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                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                    FORM 10-Q


  X Quarterly Report Pursuant to Section 13 or 15(d) of the Securities Exchange
    Act of 1934

For the quarter ended April 23, 2000         Commission File Number 333-90817



                                  SBARRO, INC.
             (Exact name of registrant as specified in its Charter)


           NEW YORK                                       11-2501939
  (State or other jurisdiction of                 (I.R.S. Employer I.D. No.)
  incorporation or organization)

 401 Broad Hollow Road, Melville, New York                    11747
    (Address of principal executive offices)              (Zip Code)

Registrant's telephone number, including area code:           (631) 715-4100

         Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the  Securities  Exchange  Act of
1934 during the  preceding  12 months,  and (2) has been  subject to such filing
requirements for the past 90 days.

Yes      X                 No

The Company has been  required to file reports since April 24, 2000 but has been
required  to or has been  voluntarily  filing  reports for more than the past 12
months.

The number of shares of Common Stock of the registrant outstanding as of June 1,
2000 was 7,064,328.
<PAGE>

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









                                  SBARRO, INC.

                                 FORM 10-Q INDEX



PART I.     FINANCIAL INFORMATION                                      PAGES


Consolidated Financial Statements:

         Balance Sheets - April 23, 2000 (unaudited) and
          January 2, 2000. . . . . . . . . . . . . . . . . . . . . . . . 3-4

         Statements of Operations (unaudited) - Sixteen Weeks
          ended April 23, 2000 and April 25, 1999  . . . . . . . . . . . . 5

         Statements of Cash Flows (unaudited) - Sixteen Weeks
           ended April 23, 2000 and April 25, 1999 . . . . . . . . . . . 6-7

         Notes to Unaudited Consolidated Financial Statements
           - April 23, 2000 . . . . . . . . . . . . . . . . . . . . . .  8-20

Management's Discussion and Analysis of Financial Condition and
             Results of Operations  . . . . . . . . . . . . . . . . . . 21-27


PART II.    OTHER INFORMATION . . . . . . . . . . . . . . . . . . . . . . .28
            -----------------














                                      Pg. 2

<PAGE>

                          SBARRO, INC. AND SUBSIDIARIES

                           CONSOLIDATED BALANCE SHEETS

                                     ASSETS
<TABLE>
<CAPTION>
                                                                      (In thousands except per share data)
                                                              April 23, 2000              January 2, 2000
                                   (unaudited)
Current assets:
<S>                                                                <C>                              <C>
     Cash and cash equivalents                                     $15,569                          $33,514
     Restricted cash for untendered shares (Note 2)                    220                              298
     Receivables; net of allowance for doubtful
        accounts of $292 and $419, respectively
       Franchisees                                                   1,245                            1,429
       Taxes                                                         1,924                             -
       Other                                                         3,064                            2,938
                                                              ---------------                --------------

                                                                     6,233                            4,367

     Inventories                                                     3,079                            3,686

     Prepaid expenses                                                3,593                            1,905
                                                              ---------------                 -------------

       Total current assets                                         28,694                           43,770

Property and equipment, net                                        137,012                          137,232

Other assets:

     Excess of purchase price over the cost
        of net assets acquired, net of
        accumulated amortization of
       $4,312 and $2,000, respectively (Note 2)                    218,442                          220,681
     Deferred financing costs, net of
       accumulated amortization of $601
       and $277, respectively (Note 3)                               9,229                            9,553
     Loan receivable from officer (Note 4)                           2,000                                -
     Other assets                                                    6,647                            6,597
                                                                -----------                     -----------
                                                                  $402,024                         $417,833
                                                                ===========                     ===========
</TABLE>

                                   (continued)


                                      Pg. 3

<PAGE>

                          SBARRO, INC. AND SUBSIDIARIES

                     CONSOLIDATED BALANCE SHEETS (CONTINUED)

                      LIABILITIES AND SHAREHOLDERS' EQUITY

<TABLE>
<CAPTION>

                                                                (In thousands except per share data)
                                                              April 23, 2000              January 2, 2000
                                                                 (unaudited)
Current liabilities:
     <S>                                                                <C>                                <C>
     Amounts due for untendered shares(Note 2)                      $220                               $298
     Accounts payable                                              5,763                              9,673
     Accrued expenses                                             28,418                             32,409
     Accrued interest payable(Note 3)                              3,195                              7,480
     Current portion of mortgage payable                             123                                -
     Income taxes payable(Note 4)                                     -                                 754
                                                                ------------                     ----------

       Total current liabilities                                  37,719                             50,614


Deferred income taxes(Note 5)                                        -                                5,629

Long-term debt, net of original issue
     discount(Note 3)                                            251,427                            251,310

Mortgage payable, net of current
     portion (Note 3)                                             15,877                               -

Shareholders' equity (Note 2):
     Preferred stock, $1 par value; authorized
       1,000,000 shares; none issued                                -                                   -
     Common stock, $.01 par value; authorized
       40,000,000 shares; issued and outstanding
       7,064,328 shares at April 23, 2000 and
       January 2, 2000                                                 71                                71
     Additional paid-in capital                                        10                                10
     Retained earnings                                             96,920                           110,199
                                                               -----------                       ----------
                                                                   97,001                           110,280
                                                               -----------                       ----------

                                                                 $402,024                          $417,833
                                                               ===========                      ===========
</TABLE>

            See notes to unaudited consolidated financial statements

                                      Pg. 4

<PAGE>

                         SBARRO, INC. AND SUBSIDIARIES

                      CONSOLIDATED STATEMENTS OF OPERATIONS

                                   (UNAUDITED)

<TABLE>
<CAPTION>

                                                                                (In thousands)
                                                                                        For the sixteen weeks ended:
                                                              April 23, 2000                  April 25, 1999
Revenues:
<S>                                                              <C>                               <C>
     Restaurant sales                                            $104,299                          $100,354
     Franchise related income                                       2,796                             2,506
     Interest income                                                  455                             1,591
                                                                -----------                   -------------
       Total revenues                                             107,550                           104,451
                                                                -----------                   -------------

Costs and expenses:
     Cost of food and paper products                               20,334                            20,964
     Restaurant operating expenses:
       Payroll and other employee benefits                         29,576                            28,103
       Occupancy and other                                         33,472                            31,868
     Depreciation and amortization                                  9,410                             6,950
     General and administrative                                     7,646                             6,912
     Interest expense (Note 3)                                      9,330                              -
     Other operating income                                        (1,853)                           (1,495)
                                                                ----------                    -------------
       Total costs and expenses                                   107,915                            93,302
                                                                ----------                    -------------

Income (loss) before income taxes                                    (365)                           11,149
Income taxes (benefit) (Notes 4 and 5)                             (5,559)                            4,237
                                                                 ----------                  --------------

Net income                                                     $    5,194                          $  6,912
                                                              =============                  ==============

</TABLE>












                                      Pg. 5

<PAGE>

                         SBARRO, INC. AND SUBSIDIARIES

                      CONSOLIDATED STATEMENTS OF CASH FLOWS

                                   (UNAUDITED)
<TABLE>
<CAPTION>

                                                                             (In thousands)
                                                                       For the sixteen weeks ended:
                                                              April 23, 2000                   April 25, 1999
Operating activities:

<S>                                                              <C>                                 <C>
Net income                                                       $   5,194                            $6,912
Adjustments to reconcile net income to net
     cash provided by operating activities:
       Depreciation and amortization                                 9,867                             6,967
       Provision for deferred income taxes                          (5,629)                             (176)
       Changes in operating assets and liabilities:
         Increase in receivables                                    (1,602)                             (194)
         Decrease in inventories                                       607                               237
         Increase in prepaid expenses                               (1,688)                           (2,577)
         Decrease (increase) in other assets                           182                              (135)
         Decrease in accounts payable and accrued
            expenses                                                (7,524)                           (6,124)
         Decrease in accrued interest payable                       (4,285)                             -
         Decrease in income taxes payable                             (754)                           (4,109)
                                                                 ---------------               -------------


Net cash (used in) provided by operating
     activities                                                     (5,632)                              801
                                                                --------------                  -------------

Investing activities:

Purchases of property and equipment                                 (7,453)                           (7,520)
                                                               ---------------                   ------------

Net cash used in investing activities                               (7,453)                           (7,520)
                                                              ----------------                --------------


</TABLE>




                                   (continued)


                                      Pg. 6

<PAGE>

                    SBARRO, INC. AND SUBSIDIARIES

                CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)

                                   (UNAUDITED)

<TABLE>
<CAPTION>

                                                                             (In thousands)
                                                                      For the sixteen weeks ended:
                                                              April 23, 2000 April 25, 1999
Financing activities:

<S>                                                                  <C>                             <C>
Proceeds from mortgage                                                 16,000                             -
Cost of mortgage                                                         (387)                            -
Loan to officer                                                        (2,000)                            -
Proceeds from exercise of stock options                            -                                     47
Distributions to shareholders                                         (18,473)                            -
                                                                 -------------                 ------------

Net cash (used in) provided by financing activities                    (4,860)                           47
                                                           ---------------------                -----------


Decrease in cash and cash equivalents                                 (17,945)                       (6,672)

Cash and cash equivalents at beginning of period                       33,514                       154,909
                                                               --------------                 -------------

Cash and cash equivalents at end of period                            $15,569                      $148,237
                                                                 ============                  ============



Supplemental disclosure of cash flow information:

Cash paid during the period for income taxes                          $2,627                          $8,432
                                                                ============                  ==============

Cash paid during the period for interest                           $13,166                     $        -
                                                                =============                 ==============

</TABLE>




            See notes to unaudited consolidated financial statements





                                      Pg. 7


<PAGE>



                          SBARRO, INC. AND SUBSIDIARIES
              Notes to Unaudited Consolidated Financial Statements

1.       Basis of presentation:

         The accompanying  unaudited consolidated financial statements have been
         prepared  in  accordance  with  the  instructions  for  Form  10-Q  and
         Regulation  S-X related to interim  period  financial  statements  and,
         therefore,  do not include all  information  and footnotes  required by
         generally accepted  accounting  principles.  However, in the opinion of
         Sbarro's  management,  all adjustments  (consisting of normal recurring
         adjustments and accruals)  considered necessary for a fair presentation
         of the consolidated  financial  position of Sbarro and its subsidiaries
         at April 23, 2000 and our  consolidated  results of operations and cash
         flows for the  sixteen  weeks  ended  April 23, 2000 and April 25, 1999
         have been included.  The results of operations for interim  periods are
         not necessarily  indicative of the results that may be expected for the
         entire  year.   Reference  should  be  made  to  the  annual  financial
         statements,  including footnotes thereto, included in our Annual Report
         on Form 10-K for the fiscal year ended January 2, 2000.

         Certain  items  in the  fiscal  1999  financial  statements  have  been
          reclassified to conform to the fiscal 2000 presentation.

  2.     Going Private Transaction:

         On September 28, 1999,  members of the Sbarro family (who prior thereto
         owned  approximately  34.4% of the Sbarro's  common  stock)  became the
         holders of 100% of our issued and outstanding  common stock as a result
         of a "going private" merger in which (i) a company owned by the members
         of the  Sbarro  family  merged  with  and into  the  company,  (ii) our
         shareholders  (other  than the  members  of the  Sbarro  family and the
         company owned by them)  received the right to receive  $28.85 per share
         in cash in exchange for the  approximately  13.5 million  shares of our
         common stock not owned by the members of the Sbarro  family,  and (iii)
         all  outstanding  stock  options,  including  stock options held by the
         members of the Sbarro  family,  were  terminated in exchange for a cash
         payment equal to the number of shares subject thereto multiplied by the
         excess,  if any, of $28.85 over the applicable  option  exercise price.
         The cost of the merger, including fees and expenses, was funded through
         the use of  substantially  all of our cash on hand and the placement of
         $255.0  million  of 11.0%  Senior  Notes due  September  15,  2009 (the
         "Senior  Notes")  sold at a price of 98.514% of par to yield 11.25% per
         annum.  The Senior Notes were issued under an Indenture dated September
         28,  1999 (the  "Indenture").  We also  entered  into a five year,  $30
         million  unsecured senior revolving bank credit facility under a Credit
         Agreement dated as of September 23, 1999 (the "Credit Agreement").  The
         Credit Agreement provides an unsecured senior revolving credit facility
         which  enables us to  borrow,  on a  revolving  basis from time to time
         during its  five-year  term,  up to $30.0  million,  including  a $10.0
         million sublimit for standby letters of credit. Our payment obligations
         under the Senior Notes and the Credit Agreement are jointly, severally,
         unconditionally  and  irrevocably  guaranteed  by all  of  our  current
         Restricted  Subsidiaries  (as  defined in the  Indenture)  and is to be
         similarly guaranteed by our future Restricted Subsidiaries.


                                      Pg. 8

<PAGE>

                          SBARRO, INC. AND SUBSIDIARIES
            Notes To Consolidated Financial Statements (continued)

2.       Going Private Transaction (continued):

         As of April 23, 2000, there was $0.2 million  remaining on deposit with
         a third party paying agent for untendered shares to be redeemed as part
         of the merger consideration.  Such amounts are shown as restricted cash
         and amounts due for untendered shares in the balance sheet.  Should any
         shares remain  untendered  after one year from  September 28, 1999, the
         related  funds  are  returned  to Sbarro to be held  until  claimed  or
         escheated to the appropriate juristrictions.

         In accordance  with Emerging  Issues Task Force Issue 88-16,  "Basis in
         Leveraged Buyout Transactions",  the acquisition of all the outstanding
         shares  of  common  stock  not  owned  by the  Sbarro  family  and  all
         outstanding  stock  options have been  accounted for under the purchase
         method of accounting. As a result, the remaining shares of common stock
         owned by the Sbarro  family are  presented in  shareholders'  equity at
         their original basis in the  accompanying  consolidated  balance sheet.
         The final  purchase price  allocations  have not been completed and are
         subject to adjustment  based on fair market  appraisals  and other fair
         market  value  estimates  as of the date of the  Merger.  The excess of
         purchase price over the cost of assets acquired is being amortized on a
         straight line basis over an estimated useful life of 30 years.

         Summarized  below are the unaudited pro forma results of our operations
         for the sixteen weeks ended April 25, 1999 as if the merger and related
         financing  had  taken  place as of the  beginning  of the  1999  period
         presented.  Adjustments  have  been  made for the  amortization  of the
         excess  of the  purchase  price  over  the  cost  basis  of net  assets
         acquired,  interest  expense and related  changes in income tax expense
         arising  from  our  election  to be  taxed  under  Subchapter  S of the
         Internal Revenue Code (See Note 5).

                                                       Sixteen weeks ended
                                                         April 25, 1999
         Pro Forma:
                  Revenues                                 $102,860
                                                           =========
                  Loss before income taxes                  $(1,922)
                                                       ===============
                  Net loss                                  $(2,077)
                                                       ================

         These pro forma results of operations are not necessarily indicative of
         the actual  results of  operations  that  would have  occurred  had the
         merger and related  financing  taken place at the beginning of the 1999
         period presented.

3.       Long-term debt:

         (a) The cost of the merger,  including  fees and  expenses,  was funded
         through  the use of  substantially  all of our  cash  on  hand  and the
         placement of $255 million of 11.0% Senior Notes due  September 15, 2009
         sold at a price of 98.514% of par to yield 11.25% per annum. The Senior
         Notes were issued  under an  Indenture  dated  September  28, 1999 (the
         "Indenture").

                                                 Pg. 9

<PAGE>

                    SBARRO, INC. AND SUBSIDIARIES
             Notes To Consolidated Financial Statements (continued)

3.       Long-term debt (continued):

         Interest on the Senior Notes is payable  semi-annually  on March 15 and
         September 15 of each year  commencing  on March 15,  2000.  Our payment
         obligations   under   the   Senior   Notes  are   jointly,   severally,
         unconditionally  and irrevocably  guaranteed by all of Sbarro's current
         Restricted  Subsidiaries  (as  defined in the  Indenture)  and is to be
         similarly guaranteed by our future Restricted Subsidiaries.  The Senior
         Notes and the subsidiary guarantees are senior unsecured obligations of
         Sbarro and the guaranteeing  subsidiaries,  respectively,  ranking pari
         passu in right of  payment to all of our and their  respective  present
         and future senior debt,  including  amounts  outstanding under the bank
         credit agreement.  The Indenture permits redemption of the Senior Notes
         at our option at varying  redemption prices and requires us to offer to
         purchase  Senior  Notes  in the  event of a Change  of  Control  and in
         connection  with certain  Asset Sales (each as defined).  The Indenture
         contains  various  convenants  for us and our  guarantor  subsidiaries,
         including,   but  not  limited  to,  restrictions  on  our  payment  of
         dividends, stock repurchases,  certain investments and other restricted
         payments,  the  incurrence  of  indebtedness  and liens on our  assets,
         affiliate transactions, asset sales and mergers.

         In  connection  with the issuance of the Senior  Notes,  Sbarro and the
         guaranteeing  subsidiaries  offered the holders of the Senior Notes the
         right to exchange those Senior Notes for 11% Senior Notes due 2009 with
         the same  terms as the  existing  Senior  Notes  but  which  were to be
         registered  under the Securities Act of 1933, as amended.  The exchange
         was completed in April 2000.

         The  discount at which the Senior  Notes were  issued,  an aggregate of
         approximately $3.8 million,  is being accreted to the Senior Notes over
         the original ten-year life of the Senior Notes.

         (b) We entered into a five year, $30 million unsecured senior revolving
         bank  credit  facility  under  a  Bank  Credit  Agreement  dated  as of
         September  23, 1999 (the "Credit  Agreement")  in  connection  with the
         going private  transaction.  The Credit  Agreement  provides us with an
         unsecured  senior  revolving credit facility that enables us to borrow,
         on a revolving basis from time to time during its five-year term, up to
         $30 million,  including a $10 million  sublimit for standby  letters of
         credit.  No amounts were  outstanding  under the credit  facility as of
         April 23, 2000.

         Each of our current guaranteeing subsidiaries (the same entities as the
         Restricted  Subsidiaries  under the Indenture)  have agreed to, and the
         future   guaranteeing   subsidiaries   are  to,   unconditionally   and
         irrevocably  guarantee our obligations  under the bank credit agreement
         on a joint and  several  basis.  All  borrowings  under the bank credit
         agreement are repayable on September 28, 2004. In addition,  we will be
         required to repay our loans and reduce the lenders'  commitments  under
         the bank credit agreement using the proceeds of certain asset sales and
         issuances of certain equity interests of, and sales of equity interests
         in, the guaranteeing subsidiaries.


                                   Pg. 10

<PAGE>

                         SBARRO, INC. AND SUBSIDIARIES
                  Notes To Consolidated Financial Statements (continued)

3.       Long-term debt (continued):

         At our option,  the interest  rates  applicable to loans under the bank
         credit agreement are at either (a) the bank's prime rate (9.50% at June
         1, 2000) plus a margin  ranging  from zero to 0.75% (the  margin at May
         31,  2000 was .25%) or (b)  reserve  adjusted  LIBOR  (6.61% at June 1,
         2000) plus a margin  ranging  from 1.5% to 2.5% (the  margin at May 31,
         2000 was 2.00%). In each case, the margin depends upon the ratio of our
         senior debt (as defined) to our  earnings  before  interest,  taxes and
         depreciation and amortization ("EBITDA"). We have agreed to pay certain
         fees in connection with the bank credit agreement,  including an unused
         commitment fee at a rate per year that varies from 0.25% of the undrawn
         amount of the  facility to 0.45% of the undrawn  amount of the facility
         per year,  depending  upon the ratio of our senior debt to EBITDA.  The
         unused commitment fee as of May 31, 2000 was .35% per year.

         The bank credit  agreement  contains  various  covenants for us and our
         guaranteeing subsidiaries,  including, but not limited to, restrictions
         on the payment of dividends, stock repurchases, certain investments and
         other restricted payments, the incurrence of indebtedness,  guarantees,
         other   contingent   obligations,   and  liens  on  assets,   affiliate
         transactions,  asset sales and mergers, consolidations and acquisitions
         of stock or assets by us and our  guaranteeing  subsidiaries.  The bank
         credit  agreement  also  contains   provisions  which,   under  certain
         circumstances, prohibit redemptions or repurchases of the Senior Notes,
         including  repurchases that might otherwise be required pursuant to the
         terms of the Indenture,  and imposes certain conditions on our amending
         or  supplementing  the  Indenture.  In  addition,  we are  required  to
         maintain  a  minimum  ratio  of  consolidated  EBITDA  to  consolidated
         interest expense (in each case with the  guaranteeing  subsidiaries) of
         at  least  2.0 to 1.0  and a  ratio  of  consolidated  senior  debt  to
         consolidated  EBITDA (in each case with the guaranteeing  subsidiaries)
         ranging  from 4.5 to 1.0 in 1999 to 3.9 to 1.0  beginning  December 29,
         2002. We are in compliance with the various covenants  contained in the
         agreement as of April 23, 2000.

         (c) The costs of issuing  the Senior  Notes and  establishing  the bank
         credit agreement,  an aggregate of approximately  $9.3 million and $0.6
         million, respectively, were capitalized as deferred financing costs and
         are being amortized over the ten and five year lives, respectively,  of
         the  Senior  Notes  and  the  Credit   Agreement.   The  accretion  and
         amortization  will result in an increase in reported  interest  expense
         above amounts payable in cash.

         (d) In March 2000, one of our guarantor  subsidiaries  obtained a $16.0
         million  8.4% loan due in 2010  secured by a mortgage on our  corporate
         headquarters  building.  The loan is payable in monthly installments of
         principal and interest of $0.1 million. The mortgage agreement contains
         various covenants including a requirement that the guarantor subsidiary
         maintain a minimum  ratio of EBITDA to annual debt  service of at least
         1.2 to 1.0.





                                   Pg. 11

<PAGE>

                         SBARRO, INC. AND SUBSIDIARIES
             Notes To Consolidated Financial Statements (continued)

4.       Related party transactions:

(a)      On March 13,  2000,  our board of directors  authorized  us to lend our
         Chairman,  President and Chief  Executive  Officer $2.0 million under a
         note that is payable on April 4, 2002.  The note bears  interest at the
         rate of 6.46% payable annually.

(b)      In April  2000,  we  renewed  the  lease for an  administrative  office
         building  in  which  we are the  sole  tenant  on the  same  terms  and
         conditions  as our present  lease.  The annual rent  payable  under the
         lease is $0.3  million  per year for the  remainder  of the lease  term
         which expires in 2011. In addition, we are obligated to pay real estate
         taxes,  utilities,   insurance  and  certain  other  expenses  for  the
         facility.  The building is leased from Sbarro  Enterprises,  L.P. whose
         limited partners are Mario, Joseph, Anthony and Carmela Sbarro.

         (c) In connection  with the going private  transaction  and the related
         financing,  we have  entered  into a tax  payment  agreement  with  our
         shareholders. The tax payment agreement permits us to make periodic tax
         distributions  to our  shareholders  in amounts  that are  intended  to
         approximate the income taxes,  including estimated taxes, that would be
         payable by our  shareholders  if their only income were their  pro-rata
         shares of our  taxable  income and that income was taxed at the highest
         applicable federal and New York State marginal income tax rates. We may
         only make the tax distributions with respect to periods in which we are
         treated as an S corporation.

         The tax payment agreement provides for adjustments of the amount of tax
         distributions  previously  paid in respect of a year upon the filing of
         our  federal  income tax  return  for that year,  upon the filing of an
         amended  federal income tax return or as a result of an audit. In these
         circumstances, if it is determined that the amount of tax distributions
         previously  made for the year was less than the amount  computed  based
         upon our federal  income tax return,  our amended  federal return or as
         adjusted based on the results of the audit,  we may make additional tax
         distributions  which  might  include  amounts to cover any  interest or
         penalties.  Conversely, if it is determined in these circumstances that
         the amount of tax distributions previously made for a year exceeded the
         amount  computed  based on our federal  income tax return,  our amended
         federal  return or the  results  of an audit,  as the case may be,  our
         shareholders  will be required to repay the  excess,  with,  in certain
         circumstances, interest. In addition, our shareholders will be required
         to return, with interest, any tax distributions  previously distributed
         with  respect  to  any  taxable  year  for  which  it  is  subsequently
         determined that we were not an S corporation.

5.       Income taxes:

         In March 2000 we elected to be taxed under the provisions of Subchapter
         S of the  Internal  Revenue Code of 1986,  and,  where  applicable  and
         permitted,  under  similar  state  and  local  income  tax  provisions,
         beginning January 3, 2000. With certain limited exceptions, we will not
         pay federal,  state and local income taxes for periods for which we are
         treated as an S corporation.

                                      Pg. 12

<PAGE>

                          SBARRO, INC. AND SUBSIDIARIES
           Notes To Consolidated Financial Statements (continued)

5.       Income taxes (continued):

         Rather,  our  shareholders  will include  their  pro-rata  share of our
         taxable income on their individual  income tax returns and thus will be
         required to pay taxes on their respective shares of our taxable income,
         whether or not it is  distributed  to them. For the sixteen weeks ended
         April 23, 2000, we made tax distributions of $0.5 million in accordance
         with the tax payment distribution agreement. (See Note 4).

         In  accordance  with SFAS No. 109  "Accounting  for Income  Taxes",  we
         reversed our deferred tax accruals upon our conversion to S corporation
         status. This resulted in a credit to income taxes of $5.6 million.

6.       Comprehensive income:

         The Company's  operations did not give rise to any items  includible in
         comprehensive  income which were not already included in net income for
         either of the sixteen week  periods  ended April 23, 2000 and April 25,
         1999.

7.       Contingencies:

         In February 1999, the Umberto of New Hyde Park joint venture companies,
         in which we have an 80% interest,  began an action in the U.S. District
         Court for the Eastern District of New York against Umberto Corteo,  who
         owns the  remaining 20% interest in the joint  venture  companies,  and
         against three other restaurants owned by Mr. Corteo. We alleged,  among
         other things,  that Mr. Corteo engaged in unfair trade practices and in
         trademark infringement, thereby breaching the joint venture agreements.
         We are seeking an  accounting,  compensatory  and punitive  damages and
         injunctive relief. The answer filed by Mr. Corteo and his co-defendants
         denies our claims and further alleges that non-competition restrictions
         against Mr. Corteo in the joint venture  agreements are  unenforceable.
         Mr. Corteo and his co-defendants  have also  counterclaimed  against us
         alleging  misappropriation  of trademark  rights and failure to perform
         administrative  duties that amounted to a breach of the agreements.  We
         believe that our claims  against Mr.  Corteo will be proven and that we
         have substantial defenses to his counterclaims.

         On November 17, 1999,  an action  entitled  Shan Wanli,  Basem  Tawill,
         Abdul Hamid v.  Sbarro,  Inc.  was filed in the  Superior  Court of the
         State of Washington for King County.  The  plaintiffs  allege that they
         served as store  managers,  general  managers,  assistant  managers  or
         co-managers  in our  restaurants  in the State of Washington at various
         times  since  November  17,  1996 and that,  in  connection  with their
         employment,  we violated the overtime  pay  provisions  of the State of
         Washington's  Minimum  Wage Act by  treating  them as  overtime  exempt
         employees,   breached  alleged  employment   agreements  and  statutory
         provisions by failing to record and pay for hours



                                     Pg. 13

<PAGE>

                          SBARRO, INC. AND SUBSIDIARIES
              Notes To Consolidated Financial Statements (continued)

7.       Contingencies (continued):

worked at the contract rates and/or  statutory  minimum wage rates and failed to
provide statutorily  required meal breaks and rest periods.  The plaintiffs also
seek to represent all of our restaurant managers employed for any period of time
on or after  November 9, 1996 in the State of  Washington.  We currently own and
operate 18 restaurants in the State of  Washington.  The plaintiffs  seek actual
damages,  exemplary  damages  and  costs of the  lawsuit,  including  reasonable
attorney's fees, each in unspecified  amounts, and injunctive relief. We believe
that we have substantial  defenses to the claims and intend to vigorously defend
this action.

         On December  20,  1999,  Antonio  Garcia and eleven  other  current and
         former general managers of Sbarro  restaurants in California  amended a
         complaint  filed in the Superior Court of California for Orange County.
         The complaint alleges that the plaintiffs were improperly classified as
         exempt employees under the California wage and hour law. The plaintiffs
         are seeking actual damages,  punitive damages and costs of the lawsuit,
         including  reasonable  attorney's  fees,  each in unspecified  amounts.
         Plaintiffs'  counsel  has  stated  that  he  is  in  contact  with  the
         plaintiffs' counsel in the Wanli case and that he may attempt to file a
         class action based upon alleged  violations of the Fair Labor Standards
         Act.  We believe  that we have  substantial  defenses to the claims and
         intend to vigorously defend this action.

         From  time  to  time,  we are a  party  to  certain  claims  and  legal
         proceedings in the ordinary  course of business,  none of which, in our
         opinion, would have a material adverse effect on our financial position
         or results of operations.

8.       Guarantor and non-guarantor financial statements:

         Certain  subsidiaries  have guaranteed  amounts  outstanding  under the
         Senior Notes and Credit Agreement such debt  arrangements.  Each of the
         guaranteeing  subsidiaries  is our  direct  or  indirect  wholly  owned
         subsidiary and each has fully and unconditionally guaranteed the Senior
         Notes and the bank credit  agreement on a joint and several  basis.  As
         described  in Note  2,  we have  not  completed  final  purchase  price
         allocations.  Accordingly,  the condensed summary financial  statements
         presented  below  does not give  effect  to any  final  purchase  price
         allocations.

         The following condensed consolidating financial information presents:

(1)               Condensed  consolidating  statements  of  operations  and cash
                  flows for the fiscal  quarters  ended April 23, 2000 and April
                  25, 1999 and  balance  sheets as of April 23, 2000 and January
                  2, 2000 of (a) Sbarro,  Inc.,  the parent,  (b) the  guarantor
                  subsidiaries as a group, (c) the nonguarantor  subsidiaries as
                  a group and (d) the Company on a consolidated basis, and



                                        Pg. 14

<PAGE>

                          SBARRO, INC. AND SUBSIDIARIES
            Notes To Consolidated Financial Statements (continued)

8.       Guarantor and non-guarantor financial statements (continued):

(2) Elimination entries necessary to consolidate Sbarro,  Inc., the parent, with
the guarantor and nonguarantor subsidiaries.

         The principal  elimination entries eliminate  intercompany balances and
transactions.

<TABLE>
<CAPTION>

                                                Condensed Consolidating Statement of Operations
                                                   For the Sixteen Weeks Ended April 23, 2000

                                                      Guarantor          Nonguarantor                            Consolidated
                                    Parent           Subsidiaries      Subsidiaries     Eliminations               Total
Revenues:
<S>                               <C>                 <C>                 <C>              <C>                  <C>
     Restaurant sales             $46,196             $52,823             $5,280           $    -               $104,299
Franchise related income            2,796                   -                  -                -                  2,796
     Intercompany charges               -               4,682                  -           (4,682)                     -
     Interest income                  972                   -                  -             (517)                   455
                                  -------         -----------        -----------         ---------        --------------
       Total revenues              49,964              57,505              5,280           (5,199)              107,550
                                   ------              ------            -------         ---------              --------

Costs and expenses:
     Cost of food and paper
       products                     8,237              10,660              1,437                -                 20,334
     Restaurant operating
        expenses:
       Payroll and other
         employee benefits         12,190              15,396              1,990                -                 29,576
Occupancy and other                16,634              15,429              1,409                -                 33,472
     Depreciation and
        amortization                5,461               3,728                221                -                  9,410
     General and administrative     2,702               4,611                333                -                  7,646
     Intercompany charges           4,682                   -                  -           (4,682)                     -
     Interest expense               9,194                 105                517             (517)                 9,330
     Other operating income        (1,176)               (677)                 -                -                  1,853
                                  --------           ---------         ---------        ---------              ---------
       Total costs and expenses    57,924              49,252              5,938           (5,199)               107,915
                                  -------             -------              -----            -----                -------

Income (loss) before
     income taxes                  (7,960)              8,253               (658)               -                   (365)
Income taxes (benefit)             (5,815)                278                (22)               -                 (5,559)
                               -----------            -------              ------        --------               ---------

Net income (loss)                 $(2,145)             $7,975              $(636)         $     -                 $5,194
                                  ========             ======              ======        ========                ========


</TABLE>










                                                                     Pg. 15

<PAGE>

                                       SBARRO, INC. AND SUBSIDIARIES
                         Notes To Consolidated Financial Statements (continued)

8.       Guarantor and non-guarantor financial statements (continued):

                           Condensed Consolidating Statement of Operations
                              For the Sixteen Weeks Ended April 25, 1999
<TABLE>
<CAPTION>

                                                      Guarantor          Nonguarantor                            Consolidated
                                    Parent           Subsidiaries      Subsidiaries     Eliminations               Total
Revenues:
<S>                               <C>                 <C>                 <C>               <C>                 <C>
     Restaurant sales             $44,432             $52,158             $3,764            $    -              $100,354
Franchise related income            2,506                   -                  -                 -                 2,506
     Intercompany charges               -               5,495                  -           (5,495)                      -
     Interest income                1,591                   -                  -               -                   1,591
                                  -------          ----------          ---------       ----------              ---------
       Total revenues              48,529              57,653              3,764           (5,495)               104,451


Costs and expenses:
     Cost of food and paper
       products                     8,564              11,432                968                -                 20,964

     Restaurant operating
        expenses:
       Payroll and other
         employee benefits         11,496              15,313              1,294                -                 28,103
       Occupancy and other         15,075              15,779              1,014                -                 31,868
     Depreciation and
        amortization                3,287               3,485                178                -                  6,950
     General and administrative     3,132               3,802                155             (177)                 6,912
     Intercompany charges           5,495                   -                  -           (5,495)                     -
     Other operating income        (1,397)              (359)                 84              177                 (1,495)
                                  --------            -------            -------         --------                 -------
       Total costs and expenses    45,652              49,452              3,693           (5,495)                 93,302
                                  -------             -------             ------           -------                -------

Income  before
     income taxes                   2,877               8,201                 71                -                  11,149
Income taxes                        1,093               3,116                 28                -                   4,237
                                    -----               -----              -----         --------                 -------

Net income                         $1,784              $5,085                $43          $     -                  $6,912
                                   ======              ======                ===         ========                  ======



</TABLE>


















                                     Pg. 16

<PAGE>

                          SBARRO, INC. AND SUBSIDIARIES
                       Notes To Consolidated Financial Statements (continued)

8.       Guarantor and non-guarantor financial statements (continued):

                      Condensed Consolidating Balance Sheet
                              As of April 23, 2000
<TABLE>
<CAPTION>

                                                      Guarantor          Nonguarantor                            Consolidated
                                    Parent           Subsidiaries      Subsidiaries     Eliminations               Total

<S>                               <C>                  <C>                  <C>        <C>                       <C>
Cash and cash equivalents         $11,384              $3,669               $516       $       -                $15,569
Restricted cash for untendered
     shares                           220                   -                  -                -                    220
Receivables                         5,041               1,043                149                -                  6,233
Inventories                         1,350               1,568                161                -                  3,079
Prepaid expenses and other          2,674                 733                186                -                 3,593
                                  -------              ------             ------           ------                 ------
     Total current assets          20,669               7,013              1,012                -                 28,694
Intercompany receivables                -             179,133                  -        (179,133)                      -
Investment in subsidiaries         66,237                   -                  -         (66,237)                      -
Net property, plant and
     equipment                     46,537              81,793              8,682                -                137,012
Intercompany  receivables
     - long term                    3,389                   -                  -          (3,389)                      -
Goodwill and other assets         248,099               1,048                915         (13,744)                236,318
                                 --------          ----------          ---------      -----------               --------
     Total assets                $384,931            $268,987            $10,609       $(262,503)               $402,024
                                 ========            ========            =======       ==========               ========

Amounts due for untendered
     shares                          $220             $     -             $    -          $     -                   $220
Accounts payable and accrued
     expenses                      30,779                 566              2,836                -                 34,181
Accrued interest                    3,195                   -                  -                -                  3,195
Current portion of mortgage
     payable                            -                 123                  -                -                    123
                               ----------                 ---          ---------         --------               --------
     Total current liabilities     34,194                 689              2,836                -                 37,719

Intercompany payables             179,133                   -             11,974         (191,107)                     -
Long-term debt, net of
     current portion              251,427              15,877                  -                -                267,304
Intercompany payables -
     long term                          -               3,389                  -           (3,389)                     -
Common stock                           71                   -                  -                -                     71
Additional paid-in capital             10              66,237              1,770          (68,007)                    10
Retained earnings (deficit)       (79,904)            182,795             (5,971)               -                 96,920
                                  --------            -------             -------   -------------                 ------
     Total stockholders' equity
       (deficiency)               (79,823)            249,032             (4,201)         (68,007)                97,001
                                  --------            -------              -----          --------                ------
     Total liabilities and
       stockholders equity       $384,931            $268,987            $10,609        $(262,503)              $402,024
                                 ========            ========            =======        ==========              ========


</TABLE>









                                     Pg. 17

<PAGE>

                                       SBARRO, INC. AND SUBSIDIARIES
                      Notes To Consolidated Financial Statements (continued)

8.       Guarantor and non-guarantor financial statements (continued):


                      Condensed Consolidating Balance Sheet
                              As of January 2, 2000
<TABLE>
<CAPTION>

                                                      Guarantor          Nonguarantor                            Consolidated
                                    Parent           Subsidiaries      Subsidiaries     Eliminations               Total

<S>                               <C>                  <C>                <C>              <C>                   <C>
Cash and cash equivalents         $27,853              $4,391             $1,270           $    -                $33,514
Restricted cash for untendered
     shares                           298                   -                  -                -                    298
Receivables                         3,485                 829                 53                -                  4,367
Inventories                         1,594               1,963                129                -                  3,686
Prepaid expenses and other          2,234               (378)                 49                -                  1,905
                                  -------               -----            -------            -----                -------
     Total current assets          35,464               6,805              1,501                -                 43,770
Intercompany receivables                -             172,769                  -         (172,769)                     -
Investment in subsidiaries         66,237                   -                  -          (66,237)                     -
Net property, plant and
     equipment                     47,568              82,215              7,449                -                137,232
Intercompany receivables
     - long term                   19,897                   -                  -         (19,897)                      -
Goodwill and other assets         247,180                 706              1,433         (12,488)                236,831
                                ---------         -----------            -------      -----------              ---------
     Total assets                $416,346            $262,495            $10,383       $(271,391)               $417,833
                                 ========            ========            =======       ==========               ========

Amounts due for untendered
     shares                          $298               $   -              $   -            $   -                   $298
Accounts payable and accrued
     expenses                      38,587                 759              2,736                -                 42,082
Accrued interest                    7,480                   -                  -                -                  7,480
Income taxes                          986               (180)               (52)                -                    754
                                  -------               -----               ----          -------                -------
     Total current liabilities     47,351                 579              2,684                -                 50,614

Intercompany payables             172,769                   -             10,718        (183,487)                      -
Long-term debt, net of
     current portion              251,310                   -                  -                -                251,310
Deferred income taxes               5,629                   -                  -                -                  5,629
Intercompany payables
     - long term                        -              19,897                  -         (19,897)                      -
Common stock                           71                   -                  -                -                     71
Additional paid-in capital             10              66,237              1,770         (68,007)                     10
Retained earnings (deficit)      (60,794)             175,782             (4,789)               -                110,199
                                 --------             -------             -------   -------------                -------
     Total stockholders' equity
       (deficiency)              (60,713)             242,019             (3,019)        (68,007)                110,280
                                 --------             -------             -------        --------                -------
     Total liabilities and
       stockholders equity       $416,346            $262,495            $10,383       $(271,391)               $417,833
                                 ========            ========            =======       ==========               ========


</TABLE>





                                     Pg. 18

<PAGE>

                          SBARRO, INC. AND SUBSIDIARIES
               Notes To Consolidated Financial Statements (continued)

8.       Guarantor and non-guarantor financial statements (continued):

                 Condensed Consolidating Statement of Cash Flows
                   For the Sixteen Weeks ended April 23, 2000
<TABLE>
<CAPTION>

                                                      Guarantor          Nonguarantor                            Consolidated
                                    Parent           Subsidiaries      Subsidiaries     Eliminations               Total
Operating activities:
<S>                               <C>                  <C>                 <C>              <C>                   <C>
Net income (loss)                 $(2,145)             $7,975              $(636)           $   -                 $5,194
Adjustments to reconcile net income
   to net cash provided by
   operating activities:
     Depreciation and amortization  5,913               3,716                238                -                  9,867
     Deferred taxes                (5,629)                  -                  -                -                 (5,629)
     Changes in operating assets
      and liabilities:
      Increase in receivables      (1,293)               (213)               (96)               -                 (1,602)
      Decrease (increase) in inventories244               396                (33)               -                    607
      Increase in prepaid expenses   (441)             (1,110)              (137)               -                 (1,688)
      Increase (decrease) in
        other assets                 (967)                (64)               (43)           1,256                    182
      (Decrease) increase in accounts
         payable and accrued expenses(7,704)               78                102                -                 (7,524)
      Decrease in accrued
        interest payable           (4,285)                  -                  -                -                 (4,285)
      (Decrease) increase in
        income taxes payable         (986)                180                52                 -                   (754)
                                   -------            -------             ------         --------                 -------
Net cash (used in) provided by
   operating activities           (17,293)             10,958               (553)           1,256                 (5,632)
                                  --------             ------             -------           -----                 -------

Investing activities:
Purchases of property and
   equipment                       (2,462)             (3,534)            (1,457)               -                 (7,453)
                                   -------             -------            -------      ----------                 -------
Net cash used in investing
   activities                      (2,462)             (3,534)            (1,457)               -                 (7,453)
                                   -------             -------            -------      ----------                 -------

Financing activities:
Proceeds from mortgage                  -              16,000                  -                -                 16,000
Cost of mortgage                        -                (387)                 -                -                   (387)
Loan to executive officer          (2,000)                  -                  -                -                 (2,000)
Cash dividends paid               (18,473)                  -                  -                -                (18,473)
Intercompany balances             23,759              (23,759)             1,256           (1,256)                   -
                                 --------             --------             -----           -------          ------------
Net cash (used in) provided
   by financing activities          3,286              (8,146)             1,256           (1,256)                (4,860)
                                  -------            ---------             -----           -------                -------

Decrease in cash and cash
   equivalents                    (16,469)               (722)              (754)               -                (17,945)
Cash and cash equivalents
   at beginning of period          27,853               4,391              1,270                -                 33,514
                                  -------              ------              -----         --------                -------
Cash and cash equivalents
   at end of period               $11,384              $3,669               $516         $      -                $15,569
                                  =======              ======               ====         ========                =======

Supplemental disclosure of cash flow information:
Cash paid during the period
   for income taxes                $2,388                $239           $     -         $      -                   $2,627
                                  =======                ====           ========        =========       ================
Cash paid during the period
   for interest                   $13,033                $105                $28       $       -                 $13,166
                                  =======                ====              =====       ==========                =======
</TABLE>

                                     Pg. 19

<PAGE>

                                    SBARRO, INC. AND SUBSIDIARIES
                     Notes To Consolidated Financial Statements (continued)

8.       Guarantor and non-guarantor financial statements (continued):

                 Condensed Consolidating Statement of Cash Flows
                   For the Sixteen Weeks ended April 25, 1999
<TABLE>
<CAPTION>

                                                      Guarantor          Nonguarantor                            Consolidated
                                    Parent           Subsidiaries      Subsidiaries     Eliminations               Total
Operating activities:
<S>                                <C>                 <C>                   <C>           <C>                    <C>
Net income                         $1,784              $5,085                $43           $    -                 $6,912
Adjustments to reconcile net
   income to net cash provided by
   operating activities:
     Depreciation and amortization  3,037               3,735                195                -                  6,967
     Provision for deferred income
      taxes                          (176)                  -                  -                -                   (176)
     Changes in operating assets
      and liabilities:
      (Increase) decrease in
        receivables                  (147)                (49)                 2                -                   (194)
      Decrease in inventories          58                 154                 25                -                    237
      Increase in prepaid expenses (1,439)             (1,107)               (31)               -                 (2,577)
      (Increase) decrease in
        other assets                  (69)                 41                 (3)            (104)                  (135)
      Decrease in accounts payable
        and accrued expenses       (5,564)               (540)               (20)               -                 (6,124)
      Decrease in income taxes
        payable                    (4,099)                (11)                 1                -                 (4,109)
                                   -------             -------             -----          -------                 -------
Net cash (used in) provided by
   operating activities            (6,615)              7,308                212             (104)                    801
                                   -------              -----                ---             -----                -------

Investing activities:
Purchases of property and
   equipment                       (5,365)             (1,965)              (190)               -                 (7,520)
                                   -------             -------              -----         -------                 -------
Net cash used in investing
   activities                      (5,365)             (1,965)              (190)               -                 (7,520)
                                   -------             -------              -----         -------                 -------

Financing activities:
Proceeds from exercise of
   stock options                       47                   -                  -                -                     47
Intercompany balances               8,448              (8,448)              (104)             104                      -
                                    -----              -------              -----             ---                -------
Net cash (used in) provided
   by financing activities          8,495              (8,448)              (104)             104                     47
                                    -----              -------              -----             ---                     --

Decrease in cash and cash
   equivalents                     (3,485)             (3,105)              (82)                -                 (6,672)
Cash and cash equivalents
   at beginning of period         148,134               6,268                507                -                154,909
                                  -------               -----                ---          -------                -------
Cash and cash equivalents
   at end of period              $144,649              $3,163               $425          $     -               $148,237
                                 ========              ======               ====         ========               ========

Supplemental disclosure of cash flow information:
Cash paid during the period
   for income taxes                $7,911                $521             $    -           $    -                 $8,432
                                   ======                ====             ======           ======                 ======


</TABLE>




                                     Pg. 20
<PAGE>

Item 2.  Management's Discussion and Analysis of Financial Condition and Results
         of Operations

Results of Operations

Our fiscal  year ends on the Sunday  nearest to  December  31.  Fiscal  2000 and
fiscal 1999 each contain 52 weeks.

The following table provides information  concerning the number of Company-owned
and franchised restaurants in operation during each indicated period:
<TABLE>
<CAPTION>

                                                16 Weeks          16 Weeks
                                                  Ended             Ended                           Fiscal Year
                                                  04/23/00         04/25/99                  1999              1998
                                                  --------         --------                  ----              ----
Company-owned restaurants (1):
<S>                                                   <C>               <C>                <C>                  <C>
   Opened during period                               5                 7                  24                   25
   Acquired from (sold to)
     franchisees during period-net                    -                -                    (1)                  1
   Closed during period                              (4)               (2)                  (9)                (20)
                                                  ------            ------                ------             ------
   Open at end of period                            639               635                  638                 624

Franchised restaurants:
   Opened during period                               6                13                   49                  43
   Purchased from (sold to)
     Company during period-net                        -               -                      1                  (1)
   Closed or terminated during period                (7)               (6)                 (32)                (13)
                                                  ------            ------                 -----              -----
   Open at end of period                            285                275                 286                 268

All restaurants:
   Opened during period                              11                 20                  73                  68
   Closed or terminated during period               (11)                (8)                (41)                (33)
                                                    -----            ------                 -----              -----
   Open at end of period                            924                904                 924                 892

Kiosks (all franchised) open at
   end of period                                     4                  8                    4                   8

</TABLE>

(1) Excludes 28, 20, 26 and 19 new concept units as of April 23, 2000, April 16,
1999, fiscal 1999 and fiscal 1998, respectively.





                                     Pg. 21



<PAGE>



Our business is subject to seasonal fluctuations,  and the effect of weather and
economic conditions. Earnings have been highest in our fourth fiscal quarter due
primarily to  increased  volume in shopping  malls  during the holiday  shopping
season.  While the fourth fiscal quarter normally accounts for approximately 40%
of  operating  income for the year,  the length of the holiday  shopping  period
between  Thanksgiving  and New  Year's Day and the number of weeks in our fourth
quarter result in fluctuations in fourth quarter  financial results from year to
year.

The going private transaction and certain other transactions  described in Notes
2,  3, 4 and 5 of  the  Notes  to the  Consolidated  Financial  Statements  have
affected  the   comparability   of  the  interest   income,   depreciation   and
amortization,  interest  expense  and income tax line items in our  consolidated
statements of operations  for the sixteen weeks ended April 23, 2000 as compared
to the comparable period in fiscal 1999 (see below).

Our  consolidated  EBITDA for the  sixteen  weeks ended April 23, 2000 was $17.9
million and our EBITDA  margin was 16.7%,  compared to $16.5  million and 16.0%,
respectively,  for the sixteen  weeks ended April 25,  1999.  EBITDA  represents
earnings  before  cumulative  effect of change in  accounting  method,  interest
income,  interest expense, taxes,  depreciation and amortization.  EBITDA margin
represents  EBITDA divided by the sum of restaurant sales and franchise  related
income.  EBITDA should not be  considered in isolation  from, or as a substitute
for, net income,  cash flow from  operations or other cash flow  statement  data
prepared in accordance  with generally  accepted  accounting  principles or as a
measure of a company's  profitability or liquidity.  Rather, EBITDA is presented
because it is a widely accepted  supplemental  financial measure, and we believe
that it provides relevant and useful information.  Our calculation of EBITDA may
not be comparable to a similarly  titled  measure  reported by other  companies,
since all companies do not calculate  this non-GAAP  measure in the same manner.
Our EBITDA calculations are not intended to represent cash provided by (used in)
operating activities since they do not include interest and taxes and changes in
operating  assets and  liabilities,  nor are they  intended  to  represent a net
increase in cash since they do not include cash  provided by (used in) investing
and financing activities.

Restaurant  sales from  Sbarro-owned  units and  consolidated  new concept joint
venture units increased 3.9% to $104.3 million for the sixteen weeks ended April
23, 2000 from $100.4  million in the sixteen  weeks ended April 25, 1999.  Sales
from new concept  units  contributed  $1.5  million of the total  increase.  The
increase  resulted  primarily  from a higher number of units in operation in the
current fiscal year than the comparable  period in 1999 and selective menu price
increases  of  approximately  2.8% at Sbarro  units which  became  effective  in
September 1999.  Comparable Sbarro unit sales increased .5% in the first sixteen
weeks of fiscal  2000  compared  to the  sixteen  week period of the 1999 fiscal
year. Comparable Sbarro unit sales were negatively affected by the timing of the
Easter week holiday which  occurred in the second fiscal quarter of 2000 and the
first fiscal quarter of 1999.  Comparable  restaurant sales are made up of sales
at locations that were open during the entire current and prior fiscal period.

Franchise  related income  increased 11.6% to $2.8 million for the sixteen weeks
ended April 23, 2000 from $2.5  million in the sixteen  week period  ended April
25, 1999. The increases resulted primarily from greater continuing royalties due
to a higher number of franchise  units in operation in the current  sixteen week
period than in the comparable 1999 period and higher area develop-

                                     Pg. 22

<PAGE>

ment and initial  franchise  fees in first quarter of fiscal 2000 than the first
quarter of fiscal  1999.  During the quarter,  we entered into area  development
agreements in specific  domestic and  international  venues and markets with two
major food service operators. We believe these agreements will increase the rate
of growth in our franchise operations.

Interest income was approximately $0.5 million for the sixteen weeks ended April
23, 2000  compared to $1.6  million in the sixteen  week period  ended April 25,
1999. As discussed  elsewhere in this report,  we used  substantially all of our
available cash in order to fund the going private transaction. Therefore, we had
a substantial  reduction in our interest  income for the first quarter of fiscal
2000.  We will not realize  the level of interest  income as we have in the past
unless and until we rebuild our cash position.

Cost of food and paper products as a percentage of restaurant  sales improved to
19.5% for the  sixteen  weeks  ended  April 23,  2000  compared to 20.9% for the
comparable  1999 fiscal  period.  This  improvement  was  primarily due to lower
average  cheese prices during the first quarter of fiscal 2000 and the impact of
the menu price increases described above.

Restaurant operating expenses - payroll and other employee benefits increased to
28.4% of  restaurant  sales in the sixteen weeks ended April 23, 2000 from 28.0%
of restaurant sales in the sixteen weeks ended April 25, 1999. This increase was
primarily  due to the tight labor  market,  resulting  in pressures on wages and
salaries and associated increases in amounts paid for payroll taxes.

Restaurant  operating expenses - occupancy and other expenses increased to 32.1%
of restaurant  sales in the sixteen weeks ended April 23, 2000 from 31.8% in the
sixteen weeks ended April 25, 1999. The increase was attributable principally to
increases in rent and other occupancy related costs.

Depreciation and amortization  expense  increased by $2.5 million in the sixteen
weeks ended April 23,  2000 over the  sixteen  week period  ended April 25, 1999
primarily as a result of the  amortization  of the excess of the purchase  price
over the cost of net assets  acquired in connection  with the  completion of the
going private transaction on September 28, 1999.

General  and  administrative  expenses  were  $7.6  million,  or 7.1%  of  total
revenues,  for the sixteen weeks ended April 23, 2000, compared to $6.9 million,
or 6.6% of total  revenues,  for the sixteen  weeks ended  April 25,  1999.  The
increase  was  primarily  due to higher  payroll  costs  due to the tight  labor
market,  expanding  joint  venture  operations,   higher  litigation  costs  and
increases in various field training and human resource functions.

Interest  expense  of $9.3  million  in the  first  fiscal  quarter  of 2000 was
recorded for the Senior  Notes,  mortgage and unused  credit line fees.  Of this
amount, $0.4 million represented  non-cash charges for the accretion of original
issue discounts and the amortization of deferred financing costs.

Other income increased by $0.4 million to $1.9 million for the first fiscal
quarter of 2000
                                     Pg. 23

<PAGE>

primarily as a result of income, net of expenses,  generated from the leasing of
substantially all of our corporate  headquarters building not occupied by Sbarro
to third  parties  and an  increase  in equity  earnings  of new  concept  joint
ventures accounted for under the equity method of accounting.

We have elected to be taxed under the provisions of Subchapter S of the Internal
Revenue Code and, where applicable and permitted,  under similar state and local
income tax  provisions  beginning  January 3, 2000. As required by SFAS No. 109,
"Accounting  for Income Taxes",  we recognized a $5.6 million credit  associated
with  the  reversal  of  our  deferred  tax  liabilities  upon  conversion  to S
corporation  status.  Under the  provisions of Subchapter S,  substantially  all
taxes on our income  are now paid by our  shareholders  rather  than us. Our tax
expense for the first  quarter of fiscal 2000  included  $.07  million for taxes
owed to  jurisdictions  that do not recognize S  corporation  status or that tax
entities based on factors other than income.

Liquidity and Capital Resources

We have  historically  not  required  significant  working  capital  to fund our
existing  operations and have financed our capital  expenditures and investments
in our joint ventures through cash generated from operations.  Substantially all
of our cash was used to complete the going private transaction.  As a result, at
April 23, 2000 we had  unrestricted  cash and cash  equivalents of $15.6 million
and a working capital deficit of $9.0 million.

As part of the going private transaction, we issued the senior notes and entered
into a $30.0  million bank Credit  Agreement.  We have $27.5  million of undrawn
availability  under the Credit Agreement,  net of outstanding  letters of credit
and guarantees of reimbursement  obligations currently aggregating approximately
$2.5 million.  In March and April 2000 we obtained a $16.0 million 8.4% mortgage
loan on our  corporate  headquarters  building,  distributed  an  $18.0  million
dividend to our shareholders, loaned $2 million to our Chairman and CEO and made
$0.5 million of tax distributions as discussed below.

Net cash used in operating  activities  was $5.6  million for the sixteen  weeks
ended April 23, 2000 compared to $0.8 million generated during the sixteen weeks
ended  April 25,  1999.  Cash flow from  operations  decreased  by $6.4  million
primarily  due to the  decrease in net income of $1.7  million and a decrease in
deferred taxes of $5.5 million offset by increased depreciation and amortization
of $2.9  million  and a $2.2  million  net  decrease  in  operating  assets  and
liabilities.  The net  decrease  in  operating  assets  and  liabilities  in the
comparable  sixteen week periods of 2000 and 1999  resulted  principally  from a
decrease in accrued interest payable of $4.3 million,  a $1.4 million  reduction
in accounts  payable and accrued  expenses as compared to the  respective  prior
year end balances and a $2.7 million  increase in taxes  receivable and decrease
in income  taxes  payable from the prior year period as a result of our election
of Subchapter S status in March 2000 (see below).

Net cash used in investing activities primarily relates to capital expenditures,
including  investments  made by our joint  ventures.  Net cash used in investing
activities was $7.5 million for the sixteen weeks ended April 23, 2000 and April
25, 1999.

                                     Pg. 24

<PAGE>

Net cash used in financing  activities  was $4.9  million for the sixteen  weeks
ended April 23,  2000.  This  primarily  resulted  from cash  dividends of $18.0
million and tax  distributions  of $0.5 million (see below) to our  shareholders
and a $2.0 million  loan to our Chairman and CEO offset by $15.6  million of net
proceeds from a loan secured by a mortgage on our corporate headquarters.

As a result of the going private  transaction,  we used substantially all of our
cash on hand and incurred  approximately  $255.0  million of debt. We will incur
annual cash  interest  expense of  approximately  $29.7 million under the senior
notes and mortgage loan and may incur additional interest expense for borrowings
under our Credit  Agreement.  In addition to debt  service,  we expect our other
liquidity  needs  will  relate  to  capital   expenditures,   working   capital,
investments in joint ventures,  distributions to shareholders as permitted under
the Indenture and Credit Agreement and general corporate purposes. We expect our
primary  sources  of  liquidity  to meet  these  needs  will be cash  flow  from
operations and availability under our Credit Agreement.

We believe that aggregate restaurant capital expenditures and our investments in
joint  ventures  during the next twelve  months will be  moderately  higher than
levels in recent fiscal years.

In March 2000,  we elected to be taxed under the  provisions  of Subchapter S of
the Internal  Revenue Code and, where  applicable  and permitted,  under similar
state and local  income tax  provisions  beginning  January  3, 2000.  Under the
provisions of Subchapter S,  substantially  all taxes on our income will be paid
by our  shareholders.  We and our  shareholders  will  have a tax  liability  of
approximately  50% of our  taxable  income.  This  tax rate is  higher  than our
historical  effective  tax  rate due to (i)  differences  in tax  rates  between
individual  and  corporate  taxpayers,  (ii) the timing  differences  previously
accounted for as deferred  taxes in our  financial  statements  (which  deferred
taxes were eliminated upon our conversion to S corporation status) and (iii) the
effect of double  taxation  in those state and local  jurisdictions  that do not
recognize  S  corporation  status.  The  indenture  and credit  facility  permit
distributions  to  shareholders  for  taxes  on our  earnings  and we  made  tax
distributions of $0.5 million in the sixteen weeks ended April 23, 2000.

Historically we have paid dividends on our common stock to our shareholders.  On
March 13, 2000 our Board of Directors  declared a dividend of $18.0 million.  We
expect that our Board of Directors will from time to time elect to pay dividends
to our  shareholders  in amounts  that will be based  upon a number of  factors,
including  our  working  capital  needs,  operating  performance,  debt  service
obligations and capital expenditure  requirements.  Distributions are subject to
the provisions of the Indenture and Credit Agreement.

We do not have any principal repayment obligations under the notes or our credit
agreement for ten and five years,  respectively.  We believe that cash flow from
operations and funds  available  under our credit facility will be sufficient to
meet our liquidity needs.





                                     Pg. 25
<PAGE>

Forward Looking Statements

This report (and other reports and statements issued by us and our officers from
time to time) contains  certain  forward-looking  statements about our financial
condition,   results  of  operations,   future  prospects  and  business.  These
statements  appear in a number of places in the  report and  include  statements
regarding our intent,  belief,  expectation,  strategies or  projections at that
time. These statements generally contain words such as "may", "should", "seeks",
"believes",  "expects", "intends", "plans", "estimates",  "projects", "strategy"
and similar expressions or the negative of those words.

Forward-looking  statements  are subject to a number of known and unknown  risks
and  uncertainties  that could cause actual  results to differ  materially  from
those projected,  expressed or implied in the forward-looking statements.  These
risks and uncertainties,  many of which are not within our control,  include but
are not limited to,  general  economic,  weather and  business  conditions;  the
availability of suitable restaurant sites in appropriate regional shopping malls
and other  locations on  reasonable  rental terms;  changes in consumer  tastes;
changes in population and traffic  patterns;  the ability to continue to attract
franchisees;  the success of our  present,  and any future,  joint  ventures and
other expansion opportunities; the availability of food (particularly cheese and
tomatoes)  and  paper  products  at  reasonable  prices;  no  material  increase
occurring in the Federal  minimum  wage;  the loss of services of members of our
senior  management  team;  our  ability  to  attract  competent  restaurant  and
executive managerial personnel; competition; government regulations; our ability
to generate  sufficient cash flow to make interest  payments and principal under
our senior notes and credit agreement; the effects which restrictions imposed on
us under our senior notes indenture and credit agreement may have on our ability
to operate our  business;  and our  ability to  repurchase  senior  notes to the
extent  required and make  repayments  under our credit  agreement to the extent
required  in the event we make  certain  asset sales or  experience  a change of
control.

Because forward-looking  statements are subject to risks and uncertainties,  you
are cautioned not to place undue reliance on these statements,  which speak only
as of the date of the report.

We do not  undertake  any  responsibility  to release  publicly any revisions to
these  forward-looking  statements to take into account events or  circumstances
that  occur  after  the date of this  report,  other  than as  required  by law.
Additionally,  we do not  undertake  any  responsibility  to  update  you on the
occurrence of any unanticipated  events which may cause actual results to differ
from those expressed or implied by the forward-looking  statements  contained in
this report, other than as required by law.








                                     Pg. 26

<PAGE>

Item 3.           Qualitative and Quantitative Disclosures of Market Risk

We have historically invested our cash on hand in short term, fixed rate, highly
rated and  highly  liquid  instruments  which are  reinvested  when they  mature
throughout  the year.  Although our existing  investments  are not considered at
risk with respect to changes in interest rates or markets for these instruments,
our rate of return on  short-term  investments  could be affected at the time of
reinvestment as a result of intervening events.

Our  borrowings  under our credit  facility will be subject to  fluctuations  in
interest rates.  However, we do not expect to enter into any interest rate swaps
or other instruments to hedge our borrowings under our credit facility.

We have not purchased  future,  forward,  option or other  instruments  to hedge
against fluctuations in the prices of the commodities we purchase.  As a result,
our future  commodities  purchases  are subject to changes in the prices of such
commodities.

All of our transactions  with foreign  franchisees have been denominated in, and
all  payments  have been made in,  United  States  dollars,  reducing  the risks
attendant in changes in the values of foreign  currencies.  As a result, we have
not purchased future  contracts,  options or other  instruments to hedge against
changes in values of foreign currencies.


























                                     Pg. 27

<PAGE>



                           PART II. OTHER INFORMATION



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

(a)      Exhibits:
         No.               Description

         27                Financial Data Schedule



(b)      Reports on Form 8-K.

No  Current  Reports  on Form 8-K were  filed by the  Company  during the period
covered by this report.
























                                     Pg. 28

<PAGE>



                                    SIGNATURE


Pursuant  to the  requirements  of the  Securities  Exchange  Act of  1934,  the
registrant  has duly  caused  this  Report  to be  signed  on its  behalf by the
undersigned thereunto duly authorized.



                                           SBARRO, INC.
                                           Registrant


Date:    June  6, 2000   By:   /s/MARIO SBARRO
        ----------------      --------------------------------------------
                              Mario Sbarro
                              Chairman of the Board and President (Principal
                              Executive Officer)



Date:    June  6, 2000   By:  /s/ROBERT G. ROONEY
        ----------------      --------------------------------------------
                              Robert G. Rooney
                              Senior Vice President and Chief Financial Officer
                               (Principal Financial Officer)



Date:    June 6, 2000    By:   /s/STEVEN B. GRAHAM
        ----------------       -------------------------------------------
                              Steven B. Graham
                              Vice President and Controller (Principal
                              Accounting Officer)












                                     Pg. 29







                                  EXHIBIT INDEX



Exhibit Number                      Description

         27                                 Financial Data Schedule