).  A total of two
million  shares  of Common Stock were originally authorized to be issued under
the  1993  Plan.    In  December  1996, the Company's shareholders approved an
amendment  to  the 1993 plan increasing by 500,000 shares the aggregate number
of  shares  of  common  stock  issuable  under  the  plan.

The  1993  Outside  Directors Stock Award Plan (the "1993 Directors Plan") was
also  adopted  by the Company effective as of October 13, 1993.  Directors who
are  not  employed  by the Company are eligible to receive stock options under
the  1993  Directors Plan.  Options are granted, up to 20,000 shares per year,
to  each  outside director who purchased a matching number of shares of Common
Stock of the Company during the preceding year.  Options are granted at market
value of the stock on the first day of the fiscal year, which is also the date
of grant, and are subject to various vesting and exercise periods.  A total of
200,000 shares of Company Common Stock are authorized to be issued pursuant to
the  1993  Directors  Plan.

During  the  year  ended  June 25, 1995, the Company canceled certain employee
options  and  granted  replacement options at the then current market value of
the  stock.    In  December 1994 and June 1995, 781,500 and 1,446,500 of these
options,  respectively, were canceled and an equal number were granted.  These
transactions  are  reflected  in  shares granted and in shares canceled in the
schedule  below.

A  summary  of  stock  option  transactions  under both of the Company's stock
option  plans  and  information  about  fixed-price  stock  options  follows:

Summary of Stock Option Transactions

<TABLE>

<CAPTION>

                                              June 29, 1997            June 30, 1996               June 25, 1995        
                                       ------------------------  -----------------------    --------------------------  
                                                      Weighted-                Weighted-                    Weighted-
                                                       Average                  Average                      Average
                                                      Exercise                 Exercise                     Exercise
                                          Shares        Price      Shares        Price       Shares            Price    
                                       -----------   ----------  -----------  ------------   ------------  -----------  
<S>                                    <C>         <C>          <C>          <C>            <C>            <C>         

Outstanding at beginning of year          2,608,356   $    2.82   2,181,073    $     2.22     1,563,573     $     2.68  

Granted                                     876,783        3.56     781,283          4.06     3,053,500           2.68
Exercised                                  (266,500)       1.90    (291,500)         1.70      (121,000)          1.47
Canceled                                    (75,000)       3.74     (62,500)         2.50    (2,315,000)          3.18
                                          -----------             -----------               -------------              
Outstanding at end of year                3,143,639   $    3.08    2,608,356   $     2.82     2,181,073    $      2.22
                                          ===========  ========== ==========   ===========  =============  ============

Exercisable at end of year                2,076,856   $    2.84    1,625,856   $     2.27       608,073    $      1.41

Weighted-average fair value of
  options granted during the year                     $     .89                $     1.21 
                                                       

Fixed Price Stock Options

                                  Options Outstanding                            Options Exercisable
                     -----------------------------------------------      ------------------------------------
<S>                  <C>             <C>            <C>                   <C>                <C>              

                                      Weighted-
                                       Average
                         Shares       Remaining        Weighted-            Shares              Weighted-
    Range of         Outstanding     Contractual        Average           Exercisable            Average
Exercise  Prices      at 6/29/97      Life(Years)    Exercise Price        at 6/29/97         Exercise Price
------------------   -------------   --------------  ----------------      --------------    -----------------
<S>                  <C>             <C>            <C>                   <C>                <C>              

$ 1.13 - $2.25             226,250             0.86  $          1.26              226,250     $          1.26
$ 1.75 - $3.94              20,323             2.48             3.87               20,323                3.87
$ 2.50 - $3.25           1,312,783             2.88             2.52            1,242,783                2.53
$ 2.69 - $4.13             707,500             5.52             4.09              587,500                4.08
$ 3.44 - $4.63             876,783             6.73             3.56                    0                   -
                      ------------                                         --------------    
$ 1.13 - $4.63           3,143,639             4.40   $         3.08            2,076,856     $          2.84
                      ============                                         ==============

</TABLE>


Pro  forma information regarding net income and earnings per share is required
to be determined as if the Company had accounted for its stock options granted
subsequent  to  June  25,  1995  under  the  fair  value  method  of SFAS 123,
"Accounting  for Stock-Based Compensation".  The fair value of options granted
in  fiscal  1996  and  1997  was  estimated  at  the  date  of  grant  using a
Black-Scholes  option  pricing  model  with  the  following  weighted  average
assumptions:    risk-free  interest  rates ranging from 5.5% to 6.5%, expected
volatility  of  43.9%  to  50.8%,  expected dividend yield of 5.2% to 8.9% and
expected  lives  of  2  to  6  years.

For  purposes  of pro forma disclosures, the estimated fair value of the stock
options  is  amortized  over  the  options vesting periods.  The Company's pro
forma  information  follows  (in  thousands  except  for  earnings  per  share
information):
<TABLE>

<CAPTION>
                                  June 29, 1997               June 30, 1996 
                            ------------------------    ------------------------  
                            As Reported    Pro Forma    As Reported    Pro Forma
                            -----------    ---------    -----------    ---------
<S>                         <C>            <C>          <C>            <C>       

        Net Income           $    4,528     $  3,981     $    3,908    $   3,891

        Earnings Per Share   $     0.33     $   0.29     $     0.28    $    0.28
</TABLE>


The  effects  of  applying  SFAS  123  in  this  pro  forma disclosure are not
indicative of future amounts as the pro forma amounts above do not include the
impact  of  stock option awards granted prior to June 25, 1995, and additional
awards  are  anticipated  in  future  years.

NOTE  I  -  COMMITMENTS  AND  CONTINGENCIES:

The  Company  is  subject  to  various  claims  and  contingencies  related to
employment  agreements,  lawsuits,  taxes, food product purchase contracts and
other  matters  arising in the normal course of business.  Management believes
that  any  liabilities  arising from these claims and contingencies are either
covered  by  insurance  or  would  not  have  a material adverse effect on the
Company's  annual  results  of  operations  or  financial  condition.







NOTE  J  -  RELATED  PARTIES:

One  of  the  individuals nominated by the Company and elected to serve on its
Board  of  Directors  is  a  franchisee.  This franchisee currently operates a
total of 20 restaurants located in Arkansas, Texas and Missouri.  Purchases by
this  franchisee  made  up 7% of the Company's food and supply sales in fiscal
1997.    Royalties  and  license  fees  from this franchisee made up 4% of the
Company's  franchise  revenues  in  fiscal  1997.    As  franchised units, his
restaurants pay royalties to the Company and purchase a majority of their food
and  supplies  from  the  Company's  distribution  division.

The Company believes the above transactions were at the same prices and on the
same  terms  available  to  non-related  third  parties.

NOTE  K  -  TREASURY  STOCK:

In January 1995, the Company implemented an odd lot buy-back program, in which
the  Company  offered  to  purchase  its Common Stock for $3.50 per share from
shareholders  who  owned less than 100 shares.  The program was implemented in
order  to  reduce  future  administrative  costs  related to small shareholder
accounts.    The  program,  which was completed in March 1995, resulted in the
purchase  of  18,898 shares from 675 shareholders, at a total cost of $66,143.

On  April 28, 1995, the Company signed an agreement to purchase 662,094 shares
of  its  Common  Stock  held  by  a  former  lender.    Under the terms of the
agreement,  the  Company  paid $1,100,000 to purchase 400,000 of the shares on
April  28, 1995.  The Company had the option to purchase the remaining 262,094
shares  for  a price of $596,285 on or before June 30, 1995, or for a price of
$720,758  between July 1 and September 30, 1995. On June 30, 1995, the Company
exercised  its  option to purchase the remaining 262,094 shares for a price of
$596,285.    These  common  shares  had  been  issued  to the former lender in
September  1993,  in exchange for 1,655,235 shares of the Company's redeemable
preferred  stock.    The redeemable preferred stock had been issued during the
period  of  September  1990  through  August  1992,  in  lieu of $1,655,235 in
interest  payments  on  the  Company's  term  loan.

In  July  1996, in order to further reduce future administrative costs related
to  small  shareholder  accounts,  the  Company  implemented  another  odd lot
buy-back  program  to  purchase  Common  Stock  for  $5.25  per  share  from
shareholders  who  own  less than 100 shares.  Under this program, the Company
purchased  8,149  shares  at  a  total  cost  of  $42,782.

For  the  period  of  September  1995 through June 1997, the Company purchased
1,100,700  shares of its own Common Stock from time to time on the open market
at  a  total  cost  of  $5  million.

The  purchases  of  common  shares  described  above  were funded from working
capital,  and  reduced the Company's outstanding shares by approximately 12%. 
The  Company  plans  to  retire  the  shares  at  the  earliest  opportunity.

NOTE  L  -  EARNINGS  PER  SHARE:

In  February  1997,  the Financial Accounting Standards Board issued SFAS 128,
"Earnings  per  Share", which is effective for financial statements issued for
periods  ending after December 15, 1997, including interim periods.  Effective
December  28,  1997,  the  Company  will  adopt  SFAS  128,  which establishes
standards  for  computing  and  presenting  earnings  per  share  (EPS).   The
statement  requires  dual presentation of basic and diluted EPS on the face of
the income statement for entities with complex capital structures and requires
a  reconciliation  of  the  numerator  and  denominator  of  the  basic  EPS
computation, to the numerator and denominator of the diluted EPS calculation. 
Basic EPS excludes the effect of potentially dilutive securities while diluted
EPS  reflects  the  potential dilution that would occur if securities or other
contracts  to issue common stock were exercised, converted into or resulted in
the  issuance of common stock that then shared in the earnings of the entity. 
The  pro  forma  EPS  amounts  shown  below  have been calculated assuming the
Company  had  already  adopted  the  provisions  of  this  statement.

<TABLE>

<CAPTION>

                                   Year Ended              
                    ----------------------------------------
                      June 29,      June 30,      June 25,
                        1997          1996          1995
                    ------------  ------------  ------------
<S>                 <C>           <C>           <C>

       Basic EPS     $     .35     $       .30   $       .24

       Diluted EPS         .33             .28           .22

</TABLE>

NOTE  M  -  SUBSEQUENT  EVENTS  (UNAUDITED):

In  July  1997,  the  Company  repurchased the area development rights for the
majority of Tennessee and Kentucky, for a cash price of $986,000.  Restaurants
operating or developed in the repurchased territory will now pay all royalties
and  franchise  fees  directly  to  Pizza  Inn,  Inc.

In August 1997, the Company's Board of Directors declared a quarterly dividend
of  $0.06 per share on the Company's common stock, payable October 24, 1997 to
shareholders  of  record  on  October  10,  1997.


NOTE  N  -  QUARTERLY  RESULTS  OF  OPERATIONS  (UNAUDITED):

The following summarizes the unaudited quarterly results of operations for the
fiscal  years  ended June 29, 1997 and June 30, 1996 (in thousands, except per
share  amounts):

<TABLE>

<CAPTION>

                                                Quarter Ended
                            ----------------------------------------------------
                            September 29,   December 29,   March 30,   June 29,
                                 1996           1996          1997       1997
                            --------------  -------------  ----------  ---------
<S>                         <C>             <C>            <C>         <C>

FISCAL YEAR 1997

Revenues                    $       17,734  $      17,559  $   16,503  $  17,327

Gross Profit                         2,140          2,077       2,159      2,133

Net Income                             996          1,165       1,076      1,291

Primary earnings per share            0.07           0.08        0.08       0.10
   on net income


                                                Quarter Ended
                            ----------------------------------------------------
                             September 24,   December 24,   March 24,   June 30,
                                 1995           1995          1996        1996
                            --------------  -------------  ----------  ---------
<S>                         <C>             <C>            <C>         <C>

FISCAL YEAR 1996

Revenues                    $       16,152  $      16,894  $   16,557  $  19,838

Gross Profit                         1,629          1,758       1,788      2,309

Net Income                             793            975         920      1,220

Primary earnings per share            0.06           0.07        0.07       0.09
   on net income

</TABLE>

<PAGE>

<TABLE>

                                                                           SCHEDULE II
                                  PIZZA INN, INC.
                     CONSOLIDATED VALUATION AND QUALIFYING ACCOUNTS
                                  (In thousands)

<CAPTION>
                                               Additions
                                       -----------------------
                          Balance at   Charged to   Charged to                    Balance at
                           beginning    cost and       other                          end
                           of period     expense     accounts    Deductions (1)    of period
                          -----------  -----------  -----------  ---------------  -----------
<S>                       <C>          <C>          <C>          <C>              <C>

YEAR ENDED JUNE 29, 1997
Allowance for doubtful    $       963  $       110  $         -  $           (48) $     1,121
 accounts and notes

YEAR ENDED JUNE 30, 1996
Allowance for doubtful          1,318            -            -              355  $       963
 accounts and notes

YEAR ENDED JUNE 25, 1995
Allowance for doubtful          1,386            -            -               68  $     1,318
accounts and notes
<FN>

(1)  Write-off  of  receivables,  net  of  recoveries.
</TABLE>

<PAGE>
ITEM  9  -  CHANGES  IN  AND  DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL  DISCLOSURE

     There  are  no  events  to  report  under  this  item.


 PART  III


ITEM  10  -  DIRECTORS  AND  EXECUTIVE  OFFICERS  OF  THE  REGISTRANT

     The  information  required  by  this  Item  is  included in the Company's
definitive  Proxy  Statement  to  be  filed  pursuant  to  Regulation  14A  in
connection  with  the  Company's  annual meeting of shareholders to be held in
December  1997  (the  "Proxy  Statement"),  and  is  incorporated  herein  by
reference.



ITEM  11  -  EXECUTIVE  COMPENSATION

     The  information required by this Item is included in the Proxy Statement
and  is  incorporated  herein  by  reference.



ITEM  12  -  SECURITY  OWNERSHIP  OF  CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

     The  information required by this Item is included in the Proxy Statement
and  is  incorporated  herein  by  reference.



ITEM  13  -  CERTAIN  RELATIONSHIPS  AND  RELATED  TRANSACTIONS

     The  information required by this Item is included in the Proxy Statement
and  is  incorporated  herein  by  reference.


<PAGE>
                                   PART IV

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


        1.           The financial statements filed as part of this report are
                     listed in the Index to Financial Statements and Schedules
                     under   Part   II,   Item   8   of   this   Form    10-K.

        2.           The financial  statement schedules filed as part of this 
                     report are listed  in  the  Index to Financial Statements
                     and  Schedules under Part II, Item 8 of  this  Form 10-K.

        3.           Exhibits:

        3.1          Restated  Articles of Incorporation as filed on September
                     5, 1990  and  amended   on   February  16, 1993 (filed as
                     Exhibit 3.1 to the  Company's Annual Report on  Form 10-K
                     for the fiscal year ended June 27, 1993 and  incorporated
                     herein by reference).

        3.2          Amended  and  Restated By-Laws as adopted by the Board of
                     Directors on July  30, 1993 (filed  as Exhibit 3.2 to the
                     Company's Annual Report  on Form 10-K for the fiscal year
                     ended June 27,1993 and incorporated herein by reference).

        4.1          Provisions  regarding  Common  Stock in Article IV of the
                     Restated  Articles  of  Incorporation,  as amended (filed
                     as Exhibit 3.1 to this  Report  and  incorporated  herein
                     by  reference).

        4.2          Provisions   regarding  Redeemable   Preferred  Stock  in
                     Article V of the Restated Articles  of  Incorporation, as
                     amended  (filed  as  Exhibit 3.1  to  this   Report   and
                     incorporated  herein  by  reference).

        10.1         Loan Agreement among the Company and Wells Fargo (Texas),
                     N.A.  dated  August  28,  1997.

        10.2         Stock   Purchase   Agreement   between  the  Company  and
                     Kleinwort Benson  Limited  dated April 28, 1995 (filed as
                     Exhibit 10.14 to the Company's  Quarterly  Report on Form
                     10-Q for  the  fiscal  quarter  ended  March 26, 1995 and
                     incorporated  herein  by  reference).

        10.3         Redemption  Agreement  between  the Company and Kleinwort
                     Benson  Limited  dated  June  24, 1994  (filed as Exhibit
                     10.4 to the Company's  Annual Report on Form 10-K for the
                     fiscal  year ended June 26, 1994 and incorporated  herein
                     by  reference).

        10.4         Employment  Agreement between the Company and C. Jeffrey
                     Rogers  dated July 1, 1994 (filed as Exhibit 10.7 to the
                     Company's Annual Report on Form 10-K for the fiscal year
                     ended  June  26,  1994  and  incorporated   herein   by 
                     reference).*

        10.5         Form  of Executive  Compensation  Agreement  between the
                     Company and certain executive officers (filed as Exhibit
                     10.8 to the Company's Annual Report on Form 10-K for the
                     fiscal  year ended June 26, 1994 and incorporated herein
                     by reference).*

        10.6         1993  Stock  Award Plan  of the Company (filed as Exhibit
                     10.9 to the Company's Annual  Report on Form 10-K for the
                     fiscal year ended  June 26,1994 and  incorporated  herein
                     by  reference).*

        10.7         1993  Outside  Directors  Stock Award Plan of the Company
                     (filed as Exhibit  10.10 to the  Company's  Annual Report
                     on Form 10-K for the  fiscal  year ended  June  26,  1994
                     and  incorporated  herein  by  reference).*

        10.8         1992 Stock  Award  Plan  of the Company (filed as Exhibit
                     10.6 to the Company's Annual  Report on Form 10-K for the
                     fiscal year ended  June 27, 1993 and incorporated  herein
                     by  reference).*

        11.0         Computation  of  Net  Income  Per  Share.

        21.0         List  of  Subsidiaries  of the  Company (filed as Exhibit
                     21.0 to the Company's  Annual Report on Form 10-K for the
                     fiscal year ended  June 26,1994  and incorporated  herein
                     by  reference).

        23.0         Consent  of  Independent  Accountants.

*      Denotes a management contract or compensatory plan or arrangement filed
pursuant  to  Item  14  (c)  of  this  report.

(b)         No reports were filed on Form 8-K during the fourth quarter of the
Company's  fiscal  year  1997.

<PAGE>
                                  SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange
Act  of  1934,  the  Company  has  duly caused this report to be signed on its
behalf  by  the  undersigned,  thereunto  duly  authorized.

Date:      September  26,  1997          By:  /s/ Elizabeth D. Reimer
                                              Elizabeth  D.  Reimer
                                              Controller  and  Treasurer
                                              (Principal  Accounting  Officer)

Pursuant  to  the  requirements  of  the Securities Exchange Act of 1934, this
report  has  been  signed by the following persons on behalf of the Registrant
and  in  the  capacities  and  on  the  dates  indicated.

                                  NAME AND POSITION                    DATE

/s/Steve  A.  Ungerman                                    September  26,  1997
Steve  A.  Ungerman
Director  and  Chairman  of  the  Board

/s/C.  Jeffrey  Rogers                                    September  26,  1997
C.  Jeffrey  Rogers
Director,  Vice  Chairman,  President  and
Chief  Executive  Officer
(Principal  Executive  Officer)

/s/Don  G.  Navarro                                       September  26,  1997
Don  G.  Navarro
Director

/s/Ramon  D.  Phillips                                    September  26,  1997
Ramon  D.  Phillips
Director

/s/F.  Jay  Taylor                                        September  26,  1997
F.  Jay  Taylor
Director

/s/Bobby  L.  Clairday                                    September  26,  1997
Bobby  L.  Clairday
Director

/s/Ronald  W.  Parker                                     September  26,  1997
Ronald  W.  Parker
Director,  Executive  Vice  President  and
Chief  Operating  Officer
(Principal  Financial  Officer)

<PAGE>