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 QUARTERLY PERIOD ENDED JULY 19, 2004

[ ]      TRANSITION  REPORT  PURSUANT  TO SECTION 13 OR 15(D) OF THE  SECURITIES
         EXCHANGE ACT OF 1934

      FOR THE TRANSITION PERIOD FROM ________________ TO _________________

                         COMMISSION FILE NUMBER 0-14837

                            ELMER'S RESTAURANTS, INC.
             (Exact name of registrant as specified in its charter)

            OREGON                 ______             93-0836824
(STATE OR OTHER JURISDICTION OF             (I.R.S. EMPLOYER IDENTIFICATION NO.)
INCORPORATION OR ORGANIZATION)

  11802 S.E. Stark St.
    Portland, Oregon               97216                (503) 252-1485
(ADDRESS OF PRINCIPAL           (ZIP CODE)       (REGISTRANT'S TELEPHONE NUMBER,
EXECUTIVE OFFICES)                                    INCLUDING AREA CODE)

           Securities registered pursuant to Section 12(b) of the Act:
                                      None

           Securities registered pursuant to Section12(g) of the Act:
                           Common Stock, no par value
                                   -----------

Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the  preceding 12 months (or for such  shorter  period that the  Registrant  was
required  to file  such  reports),  and  (2) has  been  subject  to such  filing
requirements for the past 90 days. Yes [X]  No [ ]

Number of shares of Common Stock outstanding at September 1, 2004: 1,828,463

















<PAGE>
                            ELMER'S RESTAURANTS, INC.
                                      INDEX

<TABLE>
<CAPTION>
                                                                                                   PAGE
                                                                                                  NUMBER
                                                                                                  ------
PART I:  FINANCIAL INFORMATION

<S>                                                                                                 <C>
         Item 1.           Financial Statements                                                     3
                           Condensed Consolidated Balance Sheets,
                               July 19, 2004 (Unaudited) and March 29, 2004

                           Condensed Consolidated Statements of Operations,                         4
                               Sixteen weeks ended July 19, 2004 and July 21, 2003
                               (Unaudited)

                           Condensed Statement of Changes in Shareholders' Equity,                  5
                               Sixteen weeks ended July 19, 2004 (Unaudited)

                           Condensed Consolidated Statements of Cash Flows,                         6
                               Sixteen weeks ended July 19, 2004 and July 21, 2003
                               (Unaudited)

                           Notes to Condensed Consolidated Financial Statements                     7

         Item 2.           Management's Discussion and Analysis of Financial                        10
                               Statements

         Item 3.           Quantitative and Qualitative Disclosures about Market                    15
                               Risk

         Item 4.           Controls and Procedures                                                  15

PART II: OTHER INFORMATION AND SIGNATURES

         Item 5.           Other Information                                                        16

         Item 6.           Exhibits and Reports on Form 8-K                                         16

                           Signatures                                                               16
</TABLE>
















<PAGE>
                    ELMER'S RESTAURANTS, INC. AND SUBSIDIARIES
                      CONDENSED CONSOLIDATED BALANCE SHEETS

<TABLE>
<CAPTION>
                                                                                       July 19, 2004         March 29, 2004
                                                                                    --------------------   ------------------
                                                                                        (Unaudited)
                                      ASSETS
<S>                                                                                <C>                    <C>
Current assets:
  Cash and cash equivalents                                                        $          2,062,396   $        1,601,378
  Marketable securities                                                                         781,716              930,196
  Accounts receivable                                                                           243,966              261,669
  Notes receivable - franchisees and related parties, current portion                            48,817               41,036
  Inventories                                                                                   359,980              372,707
  Prepaid expenses and other                                                                    485,320              476,159
  Income taxes receivable                                                                        34,522              159,877
                                                                                    --------------------   ------------------

      Total current assets                                                                    4,016,717            3,843,022

  Notes receivable - franchisees and related parties, net of current portion                    165,401              191,244
  Property, buildings and equipment, net                                                      8,915,682            9,325,050
  Goodwill                                                                                    4,897,743            4,897,743
  Intangible assets                                                                             602,709              602,709
  Market value of interest rate swap agreement                                                    1,043                    0
  Other assets                                                                                  231,548              185,561
                                                                                    --------------------   ------------------

      Total assets                                                                 $         18,830,843   $       19,045,329
                                                                                    ====================   ==================

                       LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
  Notes payable, current portion                                                   $            429,889   $          416,278
  Accounts payable                                                                            1,348,520            1,496,905
  Accrued expenses                                                                              445,295              500,536
  Accrued payroll and related taxes                                                             414,192              662,253
                                                                                    --------------------   ------------------

      Total current liabilities                                                               2,637,896            3,075,972

  Notes payable, net of current portion                                                       4,859,092            4,916,157
  Deferred income taxes                                                                       1,397,179            1,396,000
  Obligation under interest rate swap                                                                 0               33,005
                                                                                    --------------------   ------------------

      Total liabilities                                                                       8,894,167            9,421,134
                                                                                    --------------------   ------------------

Commitments and contingencies

Shareholders' equity
  Common stock, no par value; 10,000,000 shares authorized, 1,816,335
  shares issued and outstanding                                                               6,216,136            6,216,136
  Retained earnings                                                                           3,703,252            3,391,413
  Accumulated other comprehensive gain, net of taxes                                             17,288               16,646
                                                                                    --------------------   ------------------
      Total shareholders' equity                                                              9,936,676            9,624,195
                                                                                    --------------------   ------------------

      Total liabilities and shareholders' equity                                   $         18,830,843   $       19,045,329
                                                                                    ====================   ==================
</TABLE>

    The accompanying notes are an integral part of the condensed consolidated
                              financial statements.

                                        3
<PAGE>
                 ELMER'S RESTAURANTS, INC. AND SUBSIDIARIES
               CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

<TABLE>
<CAPTION>
                                                                  For the sixteen weeks ended
                                                          ---------------------------------------------
                                                               July 19,                 July 21,
                                                                 2004                     2003
                                                          --------------------    ---------------------
                                                              (Unaudited)             (Unaudited)

<S>                                                       <C>                     <C>
REVENUES                                                  $         9,804,684     $         10,059,012
                                                          --------------------    ---------------------

COSTS AND EXPENSES:

Cost of restaurant sales:
  Food and beverage                                                 2,843,050                3,099,959
  Labor and related costs                                           3,417,091                3,398,561
  Restaurant operating costs                                        1,383,053                1,378,674
  Occupancy costs                                                     619,454                  635,805
  Depreciation and amortization                                       267,140                  252,147
General and administrative expenses                                   731,586                  670,902
(Gain) loss on sale of land, buildings and equipment                 (145,303)                   4,071
Loss on impairment of equipment                                       140,000                        -
                                                          --------------------    ---------------------

                                                                    9,256,071                9,440,119
                                                          --------------------    ---------------------


INCOME FROM OPERATIONS                                                548,613                  618,893

OTHER INCOME (EXPENSE):
  Interest income                                                      17,798                   24,756
  Interest expense                                                   (109,546)                (115,993)
  Gain (loss) on sale of marketable securities                          1,974                    3,449
                                                          --------------------    ---------------------


  Income before provision for income taxes                            458,839                  531,105

  Income tax provision                                               (147,000)                (168,000)
                                                          --------------------    ---------------------

NET INCOME                                                $           311,839     $            363,105
                                                          ====================    =====================

PER SHARE DATA:

  Net income per share - Basic                            $              0.17     $               0.18
                                                          ====================    =====================

  Weighted average number of
  common shares outstanding - Basic                                 1,816,335                2,041,728
                                                          ====================    =====================

  Net income per share - Diluted                          $              0.16     $               0.17
                                                          ====================    =====================

  Weighted average number of
  common shares outstanding - Diluted                               1,947,823                2,131,478
                                                          ====================    =====================
</TABLE>
    The accompanying notes are an integral part of the condensed consolidated
                              financial statements.

                                        4
<PAGE>
                   ELMER'S RESTAURANTS, INC., AND SUBSIDIARIES
                  STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY

<TABLE>
<CAPTION>
                                            Common Stock
                                  --------------------------------
                                                                                         Accumulated other
                                                                                         comprehensive gain     Total shareholders
                                      Shares           Amount        Retained earnings        (loss)                 equity
                                  ----------------  --------------  ------------------  --------------------   --------------------
<S>                               <C>               <C>             <C>                 <C>                    <C>
BALANCE, March 29, 2004                 1,816,335   $   6,216,136   $       3,391,413   $            16,646    $         9,624,195
  Comprehensive income:
    Net Income                                  -               -             311,839                     -                311,839
    Change in net unrealized gain
    (loss) on available for sale
    securities, net of taxes                                                                        (19,787)               (19,787)
    Change in fair market value of
    interest rate swap agreement,
    net of taxes                                                                                     20,429                 20,429
                                  ----------------  --------------  ------------------  --------------------   --------------------
Total comprehensive income                                                    311,839                   642                312,481

                                  ----------------  --------------  ------------------  --------------------   --------------------
BALANCE, July 19, 2004                  1,816,335   $   6,216,136   $       3,703,252   $            17,288    $         9,936,676
 (Unaudited)                      ================  ==============  ==================  ====================   ====================
</TABLE>























    The accompanying notes are an integral part of the condensed consolidated
                              financial statements.

                                        5
<PAGE>
                   ELMER'S RESTAURANTS, INC. AND SUBSIDIARIES
                 CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

<TABLE>
<CAPTION>
                                                                                                For the 16 weeks ended
                                                                                  ------------------------------------------------
                                                                                        JULY 19,                    July 21
                                                                                          2004                        2003
                                                                                  ----------------------      --------------------
                                                                                      (Unaudited)                 (Unaudited)
<S>                                                                                <C>                         <C>
Cash flows from operating activities:
Net income                                                                         $            311,839        $          363,105
  Adjustments to reconcile net income to net
  cash provided by operating activities:
    Depreciation and amortization                                                               267,140                   252,147
    (Gain) loss on disposition of equipment                                                    (145,303)                    4,071
    Loss of impairment of equipment                                                             140,000
    Gain on sale of marketable securities                                                        (1,974)                   (3,449)
    Changes in assets and liabilities:
      Current assets                                                                             (6,305)                 (383,953)
      Other assets                                                                              (45,987)                   24,401
      Accounts payable                                                                         (148,385)                   42,397
      Accrued expenses                                                                          (55,241)                  107,486
      Accrued payroll and related taxes                                                        (248,061)                  (10,877)
      Income taxes                                                                              125,355                   115,500
                                                                                  ----------------------      --------------------

        Net cash provided by (used in) operating activities                                     193,078                   510,828
                                                                                  ----------------------      --------------------

Cash flows from investing activities:
  Additions to property, buildings and  equipment                                              (239,928)                 (220,119)
  Purchases of available-for-sale securities                                                   (198,711)                 (146,100)
  Proceeds from sale of available-for-sale securities                                           316,971                   230,611
  Principal collected on note receivables                                                        18,062                    29,416
  Proceeds from sale of assets                                                                  415,000                     2,500
                                                                                  ----------------------      --------------------

        Net cash provided by (used in) investing activities                                     311,394                  (103,692)
                                                                                  ----------------------      --------------------

Cash flows from financing activities:
  Issuance of notes payable                                                                      68,493                         -
  Net change in principal debt service accounts                                                       -                   (30,952)
  Payments on notes payable                                                                    (111,947)                  (93,548)
                                                                                  ----------------------      --------------------

        Net cash provided by (used in) financing activities                                     (43,454)                 (124,500)
                                                                                  ----------------------      --------------------

        Net change in cash and cash equivalents                                                 461,018                   282,636

Cash and cash equivalents, beginning of period                                                1,601,378                 2,200,263
                                                                                  ----------------------      --------------------

Cash and cash equivalents, end of period                                          $           2,062,396       $         2,482,899
                                                                                  ======================      ====================

Supplemental  disclosures of cash flow information:
Cash paid during the period for:
  Interest                                                                        $             109,546       $           115,993
                                                                                  ======================      ====================

  Income taxes                                                                    $              21,645       $            52,500
                                                                                  ======================      ====================

Supplemental disclosures of non-cash transactions:
  Change in unrealized (gain) loss on available-for-sale securities, net of taxes $             (19,787)      $            48,471
                                                                                  ======================      ====================
  Change in fair market value of interest rate swap
  agreement, net of taxes                                                         $              20,429       $           (11,083)
                                                                                  ======================      ====================
  Note receivable issued for franchise fee receivable                             $                   -       $           123,000
                                                                                  ======================      ====================
</TABLE>
    The accompanying notes are an integral part of the condensed consolidated
                              financial statements.

                                        6
<PAGE>
                            ELMER'S RESTAURANTS, INC.
              NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
                                   (UNAUDITED)

1.       BASIS OF PRESENTATION

The accompanying  unaudited condensed financial statements have been prepared in
accordance with the  instructions to Form 10-Q and Rule 10-01 of Regulation S-X.
These  interim  financial  statements  do not  include all the  information  and
footnotes necessary for a fair presentation of financial position and results of
operations  and cash flows in  conformity  with  generally  accepted  accounting
principles in the United States of America. These condensed financial statements
should be read in  conjunction  with the financial  statements and related notes
contained in the  Company's  Annual Report on Form 10-K for the year ended March
29, 2004.  Operating  results  reflected in the interim  consolidated  financial
statements  are not  necessarily  indicative of the results that may be expected
for the year ending April 4, 2005.

In the opinion of management,  the accompanying  unaudited financial  statements
contain all  adjustments  (consisting  solely of normal  recurring  adjustments)
necessary  to present  fairly the  financial  position  of the  Company  and its
subsidiaries, and their results of operations and cash flows.

The Company had  comprehensive  income of $312,481  for the sixteen  weeks ended
July 19,  2004.  This was  composed of net income of $311,839 and an increase in
the market  value an interest  rate swap  agreement  of $20,429  (net of taxes),
which   was   partially   offset   by  a  decline   in  the   market   value  of
available-for-sale securities of $19,787 (net of taxes).

INTEREST  RATE  SWAP  AGREEMENT  - In June  2003,  and in  conjunction  with the
modification of the Wells Fargo Bank real estate debt agreement discussed below,
the Company  entered into an interest rate swap  agreement with Wells Fargo Bank
to reduce the impact of changes in interest rates on its floating rate mortgage.
The debt  modification  and  related  swap  agreement  effectively  changes  the
Company's  interest  rate exposure on the Wells Fargo Bank real estate debt to a
fixed  percentage of 6.17%. The notional amount of the swap agreement as of July
19, 2004 was $1.0  million.  The interest  rate swap  agreement  matures May 24,
2010.

Under the terms of the swap  agreement,  the Company has  committed to paying or
receiving interest on the spread between 30-day LIBOR and a fixed rate of 3.92%.
If 30-day LIBOR exceeds 3.92%,  the Company  receives  interest  income from the
bank equal to the spread.  If 30-day LIBOR is less than 3.92%, the Company makes
interest  payments  to the bank equal to the  spread.  The 30-day  LIBOR rate is
fixed on a monthly basis by the bank.

The swap is inversely  correlated to the related  hedged  long-term  debt and is
therefore  considered an effective cash flow hedge of the  underlying  long-term
debt. The level of effectiveness of the hedge is measured by changes in the fair
value of the hedged  long-term  debt  resulting  from  fluctuations  in interest
rates.  As a matter  of  policy,  the  Company  does not enter  into  derivative
transactions for trading or speculative purposes.

The interest rate swap agreement  qualifies as a cash flow hedge under Statement
of Financial  Accounting  Standards  (SFAS) No. 133,  Accounting  for Derivative
Instruments and Hedging Activities. SFAS No. 133 requires that the fair value of
derivative  instruments  be  recorded  and  changes  in the  fair  value  of the
derivative  instruments be recognized in other comprehensive  income. As of July
19, 2004 the fair market value of this  agreement  was $1,043 and results in the
recognition  of $20,429 (net of tax effect) in other  comprehensive  gain during
the quarter then ended.

STOCK OPTIONS - SFAS No. 123, Accounting for Stock-Based Compensation, defines a
fair  value-based  method of accounting  for employee  stock options and similar
equity  instruments,  and  encourages  all  companies  to adopt  that  method of
accounting for all of their employee stock  compensation  plans.  It encourages,
but does not require,  companies to record  compensation  costs for  stock-based
employee compensation plans at fair value. The Company has chosen to account for
stock-based   compensation  using  the  intrinsic  value  method  prescribed  in
<PAGE>
Accounting Principles Board (APB) Opinion No. 25, Accounting for Stock Issued to
Employees, and related interpretations.

Under SFAS No. 123 no  compensation  cost has been  recognized for the plan. Had
compensation cost for the stock-based  compensation plan been determined,  based
on the fair value of options at the date of grant consistent with the provisions
of SFAS No. 123, the Company's  pro forma net income and pro forma  earnings per
share would have been as follows:

                                             July 19, 2004     July 21, 2003
                                                16 weeks         16 weeks
                                            ---------------   ---------------
Net income - as reported                          $311,839         $363,105
Deduct: Total stock-based employee
compensation expense determined under
fair value based method for all awards,
net of related tax effects                           9,655           24,435
                                            ---------------     ------------
Net income - pro forma                            $302,184         $338,670
                                            ===============     ============

Basic earnings per share - as reported               $0.17            $0.18
Diluted earnings per share - as reported             $0.16            $0.17
Basic earnings per share - pro forma                 $0.17            $0.17
Diluted earnings per share - pro forma               $0.16            $0.16

As of July 19,  2004 the  Company  had  outstanding  option  grants for  450,638
shares,  of which  327,116  were  vested.  As of July 21,  2003 the  Company had
outstanding grants for 459,624 shares with 295,330 shares vested.

GUARANTEES - As a result of the sale of three  Elmer's  restaurants  to Southern
Oregon  Elmer's  LLC (the  "Buyer") in May 2002,  the Company is a guarantor  on
Grants Pass and Medford  real estate  leases  until April 2007 and on a Roseburg
real estate lease which could extend until 2018 if all options are  exercised by
the Buyer. The Company is also a guarantor on a franchisee lease in Nampa, Idaho
until 2007.  The Company is a guarantor of the lease on the  Company's  recently
refranchised   Palm  Springs   location  until  April  2007  and  on  a  rolling
twelve-month  basis  thereafter  until 2020. In all cases,  the franchisees have
indemnified the Company  against all losses incurred as guarantor.  In addition,
the  franchisees'  principals and their spouses have  personally  guaranteed the
franchisee's indemnification.

In the event of default by the franchisee,  the Company could be required to pay
all rent and other  payments  due under the terms of the leases.  As of July 19,
2004, the maximum potential  liability under these guarantees is $1,186,069.  In
the  event of  default,  the  Company  expects  it would  exercise  its right to
reoccupy and continue to operate the restaurants.

SUBSEQUENT EVENTS

Receipt of Going Private Offer
------------------------------

August 6,  2004,  the  Company  announced  that it had  received  a  non-binding
proposal for a going private  transaction from a purchaser group led by Bruce N.
Davis,  the  Company's  Chairman  of the  Board,  Chief  Executive  Officer  and
President,  and consisting of the Company's Board of Directors and 12 additional
shareholders.  A copy of the proposal was  attached to the Press  Release  dated
August 6, 2004 and  available  in the 8-K filed  with the SEC on August 6, 2004.
The 8-K is also available on the Company's website www.elmers-restaurants.com.




RECENT TRANSACTIONS
<PAGE>
Impairment Loss On Future Store Closing
---------------------------------------

The Company recognized a $140,000 impairment loss this quarter on the write down
of property and equipment with a carrying value of  approximately  $155,000 to a
fair  value of  $15,000.  The loss  arises  from the  anticipated  closure  of a
restaurant when the lease will not be renewed.

Sale of Palm Springs Restaurant
-------------------------------
March 30, 2004, the Company  refranchised  the Company's  Elmer's  Restaurant in
Palm Springs,  California.  The buyer executed a 25-year franchise agreement and
assumed  the  Company's  operating  lease  obligations.  The  Company  remains a
guarantor  of the lease  until  April 2007 and on a rolling  twelve-month  basis
thereafter  until 2020.  The sales price of  $415,000  was  received in cash and
resulted  in a pretax  gain of  approximately  $145,000.  Assets  sold  included
prepaids and inventory of  approximately  $28,000 and equipment of approximately
$242,000.

Franchise Opening
-----------------
Elmer's newest franchised  restaurant opened on March 15, 2004. The 4,500 square
foot restaurant in Corvallis, Oregon occupies a converted Lyons restaurant site.

On July 21, 2003 a 5,000  square foot  franchise  restaurant  in Coeur  d'Alene,
Idaho opened. It occupies a converted Village Inn site.

Lottery Commission
------------------

March 31, 2004, the Oregon Lottery  Commission  approved a new six-year retailer
contract  effective  June 27,  2004.  The impact of this  contract is  discussed
further  under  Revenues on page 12.

RECENTLY ISSUED ACCOUNTING STANDARDS

In May 2003,  the Financial  Accounting  Standards  Board (FASB) issued SFAS No.
150, Accounting for Certain Financial  Instruments with  Characteristics of both
Liabilities and Equity.  SFAS No. 150 establishes  standards for  classification
and measurement of certain financial  instruments with  characteristics  of both
liabilities  and equity.  This statement is effective for financial  instruments
entered into or modified  after May 31, 2003,  and otherwise is effective at the
beginning  of the first  interim  period  after  June 15,  2003.  The  Company's
adoption  of FASB  No.  150 did not  have a  material  effect  on the  Company's
consolidated financial statements.

In April  2003,  the FASB issued SFAS No. 149,  Amendment  of  Statement  133 on
Derivative  Instruments  and  Hedging  Activities.  This  statement  amends  and
clarifies  financial   accounting  and  reporting  for  derivative   instruments
including  certain  derivatives  embedded in other contracts.  This statement is
effective  for  contracts  entered  into or modified  after June 30,  2003.  The
Company's  adoption of the  provisions of this statement did not have a material
effect on the Company's consolidated financial statements.

In January 2003, FASB issued  Interpretation  No. 46 (FIN 46),  Consolidation of
Variable Interest  Entities.  This  interpretation  clarifies the application of
Accounting  Research Bulletin No. 51,  Consolidated  Financial  Statements,  and
requires existing  unconsolidated  variable interest entities to be consolidated
by their primary beneficiaries if the entities do not effectively disperse risks
among parties involved.  This  interpretation  explains how to identify variable
interest  entities and how an  enterprise  assesses its  interests in a variable
interest entity to decide whether to consolidate the entities. In December 2003,
FASB issued FIN 46R, which made revisions and delayed  implementation of certain
provisions of FIN 46. As a public entity that is not a "Small Business  Issuer,"
the  Company is now  required  to apply FIN 46R to all  unconsolidated  variable
interest  entities  no  later  than  March  29,  2004,  with  the  exception  of
unconsolidated special purpose entities, which had an implementation deadline of
December  31,  2003.   The  Company's   adoption  of  the   provisions  of  this
interpretation had no impact on the Company's consolidated financial statements.
<PAGE>
In December 2002, the Financial  Accounting  Standards  Board (FASB) issued SFAS
No. 148, Accounting for Stock-Based  Compensation--Transition and Disclosure--an
Amendment of FASB  Statement No. 123. This  statement  amends FASB Statement No.
123, Accounting for Stock-Based Compensation,  to provide alternative methods of
transition  for a voluntary  change to the fair value based method of accounting
for stock-based employee  compensation.  In addition,  this statement amends the
disclosure requirements of statement No. 123 to require prominent disclosures in
both annual and interim financial  statements about the method of accounting for
stock-based employee  compensation and the effect of the method used on reported
results. The Company's adoption of the provisions of this statement did not have
a material impact on the Company's consolidated financial statements.

                         PART I - FINANCIAL INFORMATION

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

Elmer's Restaurants,  Inc. (the "Company" or "Elmer's") (NASDAQ Small Cap Market
symbol:  ELMS),  located in Portland,  Oregon,  is a franchisor  and operator of
full-service,  family oriented  restaurants under the names "Elmer's Breakfast o
Lunch o Dinner" and "Mitzel's  American Kitchen" and an operator of delicatessen
restaurants under the names "Ashley's", "Cooper's" and "Richard's Deli and Pub."
The Company is an Oregon  corporation and was incorporated in 1983. Walter Elmer
opened the first Elmer's  restaurant in Portland,  Oregon in 1960, and the first
franchised   restaurant  opened  in  1966.  The  Company  acquired  the  Elmer's
franchising operation in January 1984 from the Elmer family.

The Company  franchises or operates a total of 37 full-service,  family-oriented
restaurants,  with a warm, friendly atmosphere and comfortable furnishings. Most
of the restaurants are decorated in a home style,  with fireplaces in the dining
rooms.  The restaurants are primarily  freestanding  buildings,  ranging in size
from 4,600 to approximately  9,000 square feet with seating  capacities  ranging
from 120 to 220. A portion of the dining  room in most  restaurants  may also be
used for private group  meetings by closing it off from the public dining areas.
The menu offers an extensive selection of items for breakfast, lunch and dinner.

CRITICAL ACCOUNTING POLICIES

The  Company's  reported  results  are  affected by the  application  of certain
accounting  policies  that  require  subjective  or  complex  judgments.   These
judgments  involve  estimates  that  are  inherently  uncertain  and may  have a
significant  impact  on our  quarterly  or  annual  results  of  operations  and
financial  condition.  Changes  in these  estimates  and  judgments  could  have
significant  effects  on the  Company's  results  of  operations  and  financial
condition in future  years.  We believe the Company's  most critical  accounting
policies  cover  accounting  for  long-lived  assets  -  specifically  property,
buildings  and  equipment  depreciation  thereon and the valuation of intangible
assets.  Additional  critical accounting policies govern revenue recognition and
accounting for stock options.

Property, Buildings and Equipment
---------------------------------
When the Company  purchases  property,  buildings and equipment,  the assets are
recorded at cost. However,  when the Company acquires an operating restaurant or
business,  the Company must allocate the purchase  price between the fair market
value of the  tangible  assets  acquired  and any excess to  goodwill.  The fair
market value of restaurant  equipment  fixtures and  furnishings in an operating
restaurant  is  difficult  to  separate  from  the  going  concern  value of the
restaurant.  Most of the value of the equipment is due to the fact that it is in
the restaurant and working. The Company values in place equipment with reference
to replacement cost, age and condition, and utility in its intended use.

Intangible Assets
-----------------
The Company reviews the valuation of its intangible assets annually based on its
third  quarter  financial  statements  and assesses for events  occurring in the
interim indicating  possible  impairment.  If the fair values of the intangibles
were less than their recorded  values,  an impairment  loss would be recognized.
The fair values of the reporting units are estimated using multiples of earnings
<PAGE>
before  interest,  taxes,  depreciation and  amortization.  The market for these
intangibles is limited and the realizable value will differ from the fair values
estimated by using a multiple of earnings.

Depreciation
------------
Property, buildings and equipment are depreciated using the straight-line method
over their estimated useful lives. The useful lives of the individual assets are
estimated  by the  Company's  management  based  upon  their  experience  in the
restaurant  industry.  Generally  buildings  are  depreciated  over 35 years and
equipment is depreciated over a range of 3 to 10 years.  Leasehold  improvements
are amortized on a straight-line method over their estimated useful lives or the
term of the  related  lease,  whichever  is  shorter.  Periodically  the Company
reviews the net book value of its  depreciable  assets to  determine if there is
any possible  impairment of value. The Company recognized a $140,000  impairment
loss on the write  down of  property  and  equipment  with a  carrying  value of
approximately  $155,000  to a fair value of  $15,000.  Differences  between  the
realized lives and the estimated  lives could result in changes to the Company's
results  from  operations  in  future  years as well as  changes  in the rate of
recurring capital expenditures.

Revenue Recognition
-------------------
The Company's  revenue is primarily from cash and credit card  transactions.  As
such,  restaurant revenue is generally recognized upon receipt of cash or credit
cards  receipts.  Franchise fees based upon a percent of the  franchisees  gross
sales are recognized as the franchisees' sales occur.  Revenue from the lottery,
which includes traditional ticket based games and video poker games, is recorded
on a commission  basis,  net of state regulated  payouts.  Expenses are recorded
using accrual accounting based upon when goods and services are used.

Stock Options
-------------
The Company accounts for its stock-based  compensation using the intrinsic value
method prescribed in Accounting  Principles Board Opinion No. 25, Accounting for
Stock  Issued  to  Employees,  and  related   interpretations.   Based  on  this
methodology the Company has not recorded any  compensation  costs related to its
stock options  since all options have been issued at an exercise  price equal to
or greater than the market value of the Company's stock at the time of issuance.

In Section 1 Basis of  Presentation,  we provide  pro forma  disclosures  of net
income and  earnings  per share as if the  method  prescribed  by SFAS No.  123,
Accounting  for  Stock-Based   Compensation,   had  been  applied  in  measuring
compensation expense. A change to recognize compensation expense for all options
granted  using a fair value  approach in regularly  reported  financial  results
would have a significant impact on our results of operations.

HIGHLIGHTS OF HISTORICAL RESULTS. The Company reported net income of $311,839 or
$.17 per share for the quarter  ended July 19, 2004, on sales of $9.8 million as
compared to reported  net income of $363,105 or $.18 per share on sales of $10.1
million for the first quarter ended July 21, 2003. The Company's total assets at
July 19, 2004 were $18.8  million,  a decrease of $260,000  from March 29, 2004.
During  the  sixteen  weeks  ended  July 19,  2004,  working  capital  increased
$612,000. Cash provided by operating activities totaled $193,000 for the quarter
ended July 19, 2004 compared to $511,000 for the quarter ended July 21,2003. The
decrease in cash  provided  from  operations  is primarily  attributable  to the
timing of payroll tax and worker's  compensation  insurance  payments as well as
pay  down of  negative  working  capital  attributable  to the  sale of the Palm
Springs  restaurant.  The franchised  Pocatello,  Idaho restaurant was sold. The
franchisee signed a new 25-year franchise  agreement at the current 4% franchise
fee. The $35,000 initial franchise fee was recorded in the quarter.

COMPARISON  OF RESULTS OF  OPERATIONS.  The  following  discussion  and analysis
presents the  Company's  results of  operations  for the 16 weeks ended July 19,
2004 and July 21, 2003.

For the period ended July 19, 2004,  the  Company's  net income and earnings per
share  decreased  14.1% and 5.6%,  respectively,  from the comparable  period in
2003.  Net income as a percentage of total revenue  decreased  from 3.6% for the
period ended July 21, 2003, to 3.2% for the period ended July 19, 2004.
<PAGE>
<TABLE>
<CAPTION>
Dollar amounts in thousands except per share       RESULTS OF OPERATIONS             RESULTS OF OPERATIONS
data (unaudited)                                FOR THE SIXTEEN WEEKS ENDED       FOR THE SIXTEEN WEEKS ENDED
                                                       JULY 19, 2004                     JULY 21, 2003
                                                ---------------------------       ---------------------------
                                                                Percent of                       Percent of
                                                 Amount          Revenues           Amount        Revenues
                                                -----------    ------------       ---------    --------------
<S>                                                 <C>             <C>            <C>                <C>
Revenues                                            $9,805          100.0%         $10,059            100.0%

Restaurant costs and expenses                        8,530           87.0%           8,765             87.1%

General and administrative expenses                    731            7.5%             671              6.7%
Loss (Gain) on sale of land buildings and
equipment and loss on impairment                       (5)           (.1)%               4              0.1%

Income from operations                                 549            5.6%             619              6.1%
Non operating income (expense)                        (90)           (.9)%            (88)            (0.9)%
Net income                                             312            3.2%             363              3.6%

Basic earnings per share                             $0.17                           $0.18

Weighted average shares outstanding              1,816,335                       2,041,728
</TABLE>

<TABLE>
<CAPTION>
                                          REVENUE                          REVENUE
                                FOR THE SIXTEEN WEEKS ENDED      FOR THE SIXTEEN WEEKS ENDED
                                       JULY 19, 2004                    JULY 21, 2003
                                ---------------------------      ---------------------------
                                                Percent of                       Percent of
                                 Amount          Revenues         Amount          Revenues
                                --------       ------------      --------       ------------
<S>                              <C>                 <C>          <C>                 <C>
Restaurant operations:
Restaurant sales                 $8,243              84.1%        $8,547              85.0%
Lottery                           1,140              11.6%         1,128              11.2%
                                --------       ------------      --------       ------------
                                  9,383              95.7%         9,675              96.2%

Franchise operations                422               4.3%           384               3.8%
                                --------       ------------      --------       ------------

Total revenue                    $9,805             100.0%       $10,059             100.0%
                                ========       ============      ========       ============
</TABLE>

REVENUES.  Revenues  for the period  ended July 19, 2004 were 2.5% less than for
the comparable  period in 2003.  Revenues from same store restaurant  operations
were up .2% compared to the sixteen weeks ended July 21, 2003.  Same store sales
at the Company's  Elmer's  restaurants  were down 1.7%. The Company defines same
store sales as  restaurants  that were Company owned and operating  continuously
from April 1, 2003  through July 19, 2004.  Revenue  from  franchise  operations
increased $38,000 attributable to increases in initial franchise fees as well as
increases in royalty income.

March 31, 2004, the Oregon Lottery  Commission  approved a new six-year retailer
contract  effective  June 27, 2004.  If the new  commission  structure  had been
applied  to sales for the year  ended  March 29,  2004,  it would  have  reduced
commissions by  approximately  $435,000,  or 10%. The following  table shows the
expected impact by quarter.
<PAGE>
                       Quarter ended :                       Adverse impact
                       ---------------                       --------------
                         July 19, 2004                              $93,000
                      October 11, 2004                              250,000
                       January 3, 2005                               96,000
                         April 4, 2005                             (10,000)
                         July  4, 2005                                6,000

The Lottery has installed additional terminals in most Company locations and the
Company expects year over year sales increases to reduce, but not eliminate, the
impact of the new lower rates.  The $93,000 impact in the quarter ended July 19,
2004 was more than offset by increased  sales prior to the  contracts  effective
date of June 27, 2004. As a result of timing features of the new contract,  most
of the adverse  impact will be felt in the Company's  second  quarter ending the
second Monday in October.

RESTAURANT COSTS AND EXPENSES.  A comparison of restaurant costs and expenses as
a percent of revenue  for the 16 weeks ended July 19, 2004 and July 21, 2003 are
as follows:

<TABLE>
<CAPTION>
                                               RESTAURANT COSTS AND EXPENSES       RESTAURANT COSTS AND EXPENSES
                                                FOR THE SIXTEEN WEEKS ENDED         FOR THE SIXTEEN WEEKS ENDED
                                              -------------------------------    ----------------------------------
                                                      JULY 19, 2004                        JULY 21, 2003
                                              -------------------------------    ----------------------------------
<S>                                                  <C>               <C>              <C>                  <C>
Cost of restaurant sales:
Food and beverage                                    $2,843            29.0%            $3,100               30.8%
Labor and related costs                               3,417            34.9%             3,398               33.8%
Restaurant operating costs                            1,383            14.1%             1,379               13.7%
Occupancy costs                                         620             6.3%               636                6.3%
Depreciation and amortization                           267             2.7%               252                2.5%
Restaurant opening and closing expenses                  --               --                --                0.0%
                                              --------------    -------------    --------------     ---------------
    Total cost of restaurant sales                   $8,530            87.0%            $8,765               87.1%
                                              ==============    =============    ==============     ===============
</TABLE>

The Company was  operating 15  restaurants  and 13 delis in 2003 and 2004.  Deli
operations  typically  experience  higher  food costs and lower labor costs as a
percentage  of sales,  than the  Company's  full  service  Elmer's and  Mitzel's
concepts.  A decline in revenues from deli  operations  was  principally  in low
margin products. In spite of decreased revenue, deli gross profits increased 2%.
This  increase in gross  margins  accounts  for the decline in food and beverage
costs of 1.8% and increase in labor costs of 1.1% as a percentage of sales. Food
and beverage costs at the Company's Elmer's restaurants  increased 0.8% of sales
while labor and related costs declined 1.0%

GENERAL AND ADMINISTRATIVE EXPENSES. General and administrative ("G&A") expenses
were 7.5% of total revenue for the 16 weeks ended July 19, 2004 compared to 6.7%
in the comparable period in 2003. Accounting fees increased $21,000 in the first
quarter  over the  previous  year and  corporate  wages were up  $39,000  due to
additional marketing and franchise support expenses.

LOSS (GAIN) ON LAND BUILDINGS AND EQUIPMENT. Gain on sale of land, buildings and
equipment  increased  from (.1%) of sales for the quarter ended July 21, 2003 to
0.1% for the current quarter.  The Company sold the Palm Springs restaurant to a
franchisee for a net gain of approximately  $145,000.  The Company  recognized a
$140,000  impairment  loss on the write down of property  and  equipment  from a
carrying value of  approximately  $155,000 to a fair value of $15,000.  The loss
arises from the  anticipated  closure of a restaurant when the lease will not be
renewed.

INCOME FROM OPERATIONS.  Income from operations decreased $70,000 to $549,000.

NON-OPERATING INCOME/(EXPENSE). Non-operating expense was 0.9% of total revenues
for the 16 weeks  ended July 19, 2004  compared to .9% of total  revenues in the
comparable period in 2003.
<PAGE>
LIQUIDITY  AND CAPITAL  RESOURCES.  As of July 19, 2004 the Company had cash and
cash  equivalents of  approximately  $2.0 million  representing an increase from
March 29,  2004 of  approximately  $461,000.  Cash  provided by  operations  was
$193,000.  Cash provided by investing activities was $311,000,  principally from
the sale of the Palm Springs restaurant.

The Company's  primary  liquidity needs arise from debt service on indebtedness,
operating  lease  requirements  and the  funding  of capital  expenditures.  The
Company's  primary  source of liquidity  during the year is the operation of its
restaurants,  franchise  fees earned  from its  franchisees,  cash on hand,  and
borrowings.  As of July 19, 2004, the Company had  outstanding  indebtedness  of
$3.8  million  with GE Capital  and $1.5  million in real estate debt with Wells
Fargo Bank.

On January 14, 2004 the Company  purchased  204,255  shares of its Common Stock,
representing  approximately  10% of the then outstanding  shares,  at a purchase
price of $6.43 per share in  accordance  with the terms of a tender  offer.  The
aggregate price of the shares  purchased by the Company through the tender offer
was approximately $1,313,000. Fees and expenses associated with the tender offer
were  approximately  $17,000,  which was expensed in the  Company's  4th Quarter
ended March 29, 2004.

The Wells  Fargo Bank real  estate  debt  agreement  was amended in June 2003 to
change the fixed interest rate of 8% to a variable interest rate based on LIBOR.
In conjunction with this modification, the Company entered into an interest rate
swap  agreement,  which  effectively  fixed  the  interest  rate at  6.17%.  The
mortgages now have a weighted-average maturity of 7.5 years, bear interest at an
average of 6.0%,  require  monthly  payments of principal and interest,  and are
collateralized  by three real estate assets. As of July 19, 2004 the fair market
value of this  agreement  was $1,043 and results in the  recognition  of $20,429
(net of tax effect) in other comprehensive gain.

Certain of the Company's debt agreements require compliance with debt covenants.
The most restrictive  covenants  require the Company to maintain a maximum ratio
of total  liabilities,  excluding  subordinated debt, to tangible net worth plus
subordinated debt of 3.5 to 1.0, and a ratio of cash generation  (defined as net
income before taxes,  interest expense,  depreciation and amortization) to total
interest  expense plus the prior period current  maturities of long-term debt of
at least 2.0 to 1.0.  Management believes that the Company is in compliance with
such requirements.

Elmer's Restaurants,  Inc., like most restaurant businesses,  is able to operate
with nominal or deficit working capital because sales are for cash and inventory
turnover is rapid.  Renovation  and/or  remodeling  of existing  restaurants  is
either funded  directly from available cash or, in some  instances,  is financed
through  outside  lenders.  Construction  or acquisition  of new  restaurants is
generally, although not always, financed by outside lenders.

The  Company  believes  that it will  continue  to be  able to  obtain  adequate
financing on acceptable  terms for new restaurant  construction and acquisitions
and that cash generated from  operations  will be adequate to meet its financial
needs and to pay  operating  expenses for the  foreseeable  future,  although no
assurances can be given.

CONTRACTUAL OBLIGATIONS
The Company makes a range of contractual  commitments in the ordinary  course of
business and in conjunction  with the acquisition  and sale of restaurants.  The
following table shows the Company's contractual obligations:

<TABLE>
<CAPTION>
                                                                Commitment expiration period
                            Total amount committed   1 year or less     1-3 years       4-5 years     5 years or more
----------------------------------------------------------------------------------------------------------------------
<S>                                     <C>                  <C>            <C>           <C>              <C>
Term debt                               $5,288,981           $429,889       $989,336      $1,389,900       $2,479,856
Operating Leases                         4,873,662          1,277,158      1,763,240       1,089,350          743,914
Guarantees                               1,186,069            385,846        729,019          71,204                -
----------------------------------------------------------------------------------------------------------------------
Totals                                 $11,348,712         $2,092,893     $3,481,595      $2,550,454       $3,223,770
                                       ===========         ==========     ==========      ==========       ==========
</TABLE>
<PAGE>
ITEM 3.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS:

Certain  statements in this Form 10-Q  constitute  "forward-looking  statements"
which we believe are  reasonable and within the meaning of the Securities Act of
1933,  as amended and the  Securities  Exchange  Act of 1934,  as amended.  Such
forward-looking statements involve known and unknown risks,  uncertainties,  and
other  factors  relating to the Company's  business,  financial  condition,  and
operations which may cause the actual results,  performance,  or achievements of
Elmer's Restaurants,  Inc. (individually and collectively with its subsidiaries,
herein the  "Company")  to be  materially  different  from any  future  results,
performance,  or  achievements  expressed  or  implied  by such  forward-looking
statements. Such factors include, among others, the following:  general economic
and business conditions;  the ability to accomplish stated goals and objectives;
successful  integration of acquisitions;  the impact of competitive products and
pricing;  success of operating  initiatives;  development  and operating  costs;
advertising  and  promotional  efforts;  adverse  publicity;  acceptance  of new
product offerings;  consumer trial and frequency;  availability,  locations, and
terms of sites for  restaurant  development;  changes in  business  strategy  or
development plans; changes in regulations affecting lottery commissions; quality
of management;  availability,  terms and  deployment of capital;  the results of
financing efforts; business abilities and judgment of personnel; availability of
qualified personnel;  food, labor and employee benefit costs; changes in, or the
failure  to comply  with,  government  regulations;  continued  NASDAQ  listing;
weather  conditions;  construction and remodeling  schedules;  and other factors
referenced in this Form 10-Q.

Market Risks
------------
The Company  invests  excess cash beyond its  working  capital  requirements  in
liquid marketable  securities.  These securities  consist primarily of corporate
and  government  bond mutual funds focusing on issues with medium and short term
maturities.  The Company  actively manages its portfolio to reduce interest rate
risk. However, an increase in interest rate levels will tend to reduce the value
of the portfolio.

Certain of the Company's outstanding financial instruments are subject to market
risks,  including  interest  rate  risk.  Such  financial  instruments  are  not
currently  subject to foreign  currency risk or commodity  price risk. A rise in
prevailing  interest rates could have adverse effects on the Company's financial
condition  and results of  operations.  The fair value of financial  instruments
approximated the book value at July 19, 2004.

ITEM 4.  CONTROLS AND PROCEDURES

The Company's  President  and its Corporate  Controller,  after  evaluating  the
effectiveness of the Company's disclosure controls and procedures (as defined in
the  Securities  Exchange Act of 1934 Rules  13a-14(c) and 15d-14(c)) as of July
19, 2004 on Form 10-Q (the  "Evaluation  Date"),  have  concluded that as of the
Evaluation Date, the Company's  disclosure controls and procedures were adequate
and  effective to ensure that material  information  relating to the Company and
its consolidated subsidiaries would be made known to them by others within those
entities,  particularly during the period in which this quarterly report on Form
10-Q was being prepared.

There were no significant changes in the Company's internal controls or in other
factors that could  significantly  affect the Company's  disclosure controls and
procedures  subsequent to the Evaluation Date, nor any significant  deficiencies
or material  weaknesses in such  disclosure  controls and  procedures  requiring
corrective actions. As a result, no corrective actions were taken.
<PAGE>
                           PART II - OTHER INFORMATION

ITEM 5.  OTHER INFORMATION

In accordance  with  amendments  adopted on May 21, 1998 to Rule 14a-4 under the
Securities  and Exchange Act of 1934, if notice of a shareholder  proposal to be
raised at the annual  meeting  of  shareholders  is  received  at the  principal
executive  offices of the Company after May 15, 2005 (45 days prior to the month
and date in 2005 corresponding to the date on which the Company mailed its proxy
materials for the 2004 annual  meeting),  proxy voting on that proposal when and
if raised at the 2005 annual meeting will be subject to the discretionary voting
authority  of the  designated  proxy  holders.  Any  shareholder  proposal to be
considered  for  inclusion  in proxy  materials  for the  Company's  2005 annual
meeting  must be received at the  principal  executive  office of the Company no
later than January 21, 2005.

ITEM 6.  EXHIBITS AND REPORTS OF FORM 8-K

         a)       Exhibits:

                  Exhibits required to be attached by Item 601 of Regulation S-K
                  are listed in the Index to  Exhibits of this Form 10-Q and are
                  incorporated herein by this reference.

         b)       Reports on Form 8-K:

                  June 23, 2004 reporting fiscal year end financial results.

                  August 6, 2004 reporting going private proposal.

                                   SIGNATURES


Pursuant to the  requirements  of Section 13 of the  Securities  Exchange Act of
1934, Elmer's Restaurants,  Inc. has duly caused this report to be signed on its
behalf by the undersigned, thereunto duly authorized.


                            Elmer's Restaurants, Inc.


                            By: /s/ BRUCE N. DAVIS
                                --------------------------------------------
                                Bruce N. Davis
                                Chief Executive Officer and President


Dated: September 2, 2004


<PAGE>
                                  EXHIBIT INDEX


<TABLE>
<CAPTION>
Exhibit                                                                                Sequential
  No.    Description                                                                    Page No.


<C>                                                                                    <S>
3(i)*    Restated Articles of Incorporation of the Company  (Incorporated herein
         by reference  from Exhibit No. 3.1 to the  Company's  Annual  Report on
         Form 10-K for the year ended March 31, 1988.)

3(ii)*   By-Laws of the Company, as amended.  (Incorporated  herein by reference
         from Exhibit 3.2 of the  Company's  Annual  Report on Form 10-K for the
         year ended March 31, 1990.)

31.1     Certification  Pursuant to 18 U.S.C.  Section 1350, as Adopted pursuant
         to Section 302 of the  Sarbanes-Oxley  Act of 2002, of Chief  Executive
         Officer and President.                                                            18

31.2     Certification  Pursuant to 18 U.S.C.  Section 1350, as Adopted pursuant
         to Section 302 of the  Sarbanes-Oxley  Act of 2002,  of  Secretary  and
         Corporate Controller.                                                             19

32.1     Certification  Pursuant to 18 U.S.C.  Section 1350, as Adopted pursuant
         to Section 906 of the  Sarbanes-Oxley  Act of 2002, of Chief  Executive
         Officer and President.                                                            20

32.2     Certification  Pursuant to 18 U.S.C.  Section 1350, as Adopted pursuant
         to Section 906 of the  Sarbanes-Oxley  Act of 2002,  of  Secretary  and
         Corporate Controller.                                                             21
</TABLE>