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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C.  20549

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FORM 10-Q

|(Mark One)
|----------
|x         
|          
|          
|          
|OR        
|          
|o         
|          
|          

Commission file number 0-20792

FRESH CHOICE, INC.(Exact name of registrant as specified in its charter)

|Delaware                                                                                                                                                                                                                                                                                                                                                           |  | 77-0130849                              
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------ |  | ----------------------------------------
|(State
  or other jurisdiction of
  incorporation or organization)                                                                                                                                                                                                                                                                                                 |  | (I.R.S.
  Employee
  Identification No.)
|                                                                                                                                                                                                                                                                                                                                                                   |  |                                         
|485 Cochrane Circle, Morgan Hill, California 95037                                                                                                                                                                                                                                                                                                                
|(Address
  of principal executives
  offices)         (Zip
  Code)                                                                                                                                                                                                                                                                                                
|                                                                                                                                                                                                                                                                                                                                                                   |  |                                         
|Registrants
  telephone number, including area code:     (408) 776-0799                                                                                                                                                                                                                                                                                          
|                                                                                                                                                                                                                                                                                                                                                                   |  |                                         
|                                                                                                                                                                                                                                                                                                                                                                   |  |                                         
|                                                                                                                                                                                                                                                                                                                                                                  
|Former name, former address and former fiscal year, if changed since last report.                                                                                                                                                                                                                                                                                 
|                                                                                                                                                                                                                                                                                                                                                                   |  |                                         
|Indicate
   by check 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.
|xYesoNo                                                                                                                                                                                                                                                                                                                                                           
|                                                                                                                                                                                                                                                                                                                                                                   |  |                                         
|Indicate
   by check mark whether the registrant is an accelerated filer (as defined in
   rule 12B-2 of the Exchange Act).                                                                                                                                                                                                                                       
|oYes
   xNo                                                                                                                                                                                                                                                                                                                                                       

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FRESH CHOICE, INC.

INDEX

|PART I -
  FINANCIAL INFORMATION |                                                                                                                 
|-------------------------------- | ----------------------------------------------------------------------------------------------------------------
|                                 |                                                                                                                 
|                                 | Item 1 -
  Financial Statements                                                                                 
|                                 |                                                                                                                 
|                                 | Condensed
  Consolidated Balance Sheets at March 21, 2004
  and December 28, 2003                               
|                                 |                                                                                                                 
|                                 | Condensed
  Consolidated Statements of Operations for the Twelve Weeks
  ended March 21, 2004 and March 23, 2003
|                                 |                                                                                                                 
|                                 | Condensed
  Consolidated Statements of Cash Flows for the Twelve Weeks
  ended March 21, 2004 and March, 23 2003
|                                 |                                                                                                                 
|                                 | Notes to
  Condensed Consolidated Financial Statements                                                          
|                                 |                                                                                                                 
|                                 | Item 2 -
  Managements Discussion and Analysis of Financial Condition
          and Results of Operations      
|                                 |                                                                                                                 
|                                 | Item 3 -
  Quantitative and Qualitative Disclosures About Market Risk                                           
|                                 |                                                                                                                 
|                                 | Item 4-
  Controls and Procedures                                                                               
|                                 |                                                                                                                 
|PART II -
  OTHER INFORMATION    |                                                                                                                 
|                                 |                                                                                                                 
|                                 | Item 1 -
  Legal Proceedings                                                                                    
|                                 | Item 2 -
  Changes in Securities                                                                                
|                                 | Item 3 -
  Defaults Upon Senior Securities                                                                      
|                                 | Item 4 -
  Submission of Matters to a Vote of Security Holders                                                  
|                                 | Item 5 -
  Other Information                                                                                    
|                                 | Item 6 -
  Exhibits and Reports on Form 8-K                                                                     
|                                 |                                                                                                                 
|SIGNATURES                       | 20                                                                                                              
|                                 |                                                                                                                 
|INDEX TO
  FORM 10-Q EXHIBITS    | 21                                                                                                              
|                                 |                                                                                                                 

2

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PART I.  FINANCIAL INFORMATION

Item 1 - Financial Statements

FRESH CHOICE, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS(In
thousands, except share and per share amounts)(Unaudited)

|                                                                                                                                                                                                                                                      |  | March 21,
  2004 |   | December 28,
  2003 |  
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ---------------- | - | ------------------- | -
|                                                                                                                                                                                                                                                      |  |                  |   |                     |  
|ASSETS                                                                                                                                                                                                                                                |  |                  |   |                     |  
|                                                                                                                                                                                                                                                      |  |                  |   |                     |  
|CURRENT
  ASSETS:                                                                                                                                                                                                                                     |  |                  |   |                     |  
|Cash
  and cash equivalents                                                                                                                                                                                                                           |  |                  | $ | 675                 |  
|Inventories                                                                                                                                                                                                                                           |  |                  |   | 460                 |  
|Prepaid
  expenses and other current assets                                                                                                                                                                                                           |  |                  |   | 655                 |  
|                                                                                                                                                                                                                                                      |  |                  |   |                     |  
|Total
  current assets                                                                                                                                                                                                                                |  |                  |   | 1,790               |  
|                                                                                                                                                                                                                                                      |  |                  |   |                     |  
|PROPERTY
  AND EQUIPMENT, net                                                                                                                                                                                                                         |  |                  |   | 27,112              |  
|                                                                                                                                                                                                                                                      |  |                  |   |                     |  
|DEPOSITS
  AND OTHER ASSETS                                                                                                                                                                                                                           |  |                  |   | 749                 |  
|                                                                                                                                                                                                                                                      |  |                  |   |                     |  
|                                                                                                                                                                                                                                                      |  |                  |   |                     |  
|TOTAL
  ASSETS                                                                                                                                                                                                                                        |  |                  | $ | 29,651              |  
|                                                                                                                                                                                                                                                      |  |                  |   |                     |  
|                                                                                                                                                                                                                                                      |  |                  |   |                     |  
|LIABILITIES
  AND STOCKHOLDERS EQUITY                                                                                                                                                                                                                |  |                  |   |                     |  
|                                                                                                                                                                                                                                                      |  |                  |   |                     |  
|CURRENT
  LIABILITIES:                                                                                                                                                                                                                                |  |                  |   |                     |  
|Accounts
  payable                                                                                                                                                                                                                                    |  |                  | $ | 1,475               |  
|Other
  accrued expenses                                                                                                                                                                                                                              |  |                  |   | 2,957               |  
|Accrued
  salaries and wages                                                                                                                                                                                                                          |  |                  |   | 1,631               |  
|Sales
  tax payable                                                                                                                                                                                                                                   |  |                  |   | 936                 |  
|Current
  portion of long-term obligations                                                                                                                                                                                                            |  |                  |   | 934                 |  
|                                                                                                                                                                                                                                                      |  |                  |   |                     |  
|Total
  current liabilities                                                                                                                                                                                                                           |  |                  |   | 7,933               |  
|                                                                                                                                                                                                                                                      |  |                  |   |                     |  
|CAPITAL
  LEASE OBLIGATIONS                                                                                                                                                                                                                           |  |                  |   | 1,920               |  
|                                                                                                                                                                                                                                                      |  |                  |   |                     |  
|LONG-TERM
  DEBT                                                                                                                                                                                                                                      |  |                  |   | 1,848               |  
|                                                                                                                                                                                                                                                      |  |                  |   |                     |  
|OTHER
  LONG-TERM LIABILITIES                                                                                                                                                                                                                         |  |                  |   | 2,647               |  
|                                                                                                                                                                                                                                                      |  |                  |   |                     |  
|                                                                                                                                                                                                                                                      |  |                  |   |                     |  
|Total
  liabilities                                                                                                                                                                                                                                   |  |                  |   | 14,348              |  
|                                                                                                                                                                                                                                                      |  |                  |   |                     |  
|                                                                                                                                                                                                                                                      |  |                  |   |                     |  
|STOCKHOLDERS
  EQUITY:                                                                                                                                                                                                                               |  |                  |   |                     |  
|Convertible
  preferred stock, $.001 par value;
                      3.5
  million shares authorized; shares
                      outstanding:  2004 and 2003 - 1,187,906;
                      liquidation
  preference; 2004-$8,980; 2003-$8,826 |  |                  |   | 5,175               |  
|Common
  stock - $.001 par value;
                      15
  million shares authorized; shares
                      outstanding:
  2004 - 6,017,190;  2003 - 6,017,190                                                                               |  |                  |   | 42,714              |  
|Accumulated
  deficit                                                                                                                                                                                                                                 |  |                  |   | (32,586             | )
|                                                                                                                                                                                                                                                      |  |                  |   |                     |  
|                                                                                                                                                                                                                                                      |  |                  |   |                     |  
|Total
  stockholders equity                                                                                                                                                                                                                          |  |                  |   | 15,303              |  
|                                                                                                                                                                                                                                                      |  |                  |   |                     |  
|                                                                                                                                                                                                                                                      |  |                  |   |                     |  
|TOTAL
  LIABILITIES AND STOCKHOLDERS EQUITY                                                                                                                                                                                                          |  |                  | $ | 29,651              |  
|                                                                                                                                                                                                                                                      |  |                  |   |                     |  

The
December 28, 2003 amounts are derived from the Companys audited financial
statements.
See accompanying notes to condensed consolidated financial statements.

3

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FRESH CHOICE, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share amounts)(Unaudited)

|                                                               |  | Twelve Weeks Ended |  
|-------------------------------------------------------------- |  | ------------------ | -
|                                                               |  |                    |  
|                                                               |  | March 21, 2004     |  
|                                                               |  |                    |  
|                                                               |  |                    |  
|NET
  SALES                                                    |  |                    | $
|                                                               |  |                    |  
|                                                               |  |                    |  
|COSTS
  AND EXPENSES:                                          |  |                    |  
|Cost
  of sales                                                |  |                    |  
|Restaurant
  operating expenses:                               |  |                    |  
|Labor                                                          |  |                    |  
|Occupancy
  and other                                          |  |                    |  
|General
  and administrative expenses                          |  |                    |  
|Depreciation
  and amortization                                |  |                    |  
|Restaurant
  opening costs                                     |  |                    |  
|                                                               |  |                    |  
|Total
  costs and expenses                                     |  |                    |  
|                                                               |  |                    |  
|                                                               |  |                    |  
|OPERATING
  LOSS                                               |  |                    |  
|                                                               |  |                    |  
|Interest
  income                                              |  |                    |  
|Interest
  expense                                             |  |                    |  
|                                                               |  |                    |  
|                                                               |  |                    |  
|Interest
  expense, net                                        |  |                    |  
|                                                               |  |                    |  
|                                                               |  |                    |  
|LOSS
  BEFORE INCOME TAXES                                     |  |                    |  
|Provision
  for income taxes                                   |  |                    |  
|                                                               |  |                    |  
|                                                               |  |                    |  
|NET
  LOSS                                                     |  |                    | $
|                                                               |  |                    |  
|                                                               |  |                    |  
|Basic
  and diluted net loss per common share:                 |  |                    | $
|                                                               |  |                    |  
|                                                               |  |                    |  
|Shares
  used in computing basic and diluted per share amounts |  |                    |  
|                                                               |  |                    |  

See
accompanying notes to condensed consolidated financial statements.

4

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FRESH
CHOICE, INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS(In
thousands)
(Unaudited)

|                                                                                                       |  | Twelve Weeks Ended |  
|------------------------------------------------------------------------------------------------------ |  | ------------------ | -
|                                                                                                       |  |                    |  
|                                                                                                       |  | March 21,2004      |  
|                                                                                                       |  |                    |  
|OPERATING
  ACTIVITIES :                                                                               |  |                    |  
|Net
  loss                                                                                             |  |                    | $
|Adjustments
  to reconcile net loss to net cash provided (used) by
            operating
  activities: |  |                    |  
|Depreciation
  and amortization                                                                        |  |                    |  
|Issuance
  of common stock for consulting services                                                     |  |                    |  
|Loss
  on disposal of property and equipment                                                           |  |                    |  
|Deferred
  rent                                                                                        |  |                    |  
|Change
  in operating assets and liabilities:                                                          |  |                    |  
|Inventories                                                                                            |  |                    |  
|Prepaid
  expenses and other current assets                                                            |  |                    |  
|Accounts
  payable                                                                                     |  |                    |  
|Accrued
  salaries and wages                                                                           |  |                    |  
|Other
  accrued expenses                                                                               |  |                    |  
|                                                                                                       |  |                    |  
|                                                                                                       |  |                    |  
|Net
  cash provided (used) by operating activities                                                     |  |                    |  
|                                                                                                       |  |                    |  
|                                                                                                       |  |                    |  
|INVESTING
  ACTIVITIES:                                                                                |  |                    |  
|Capital
  expenditures                                                                                 |  |                    |  
|Deposits
  and other assets                                                                            |  |                    |  
|                                                                                                       |  |                    |  
|                                                                                                       |  |                    |  
|Net
  cash used in investing activities                                                                |  |                    |  
|                                                                                                       |  |                    |  
|                                                                                                       |  |                    |  
|FINANCING
  ACTIVITIES:                                                                                |  |                    |  
|Long-term
  debt - repayments                                                                          |  |                    |  
|Capital
  lease obligations - borrowings                                                               |  |                    |  
|Capital
  lease obligations - repayments                                                               |  |                    |  
|                                                                                                       |  |                    |  
|Net
  cash provided (used) by financing activities                                                     |  |                    |  
|                                                                                                       |  |                    |  
|                                                                                                       |  |                    |  
|DECREASE
  IN CASH AND CASH EQUIVALENTS                                                                |  |                    |  
|                                                                                                       |  |                    |  
|CASH
  AND CASH EQUIVALENTS:                                                                           |  |                    |  
|                                                                                                       |  |                    |  
|Beginning
  of period                                                                                  |  |                    |  
|                                                                                                       |  |                    |  
|End
  of period                                                                                        |  |                    | $
|                                                                                                       |  |                    |  
|                                                                                                       |  |                    |  
|Supplemental
  Disclosure of Cash Flow Information:                                                    |  |                    |  
|Cash
  paid during the period for interest                                                             |  |                    | $
|                                                                                                       |  |                    |  
|                                                                                                       |  |                    |  
|Cash
  paid during the period for income taxes                                                         |  |                    | $
|                                                                                                       |  |                    |  

See
accompanying notes to condensed consolidated financial statements.

5

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FRESH
CHOICE, INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
For the Twelve Weeks Ended March 21, 2004 and March 23, 2003
(Unaudited)

1.          CONDENSED
CONSOLIDATED FINANCIAL STATEMENTS

The
accompanying condensed consolidated financial statements have been prepared by
the Company without audit and reflect all adjustments, consisting of normal
recurring adjustments and accruals, which are, in the opinion of management,
necessary for a fair statement of financial position and the results of
operations for the interim periods.  The
statements have been prepared in accordance with the regulations of the
Securities and Exchange Commission, but omit certain information and footnote
disclosures necessary to present the statements in accordance with accounting
principles generally accepted in the United States of America.  For further information, refer to the
financial statements and notes thereto included in the Companys Annual Report
on Form 10-K for the fiscal year ended December 28, 2003.

2.          SIGNIFICANT
ACCOUNTING POLICIES

The
Companys accounting policies are described in Note 1 of the Companys audited
December 28, 2003 financial statements included in the Companys Annual Report
on Form 10-K.  The accounting policies
that management has identified as critical or complex accounting policies are described
on Page 15 of this Form 10-Q under the caption Critical Accounting Policies.

3.          STOCK-BASED
COMPENSATION

The
Company accounts for stock-based awards to employees using the intrinsic value
method in accordance with Accounting Principles Board (APB) Opinion No. 25,
Accounting for Stock Issued to Employees. 
The Company accounts for stock-based awards to non employees in
accordance with Statement of Financial Accounting Standards (SFAS) No. 123
Accounting for Stock-Based Compensation and Emerging Issues Task Force
(EITF) Issue No. 96-18 Accounting for Equity Instruments That Are Issued to
Other Than Employees for Acquiring, or in Conjunction with Selling, Goods or
Services.

The
following table illustrates the effect on net income (loss) and net income
(loss) per common share if the Company had applied fair value recognition
provisions of SFAS No. 123 to stock based employee compensation.

|                                                                                                                                                               |  | Twelve Weeks Ended |  
|-------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ------------------ | -
|                                                                                                                                                               |  |                    |  
|(In thousands, except per share data)                                                                                                                          |  | March 21,
  2004   |  
|                                                                                                                                                               |  |                    |  
|                                                                                                                                                               |  |                    |  
|Net
  loss                                                                                                                                                     |  |                    | $
|Deduct:
  Total stock-based employee
     compensation expense determined under
     fair value based method for all awards,
     net of related tax effects * |  |                    |  
|                                                                                                                                                               |  |                    |  
|Pro
  forma net loss                                                                                                                                           |  |                    | $
|                                                                                                                                                               |  |                    |  
|                                                                                                                                                               |  |                    |  
|Net
  loss per common share:                                                                                                                                   |  |                    |  
|Basic
  and Diluted-as reported                                                                                                                                |  |                    | $
|                                                                                                                                                               |  |                    |  
|Basic
  and Diluted-pro forma                                                                                                                                  |  |                    | $
|                                                                                                                                                               |  |                    |  
|                                                                                                                                                               |  |                    |  
|*
  Of which there were none.                                                                                                                                  |  |                    |  

6

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4.          NET
LOSS PER COMMON SHARE

Basic
net loss per common share excludes dilution and is computed by dividing net
income by the weighted average of its common shares outstanding for the
period.  Diluted net loss per common
share reflects the potential dilution that could occur if securities or other
contracts to issue common stock were exercised or converted into common
stock.  The Company converts common
stock options and warrants into potential dilutive shares using the treasury
stock method and converts preferred stock into potential dilutive shares using
the if converted method.

A
reconciliation of the components of basic and diluted net income per share
follows:

|                                      |  | Twelve Weeks Ended |  
|------------------------------------- |  | ------------------ | -
|                                      |  |                    |  
|(In thousands, except per share data) |  | March 21, 2004     |  
|                                      |  |                    |  
|                                      |  |                    |  
|Basic Net Loss Per Common
  Share     |  |                    |  
|                                      |  |                    |  
|Net Loss                              |  |                    | $
|                                      |  |                    |  
|Average common
  shares outstanding   |  |                    |  
|                                      |  |                    |  
|Basic net loss
  per common share     |  |                    | $
|                                      |  |                    |  
|                                      |  |                    |  
|Diluted Net Loss Per Common
  Share   |  |                    |  
|                                      |  |                    |  
|Net Loss                              |  |                    | $
|                                      |  |                    |  
|                                      |  |                    |  
|Average common
  shares outstanding   |  |                    |  
|                                      |  |                    |  
|Dilutive
  shares:                    |  |                    |  
|Stock
  options                       |  |                    |  
|Convertible
  preferred stock         |  |                    |  
|                                      |  |                    |  
|Total
  shares and dilutive shares    |  |                    |  
|                                      |  |                    |  
|Diluted net
  loss per common share   |  |                    | $
|                                      |  |                    |  

The
following table presents the total dilutive securities, which the Company
excluded for each period presented from its diluted EPS computation because the
exercise price of the securities exceeded the average fair value of the
Companys common stock or the Company had a net loss and therefore, these
securities were anti-dilutive:

|                                |  | Twelve
  Weeks Ended | 
|------------------------------- |  | -------------------- | 
|                                |  |                      | 
|(In thousands)                  |  | March 21,
  2004     | 
|                                |  |                      | 
|                                |  |                      | 
|Potential
  Dilutive Securities |  |                      | 
|                                |  |                      | 
|Stock
  options excluded        |  | 1,174                | 
|Stock
  warrants                |  | 100                  | 
|Convertible
  preferred stock   |  | 1,188                | 

7

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5.          OTHER
ACCRUED EXPENSES

The
components of other accrued expenses are as follows:

|(In thousands)                  |  | March 21,2004 |   | December 28,2003 | 
|------------------------------- |  | ------------- | - | ---------------- | 
|                                |  |               |   |                  | 
|                                |  |               |   |                  | 
|Accrued
  workers compensation |  |               | $ | 828              | 
|Unredeemed
  gift certificates  |  |               |   | 571              | 
|Deferred
  vendor allowances    |  |               |   | 469              | 
|Accrued
  utilities             |  |               |   | 292              | 
|Accrued
  advertising           |  |               |   | 207              | 
|Accrued
  insurance             |  |               |   | 138              | 
|Accrued
  professional fees     |  |               |   | 104              | 
|Accrued
  property taxes        |  |               |   | 54               | 
|Other                           |  |               |   | 294              | 
|                                |  |               |   |                  | 
|                                |  |               | $ | 2,957            | 
|                                |  |               |   |                  | 

6.          BORROWING
ARRANGEMENTS

The
Company has a
$2,200,000 loan (the Loan), with a commercial bank.  Under the terms of the Loan, the Company issued a promissory note
(the Note) in the amount of $2,200,000. 
The Note is secured by a deed of trust on certain Company-owned real
estate.  The Note bears interest at the
prime rate (4.0% at March 21, 2004) plus 0.625%.  The Note has a fifteen-year amortization period and matures after
84 monthly payments of principal and interest. 
All unpaid principal and interest shall be due and payable on the Notes
maturity date of September 2, 2008.

On
March 21, 2004, the Company had $1,886,000 of debt outstanding under the Loan
described above.  At March 21, 2004,
$1,737,000 was included in long-term debt and $149,000 was included in the
current portion of long-term obligations. 
The Deed of Trust requires the Company to maintain a minimum debt
service coverage ratio and to maintain a minimum tangible net worth.

In
March 2004 the Company amended its $2,000,000 revolving line of credit
(the  Agreement) with its bank to
increase the amount to $3,000,000 and extend the Agreement to May 17,
2005.  Borrowings bear interest at the
prime rate (4.0% at March 21, 2004) plus 0.5%. 
Borrowings under the Agreement are collateralized by the Companys
personal property.  On March 21, 2004
the Company had no borrowings under the Agreement, but had $1,972,000 utilized
to support outstanding letters of credit required under its workers
compensation program.  The letters of
credit, which are scheduled to expire March 1, 2005, will automatically extend for
a one-year period.

The
amended Agreement requires the Company to maintain (i) a minimum tangible net
worth, (ii) a minimum debt service coverage ratio and (iii) a maximum debt to
tangible net worth ratio.  The Agreement
also limits the Companys fixed asset acquisitions and requires approval before
paying dividends or repurchasing outstanding shares of stock.  In addition the Agreement requires the
outstanding principal balance of the loan to be zero for at least one period of
thirty consecutive days during the term of the loan.

Covenant
compliance is reported quarterly and the Company was in compliance with all
covenants under the amended Agreement at March 21, 2004.  Due to an expected second quarter charge for
store closure and lease termination costs for one restaurant of between
$200,000 and $375,000, the Company is likely to be out of compliance with one
or more of these covenants at the end of the Companys second quarter of
2004.  The Company believes it can
obtain a waiver or renegotiate these covenants with its bank.  However, there can be no assurance that the
Company will be able to obtain a waiver or renegotiate its covenants.

8

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7.          CONVERTIBLE
PREFERRED STOCK

The
Companys outstanding Series B non-voting convertible preferred stock is
currently held by one entity and is convertible, at the holders
option, into Series A voting convertible preferred stock on a one-for-one
basis.  Although no Series A preferred
stock is currently outstanding, holders of Series A preferred stock, if any,
would be entitled to vote with common stockholders on all matters submitted to
a vote of stockholders.  When and if
issued, the holders of a majority of the outstanding Series A preferred stock
would have a separate right to approve certain corporate actions.

In
fiscal 1998, the Company failed to achieve a specified earnings target, which
constituted an event of default of the terms of the preferred stock agreement
and which triggered the right of the Series A preferred stockholders to elect a
majority of the Companys Board of Directors. 
The holder of the Series B preferred stock has not initiated any action
to convert such shares into shares of Series A preferred stock nor has it exercised
its right to elect a majority of the Board of Directors.  The holder has entered into a letter
agreement waiving this right until the date that such holder elects to sell,
transfer, convey or otherwise dispose of all its shares.

8.          RECENTLY
ISSUED ACCOUNTING STANDARDS

In
January 2003, the FASB issued FASB Interpretation No. 46 (FIN No. 46),
Consolidation of Variable Interest Entities, an interpretation of ARB No. 51.
FIN No. 46 requires existing unconsolidated variable interest entities to be
consolidated by their primary beneficiaries if the entities do not effectively
disperse risks among parties involved. Variable interest entities that
effectively disperse risk will not be consolidated unless a single party holds
an interest or combination of interests that effectively recombines risks that
were previously dispersed. FIN No. 46 also requires enhanced disclosure
requirements related to variable interest entities. FIN No. 46 was revised in
December 2003 and is effective for the first financial reporting period ending
after March 15, 2004.  The Company
adopted the provisions of FIN No. 46 for the fiscal quarter ending March 21,
2004, which did not have a material impact on the financial statements.

In
May 2003, the FASB issued SFAS No. 150, Accounting for Certain Financial
Instruments with Characteristics of both Liabilities and Equity.  The provisions of SFAS No. 150 are effective
for financial instruments entered into or modified after May 31, 2003 and with
one exception, is effective at the beginning of the first interim period
beginning after June 15, 2003.  The
provisions of SFAS No. 150 have been delayed indefinitely, except for required
disclosures, for certain mandatorily redeemable noncontrolling interests, while
its measurement provisions have been delayed indefinitely for other mandatorily
redeemable noncontrolling interests prior to November 5, 2003.  The adoption of SFAS No. 150 did not have a
material effect on the Companys financial statements.

Item 2 - Managements Discussion and Analysis of
Financial Condition and Results of Operations

The
following discussion is intended to highlight significant changes in the
Companys financial position and results of operations for the twelve weeks
ended March 21, 2004.  The interim
financial statements and this Managements Discussion and Analysis of Financial
Condition and Results of Operations should be read in conjunction with the
Consolidated Financial Statements and Notes thereto for the fiscal year ended
December 28, 2003 and the related Managements Discussion and
Analysis of Financial Condition and Results of Operations, both of which are
contained in the Companys Annual Report on Form 10-K for the fiscal year ended
December 28, 2003.

Certain
statements set forth in this discussion and analysis of financial condition and
results of operations are forward-looking statements within the meaning of the
Private Securities Litigation Reform Act of 1995. They use such words as may,
will, expect, believe, plan and other similar terminology. These
statements reflect managements current expectations regarding future events
and operating performance and speak only as of the date of this release.  These forward-looking statements involve a
number of risks and uncertainties. Actual future results and trends may differ

9

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materially depending on a variety of factors as set forth under the
heading Business Risks.  In
particular, among these risks and uncertainties is the ability of the Company
to return to positive comparable-store sales and improve newer restaurant
sales, operate its restaurants profitably, obtain a waiver or renegotiate the
Companys current loan covenants with its bank and obtain additional
financing, as well as general economic conditions.

In
addition, terrorist threats and the possible responses by the U.S. government,
the effects on consumer demand, the financial markets, food supply and
distribution and other conditions increase the uncertainty inherent in
forward-looking statements. 
Forward-looking statements reflect the expectations of the Company at
the time they are made, and investors should rely on them only as expressions
of opinion about what may happen in the future and only at the time they are
made.  The Company undertakes no
obligation to update any forward-looking statement.  Although the Company believes it has an appropriate business
strategy and the resources necessary for its operations, future revenue and
margin trends cannot be reliably predicted and the Company may alter its
business strategies to address changing conditions.

Liquidity and Capital Resources

The
Companys primary capital requirements have been for the expansion of its
restaurant operations and remodeling of its restaurants.  The Company has traditionally financed these
requirements with funds from equity offerings, cash flow from operations,
landlord allowances, capital equipment leases and short-term bank debt.  The Company does not have significant trade
receivables or inventory and receives trade credit based upon negotiated terms
in purchasing food and supplies.

The
Company has a $2,200,000 loan (the Loan) with a commercial bank.  Under the terms of the Loan, the Company issued a promissory note (the
Note) in the amount of $2,200,000. 
The Note is secured by a deed of trust on certain Company-owned real
estate.  The Note bears interest at the
prime rate (4.0% at March 21, 2004) plus 0.625%.  The Note has a fifteen-year amortization period and matures after
84 monthly payments of principal and interest. 
All unpaid principal and interest shall be due and payable on the Notes
maturity date of September 2, 2008.

On
March 21, 2004 the Company had $1,886,000 of debt outstanding under the Loan
described above.  At March 21, 2004
$1,737,000 was included in long-term debt and $149,000 was included in the
current portion of long-term obligations. 
The amended Deed of Trust requires the Company to maintain a minimum
debt service coverage ratio and to maintain a minimum tangible net worth.

In
March 2004 the Company amended its $2,000,000 revolving line of credit
(the  Agreement) with its bank to
increase the amount to $3,000,000 and extend the Agreement to May 17,
2005.  Borrowings bear interest at the
prime rate (4.0% at March 21, 2004) plus 0.5%. 
Borrowings under the Agreement are collateralized by the Companys
personal property.  On March 21, 2004
the Company had no borrowings under the Agreement, but had $1,972,000 utilized
to support outstanding letters of credit required under its workers
compensation program.  The letters of
credit, which are scheduled to expire March 1, 2005, will automatically extend
for a one-year period.

The
amended Agreement requires the Company to maintain (i) a minimum tangible net
worth, (ii) a minimum debt service coverage ratio and (iii) a maximum debt to
tangible net worth ratio.  The Agreement
also limits the Companys fixed asset acquisitions and requires approval before
paying dividends or repurchasing outstanding shares of stock.  In addition the Agreement requires the
outstanding principal balance of the loan to be zero for at least one period of
thirty consecutive days during the term of the loan.

Covenant
compliance is reported quarterly and the Company was in compliance with all
covenants under the amended Agreement at March 21, 2004.  Due to an expected second quarter charge for
store closure and lease termination costs for one restaurant of between
$200,000 and $375,000, the Company is likely to be out of compliance with one
or more of these covenants at the end of the Companys second quarter of 2004.  The Company believes it can obtain a waiver
or renegotiate these covenants with its bank. 
However, there can be no assurance that the Company will be able to
obtain a waiver or renegotiate its covenants.

10

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The
Company had capital lease obligations at March 21, 2004 that totaled $2,704,000
of which $784,000 was included in the current portion of long-term
obligations.  Long-Term Debt also
included a $112,000 note for site construction costs of which $1,000 was
included in the current portion of long-term obligations.

The
Companys other long-term liabilities include deferred rent of $2,242,000 at
March 21, 2004.  The Companys deferred
rent liability consists of the net cumulative rent expensed in excess of rent
payments since inception of these leases. In addition other long term
liabilities includes $171,000 of deferred income at March 21, 2004 from a gain
on the 1993 sale and leaseback of a building and land for one of the Companys
restaurants.  The Company is amortizing
the gain over the 20-year initial term of the lease. The remaining balance in
other long-term liabilities is the non-current portion of certain employee
benefit plans.

Net
cash provided by operating activities of continuing operations for the first
twelve weeks of 2004 was $1,000 and consisted of:

|(In thousands)                                                                    |  |   |      |  
|--------------------------------------------------------------------------------- |  | - | ---- | -
|                                                                                  |  |   |      |  
|Loss
  from operations                                                            |  | $ | (407 | )
|Adjustments
  to reconcile net loss to net cash used by
    operating activities: |  |   |      |  
|Depreciation
  and amortization                                                   |  |   | 840  |  
|Change
  in operating assets and liabilities                                      |  |   | (315 | )
|Other                                                                             |  |   | (117 | )
|                                                                                  |  |   |      |  
|Net
  cash provided by operating activities                                       |  | $ | 1    |  
|                                                                                  |  |   |      |  

Net
cash provided by operating activities for the first twelve weeks of 2004
included a change in operating assets and liabilities of ($315,000).  The change in operating assets and
liabilities was primarily due to a reduction in accounts payable as the result
of the timing of payments to certain vendors and payments for construction
invoices that were included in accounts payable at December 28, 2003.

During
the same period the Company invested $438,000 in property and equipment.

The
Companys contractual obligations as of March 21, 2004 are as follows:

|(In thousands)                    |  |       |   |                  |  |                  |  |                  |       |                    | 
|--------------------------------- |  | ----- | - | ---------------- |  | ---------------- |  | ---------------- | ----- | ------------------ | 
|                                  |  | Total |   | Remainder of2004 |  | 2005 through2007 |  | 2008 through2009 |       | 2010 andthereafter | 
|                                  |  |       |   |                  |  |                  |  |                  |       |                    | 
|Capital Lease Obligations         |  |       | $ | 2,704            |  |                  |  |                  | 581   |                    | 
|Secured Note                      |  |       |   | 1,886            |  |                  |  |                  | 111   |                    | 
|Other Note Payable                |  |       |   | 112              |  |                  |  |                  | 1     |                    | 
|Operating Leases                  |  |       |   | 128,099          |  |                  |  |                  | 7,035 |                    | 
|Puchase Obligations               |  |       |   | 481              |  |                  |  |                  | 90    |                    | 
|                                  |  |       |   |                  |  |                  |  |                  |       |                    | 
|                                  |  |       |   |                  |  |                  |  |                  |       |                    | 
|Total Contractual CashObligations |  |       | $ | 133,282          |  |                  |  | $                | 7,818 |                    | 
|                                  |  |       |   |                  |  |                  |  |                  |       |                    | 

The
Companys outstanding Series B non-voting convertible preferred stock is
currently held by one entity and is convertible, at the holders option, into
Series A voting convertible preferred stock on a one-for-one basis.  Although no Series A preferred stock is
currently outstanding, holders of Series A preferred stock, if any, would be
entitled to vote with common stockholders on all matters submitted to a vote of
stockholders.  When and if issued, the holders
of a majority of the outstanding Series A preferred stock will have a separate
right to approve certain corporate actions.

11

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In fiscal
1998, the Company failed to achieve a specified earnings target (before
interest, taxes, depreciation and amortization) of at least $5.5 million which constituted
an event of default of the terms of the preferred stock agreement and which
triggered the right of the Series A preferred stockholders to elect a majority
of the Companys Board of Directors. 
The holder of the Series B preferred stock has not initiated any action
to convert such shares into shares of Series A
preferred stock nor has it exercised its right to elect a majority of the Board
of Directors.  In December 2003 such
holder entered into a letter agreement whereby the holder of the Series B
preferred stock agreed to not convert any of its shares of Series B preferred
stock into Series A preferred stock so long as the holder owns the Series B
preferred shares.

The Companys
continued growth depends to a significant degree on its ability to open new
restaurants and to operate such restaurants profitably.  The Company does not currently have plans to
open any new restaurants in 2004.  The
Companys ability to resume an expansion strategy will depend upon a variety of
factors, including its return to profitability and the Companys ability to
obtain funds.  See Business Risks
included herein.

The Company
intends to finance its operating cash requirements and fiscal 2004 capital
requirements through existing cash balances, cash provided by operations and
its borrowing arrangements.  However,
the Companys operating cash flow is impacted by the Companys comparable store
sales increases or decreases as well as the Companys newer restaurants sales
performance.  The Companys comparable store
sales increased 1.2% in the first quarter of 2004 but the average sales of the
seven newer stores, opened less than eighteen months and open for both lunch
and dinner, averaged 37.9% below the comparable-store average sales.  The Company expects comparable store sales
to continue to improve and the sales performance of its newer restaurants to
improve, but there can be no assurance that comparable store sales will improve
or newer restaurant sales will improve. 
In addition, the Company may seek additional financing to provide
greater flexibility.  There can be no
assurance that the Company will be able to obtain additional financing when
needed on acceptable terms or at all. 
To the extent operating cash flow declines, or financing cannot be
obtained, the Company intends to further curtail its capital spending plans in
2004 and beyond.

Impact of Inflation

Many of the
Companys employees are paid hourly rates related to the federal and state
minimum wage laws.  Accordingly,
increases in the minimum wage could materially increase the Companys labor
costs.  In addition, the cost of food
commodities utilized by the Company is subject to market supply and demand
pressures.  Shifts in these costs may
have a significant impact on the Companys food costs.  The Company anticipates that increases in
these costs may be offset through pricing and other cost control efforts;
however, there is no assurance that the Company would be able to pass such
costs on to its guests or that even if it were able to do so, it could do so in
a short period of time.

Business Risks

Certain
characteristics and dynamics of the Companys business and of financial markets
in general create risks to the Companys long-term success and to predictable
financial results.  These risks include:

Operating
Losses and Historical Declines in Comparable Store Sales.  Our
quarterly and annual operating results and same store sales have fluctuated
significantly in the past and are likely to fluctuate significantly in the
future.  The Company has reported a loss
for the last two years and for the first quarter of 2004 and there can be no
assurance that the Company will be profitable over the long or short term.

The Companys
comparable store sales decreased for the three fiscal years of 2001 through
2003.  Although the Companys comparable
store sales increased 1.2% in the first quarter of 2004, there can be no
assurance that the comparable store sales declines experienced in 2001 through
2003 will not resume or not decline further.

Expansion.  The Company believes its growth depends to a
significant degree on its ability to open new restaurants and to operate such
restaurants profitably.  The Company
resumed its expansion with one new Fresh Choice restaurant opening in 2001,
five opening in 2002 and four restaurants opening in 2003.  For the first quarter of 2004 certain

12

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of these eight newer locations did not meet the Companys financial
expectations with average sales for the seven newer restaurants, open for both
lunch and dinner, not open eighteen months 37.9% below the comparable-store
average sales.  There can be no
assurance that these eight newer restaurants or any future restaurants will be
successful.  The Company recorded a
non-cash impairment charge of $3.7 million in 2003 primarily related to four of
these restaurants and one additional restaurant.  An impairment charge was deemed appropriate based on the expected
cash flows over the remaining lease terms, as compared to the net book value of
the restaurant assets. If performance does not improve, or deteriorates further
in certain other newer restaurants, the Company may be required to record
additional impairment expenses.

The
Company currently has no development plans for 2004 or beyond.  The Companys ability to successfully
resume an expansion strategy will depend upon a variety of factors, many of
which may be beyond the Companys control, including the Companys ability to
locate suitable restaurant locations, negotiate acceptable lease terms, obtain
required government approvals, construct new restaurants in a timely manner,
attract, train and retrain qualified and experienced personnel and management,
operate its restaurants profitably and obtain additional capital to finance
expansion and  equipment costs, as well
as general economic conditions and the degree of competition in the particular
market.

The
Companys future expansion plans may include entering new geographic regions in
which the Company has no previous operating experience.  There can be no assurance that the Fresh
Choice concept will be successful in new geographic regions.  In addition the Company expects intense
competition for restaurant sites, which may result in the Company having
difficulty leasing desirable sites on terms that are acceptable to the Company.
The Company expects that in some cases competitors may be willing to pay more
than the Company for sites.  These
circumstances may make it difficult for the Company to achieve any new store
growth objectives.

Lease
Renewals.  As existing restaurant leases expire, the
Company must negotiate new leases or lease extensions in order to continue
operations at existing restaurants. 
There can be no assurance that the Company will be able to renew these
leases on favorable terms or at all.  If
the Company is unable to obtain favorable terms on new leases or extensions on
existing leases, it would increase costs and reduce the Companys operating
margins.  Moreover, if the Company is
unable to renew existing leases and is unable to find suitable alternate
locations, the Companys revenue and operating results would be adversely
affected.

Geographic
Concentration.  As of April 16, 2004, 42 of the Companys 56
restaurants were located in California, primarily in Northern California.  Accordingly, the Company is susceptible to
fluctuations in its business caused by adverse economic conditions in this
region.  In addition, net sales at
certain of the Companys restaurants have been adversely affected when a new
Company restaurant has been opened in relatively close geographic
proximity.  There can be no assurance
that expansion within existing or future geographic markets will not adversely
affect the individual financial performance of Company restaurants in such
markets or the Companys overall results of operations.  In addition, given the Companys present
geographic concentration in Northern California, adverse weather conditions or
increased utility costs in the region or negative publicity relating to an
individual Company restaurant could have a more pronounced adverse effect on
results of operations than if the Companys restaurants were more broadly
dispersed.

Sensitivity
to Economic Conditions and Consumer Spending.  The
restaurant industry historically has been subject to substantial cyclical
variation.  The California economy has
slowed and there has been a downturn in the general economy and a decline in
consumer spending in the restaurant industry. 
A continued decline could have a material adverse effect on the Companys
financial performance, as restaurant sales tend to decline during recessionary
periods.  A prolonged economic downturn
could alter customers purchasing decisions, which most likely would have a
material adverse impact on the Companys revenue and results of operations.

Seasonality
and Quarterly Fluctuations The Companys restaurants have typically experienced seasonal
fluctuations, as disproportionate amounts of net sales and net income are
generally realized in the second and third fiscal quarters.  In addition, the Companys quarterly results
of operations have been, and may continue to be, materially impacted by the
timing of new restaurant openings, restaurant closings and impairment
charges.  The fourth quarter normally
includes 16 weeks of operations as compared with 12 weeks for each of the three
prior quarters.  As a result of these
factors, net sales and net income in the fourth quarter are not comparable to
results in each of the first three fiscal quarters, and net sales can be
expected to decline in the first quarter of each fiscal year in comparison to
the fourth quarter of the prior fiscal year.

13

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Dependence
on Key Personnel.  The success of the Company depends on the
efforts of key management personnel. 
The Companys success will depend on its ability to motivate and retain
its key crewmembers and to attract qualified personnel, particularly general
managers, for its restaurants.  The
Company faces significant competition in the recruitment of qualified
crewmembers.

Restaurant
Industry.  The restaurant industry is affected by
changes in consumer tastes, as well as national, regional and local economic
conditions and demographic trends.  The
performance of individual restaurants, including the Companys restaurants, may
be affected by factors such as traffic patterns, demographic considerations,
and the type, number and location of competing restaurants.  In addition, factors such as inflation,
increased food, labor and crewmember benefit costs, and the availability of
experienced management and hourly crewmembers may also adversely affect the
restaurant industry in general and the Companys restaurants in
particular.  Restaurant operating costs
are affected by increases in the minimum hourly wage, unemployment tax rates,
and various federal, state and local governmental regulations, including those
relating to the sale of food and alcoholic beverages.  There can be no assurance that the restaurant industry in
general, and the Company in particular, will be successful.

Competition.  The
Companys restaurants compete with the rapidly growing mid-price, full-service
casual dining segment; with traditional limited-service buffet, soup, and salad
restaurants; and, increasingly, with fast-casual and quick-service
outlets.  The Companys competitors
include national and regional chains, as well as local owner-operated
restaurants.  Key competitive factors in
the industry are the quality and value of the food products offered, quality
and speed of service, price, dining experience, restaurant location and the ambiance
of facilities.  Many of the Companys
competitors have been in existence longer than the Company, have a more
established market presence, and have substantially greater financial,
marketing and other resources than the Company, which may give them certain
competitive advantages.  The Company
believes that its ability to compete effectively will continue to depend in
large measure upon its ability to offer a diverse selection of high-quality,
fresh food products with an attractive price/value relationship.  In addition, if and when the Company resumes
expansion, it expects intense competition for restaurant sites, which may
result in the Company having difficulty leasing desirable sites on terms that
are acceptable to the Company.  The
Company expects that in some cases competitors may be willing to pay more than
the Company for sites.

Ability
to Obtain Additional Financing.  The Company resumed its
restaurant expansion in 2001.  The
Company currently has no expansion plans for 2004 or beyond.  The Companys ability to resume an expansion
strategy will depend upon a variety of factors, including its ability to obtain
funds.  The Company believes its
near-term capital requirements can be met through its existing cash balances,
cash provided by operations and its borrowing arrangements. Should the Company
seek new financing there can be no assurance that the Company would be able to
obtain additional financing on acceptable terms or at all.

Loan
Covenants.Due to a
potential second quarter charge for store closure and lease termination costs
for one restaurant of between $200,000 and $375,000, the Company may be out of
compliance with one or more of its existing loan covenants by the end of the
Companys second quarter 2004.  The
Company believes it can obtain a waiver or renegotiate these covenants with its
bank.  However, there can be no
assurance that the Company will be able to obtain a waiver or renegotiate its
covenants. If the Company is unable to renegotiate the covenants or obtain a
waiver from its bank, the bank could declare the Companys outstanding loans in
default and demand immediate payment in full of all outstanding principal and
interest.

Control
by Major Shareholder. 
Crescent Real Estate Equities Limited Partnership (Crescent) holds
1,187,906 shares of Series B non-voting convertible preferred stock, which is
convertible into Series A voting convertible preferred stock at any time at the
option of the holder.  Upon conversion,
holders of Series A preferred stock would be entitled to vote with common
stockholders and would have a separate right to approve certain corporate
actions, such as amending the Companys Certificate of Incorporation or Bylaws,
effecting a merger or sale of the Company, or making a fundamental change in the
Companys business activity.  In
addition, because the Company did not achieve a specified earnings target in
1998, the holders of Series A preferred stock would have the right to elect a
majority of the Companys Board of Directors. 
Crescent has entered into a letter agreement waiving this right until
the date that Crescent elects to sell, transfer, convey or otherwise dispose of
all its shares.  These factors could
have the effect of delaying, deferring or preventing a change in control of the
Company and, as a result, could discourage acquisition bids for the Company and
limit the price that investors are willing to pay for shares of common stock.

14

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Critical Accounting Policies

Our
accounting policies are more fully described in Note 1 of the Companys audited
December 28, 2003 financial statements. 
The preparation of financial statements in conformity with accounting
principles generally accepted in the United States of America (US GAAP)
requires management to make estimates and assumptions that affect reported
amounts of assets, liabilities, revenues and expenses and related disclosures
of contingent assets and liabilities as of the dates and for the periods
presented.  Management believes the
following accounting policies, among others, represent its more critical or
complex estimates and assumptions used in preparation of its consolidated
financial statements.

The Company
evaluates its estimates and assumptions on an on-going basis and believes its
estimates and assumptions are reasonable based on historical experience and
other factors.  However, actual results
could differ from those estimates and these differences could be material to
the consolidated financial statements. 
The accounting policies management has identified as critical or complex
accounting policies are described below.

Long-lived
assets impairment. 
The Company reviews its long-lived assets related to each restaurant
annually for impairment, or whenever events or changes in circumstances
indicate that the carrying amount of a restaurant and the related equipment may
not be recoverable.  The Company
considers a history of operating losses to be its primary indicator of
potential impairment; therefore new restaurants are generally not identified
for impairment until a sufficient operating history has been developed.  Assets are grouped and evaluated for
impairment at the lowest level for which there are identifiable cash flows, the
individual restaurants.  Impairment
evaluations require an estimation of cash flows over the remaining useful life
of the restaurants.  If the long-lived
assets of a restaurant are not recoverable based upon forecasted undiscounted
cash flows, the Company writes down an impaired restaurant to its estimated fair
value, which becomes its new cost basis. 
Generally, management considers the present value of a restaurants
projected future cash flows and estimated sales values of a restaurants
long-lived assets in determining fair value. 
Considerable management judgment is necessary to estimate projected
future operating cash flows. 
Accordingly, if actual results vary from such estimates, significant
future impairment could result.

In
addition, accounting principles generally accepted in the United States of
America, (US GAAP), requires that the operating losses of underperforming
restaurants be recorded in the periods incurred.  US GAAP also requires that reserves for store closures and lease
termination costs for any restaurant to be closed not be recognized until a
restaurant ceases operations.  Accordingly,
if the Company closes restaurants in the future, prior to lease expirations,
the Company may incur significant store closure and lease termination charges
in the period such restaurants close.

Workers
Compensation Claims Accrual.  The Company records estimates for workers compensation claims
under its workers compensation program. 
The Company evaluates the adequacy of these accruals by evaluating
information periodically provided by its insurance carrier regarding the
Companys historical experience and trends relating to insurance claims and
payments and general industry experience regarding the expectation of future
trends in claims development. If such information indicates that the accruals
are overstated or understated, the Company will reduce or provide additional
accruals as appropriate. If a greater number of claims occur in comparison to
the amount of claims estimated or medical costs increase beyond anticipated
costs, additional charges may be required in the period such determination was
made.

Discontinued
Operations. Considerable management judgment is necessary to determine whether
a closed restaurant should be classified as discontinued operations.  In general, the Company considers the extent
to which the restaurants operations and cash flow are expected to be absorbed
by other currently operated restaurants or replaced with a new restaurant in
making this determination.  A closed
restaurant, or group of restaurants, which is located in an isolated market and
not replaced, would generally be classified as discontinued operations.

Income
taxes.The
Companys net deferred tax assets consist primarily of the tax benefit related
to operating loss carryforwards, alternative minimum tax credits and asset
write-downs, in connection with store asset

15

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impairments, that are not deductible for tax purposes until the assets
are disposed.  The Company has provided
valuation allowances against its deferred net tax assets based on managements
most recent assessment that it is not deemed more likely than not that the
deferred tax assets will be realized. 
If future assessments by management were to determine that the Company
would be able to realize its deferred tax assets in excess of their net
recorded amounts, an adjustment to the deferred tax assets could result in an
increase in net income in the period such determination was made.

Property and equipment. Property and equipment are stated at
cost.  Depreciation and amortization are
computed using the straight-line method over the estimated useful lives of the
assets which range from 5 to 30 years or the lease term of a restaurant
including option periods, as appropriate, not to exceed 25 years.

Overview

For the
first quarter of 2004 the Companys earnings improved primarily due to the Company
incurring no restaurant opening costs versus $192,000 in the first quarter of
2003.  The Companys earnings were
negatively impacted by the weak sales performance at certain of the Companys
seven newer restaurants open for both lunch and dinner.  Sales at these restaurants were 37.9% below
the comparable store average sales.  The
Company was encouraged by the 1.2% increase, versus the first quarter of 2003,
in comparable store sales, which was primarily the result of increased pricing
during the quarter versus the first quarter last year.  In addition, the Company experienced
significant cost increases in workers compensation and medical insurance
costs.

Results of Operations

The
following table sets forth items in the Companys statements of operations as a
percentage of sales and certain operating data for the periods indicated:

|                                      |  | Twelve Weeks Ended |       
|------------------------------------- |  | ------------------ | ------
|                                      |  |                    |       
|(Dollars in thousands)                |  | March 21, 2004     |       
|                                      |  |                    |       
|                                      |  |                    |       
|NET SALES                             |  | $                  | 18,021
|                                      |  |                    |       
|COSTS AND
  EXPENSES:                 |  |                    |       
|Cost
  of sales                       |  |                    | 4,050 
|Restaurant
  operating expenses:      |  |                    |       
|Labor                                 |  |                    | 6,361 
|Occupancy
  and other                 |  |                    | 5,919 
|General
  and administrative expenses |  |                    | 1,216 
|Depreciation
  and amortization       |  |                    | 789   
|Restaurant
  opening costs            |  |                    | -     
|                                      |  |                    |       
|Total
  costs and expenses            |  |                    | 18,335
|                                      |  |                    |       
|                                      |  |                    |       
|OPERATING
  LOSS                      |  |                    | (314  
|                                      |  |                    |       
|Interest
  income                     |  |                    | 1     
|Interest
  expense                    |  |                    | (94   
|                                      |  |                    |       
|                                      |  |                    |       
|Interest
  expense, net               |  |                    | (93   
|                                      |  |                    |       
|                                      |  |                    |       
|LOSS BEFORE
  INCOME TAXES            |  |                    | (407  
|Provision
  for income taxes          |  |                    | -     
|                                      |  |                    |       
|NET LOSS                              |  | $                  | (407  
|                                      |  |                    |       
|                                      |  |                    |       
|Number of
  restaurants:              |  |                    |       
|Open
  at beginning of period         |  |                    | 57    
|                                      |  |                    |       
|Open
  at end of period               |  |                    | 57    
|                                      |  |                    |       

16

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The following table
presents the components of average restaurant operating income on a per
restaurant basis, for the Fresh Choice and Zoopa restaurants open for both
lunch and dinner during each period (the Companys three Fresh Choice Express
restaurants, one lunch only Fresh Choice restaurant and one licensed Starbucks
retail store are excluded):

|                                                                                                                                     |  | Twelve Weeks Ended |     
|------------------------------------------------------------------------------------------------------------------------------------ |  | ------------------ | ----
|                                                                                                                                     |  |                    |     
|(Dollars in thousands)                                                                                                               |  | March 21, 2004     |     
|                                                                                                                                     |  |                    |     
|                                                                                                                                     |  |                    |     
|NET SALES                                                                                                                            |  | $                  | 336 
|                                                                                                                                     |  |                    |     
|COSTS AND EXPENSES:                                                                                                                  |  |                    |     
|Cost
  of sales                                                                                                                      |  |                    | 74  
|Restaurant
  operating expenses:                                                                                                     |  |                    |     
|Labor                                                                                                                                |  |                    | 119 
|Occupancy
  and other                                                                                                                |  |                    | 109 
|Depreciation
  and amortization                                                                                                      |  |                    | 14  
|                                                                                                                                     |  |                    |     
|                                                                                                                                     |  |                    |     
|Total
  costs and expenses                                                                                                           |  |                    | 316 
|                                                                                                                                     |  |                    |     
|                                                                                                                                     |  |                    |     
|RESTAURANT OPERATING INCOME                                                                                                          |  | $                  | 19  
|                                                                                                                                     |  |                    |     
|                                                                                                                                     |  |                    |     
|Fresh Choice & Zoopa
  restaurants included                                                                                          |  |                    | 52.0
|                                                                                                                                     |  |                    |     
|                                                                                                                                     |  |                    |     
|Restaurant operating income
  excludes restaurant opening costs, general and administrative expenses
     and interest expense, net.

Results of
Operations:  Twelve Weeks Ended March
21, 2004Compared to Twelve Weeks Ended March 23, 2003

Net
Sales.  Net sales for the
quarter ended March 21, 2004 were $18,021,000; an increase of $337,000, or
1.9%, from sales of $17,684,000 for the quarter ended March 23, 2003. The
primary components of the net increase in sales were:

|(In thousands)                                                                                  |  |   |     | 
|----------------------------------------------------------------------------------------------- |  | - | --- | 
|                                                                                                |  |   |     | 
|Increase in
  comparable Fresh Choice restaurant sales                                          |  | $ | 181 | 
|                                                                                                |  |   |     | 
|Incremental
  sales from eight new Fresh Choice restaurants                                     |  |   | 90  | 
|                                                                                                |  |   |     | 
|Change in
  sales in Fresh Choice Express restaurants and the licensed Starbucks retail
  store |  |   | 66  | 
|                                                                                                |  |   |     | 
|                                                                                                |  | $ | 337 | 
|                                                                                                |  |   |     | 

The
Company had an average of 53.0 Fresh Choice restaurants included in sales in
the first quarter of 2004 compared to 50.5 Fresh Choice restaurants in the
first quarter of 2003.  The
Company does not include any new stores in its comparable store sales until a
store has been open for 18-months. 
Management believes utilizing an 18-month basis for reporting comparable
store sales represents a more realistic indication of the base business trends.  On this basis, sales at the Companys 45 comparable Fresh Choice
restaurants increased 1.2% in the first quarter of 2004 versus the first
quarter of 2003.  Comparable store guest
counts increased 0.1%, while the comparable store average check increased 1.1%
to $7.83, primarily reflecting price increases.

Net
sales per Fresh Choice restaurant open for both lunch and dinner averaged
$336,000 in the first quarter of 2004, a decrease of 2.3% over net sales per
restaurant of $344,000 in the first quarter of 2003, due to the lower than
expected sales per restaurant from the seven newer restaurants, open for both
lunch and dinner, not included in comparable

17

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store
sales.  Sales at these restaurants were
37.9% below the comparable store average sales.

Costs
and Expenses.  Cost of sales (food and beverage costs) was
22.5% of sales in the first quarter of 2004 compared to 22.7% in the first
quarter of 2003.  Food and beverage
costs declined as a percentage of sales due to the combined effect of
controlling food cost per guest and increases in the average check.

Restaurant
Operating Expenses.  Restaurant operating expenses (labor,
occupancy and other) were 68.1% of sales in the first quarter of 2004 compared
to 66.6% of sales in the first quarter of 2003, an increase of 1.5% of sales.

Labor
costs as a percentage of sales were 35.3% for the first quarter of 2004
compared to 34.4% in the first quarter of 2003.  Labor costs, as a percentage of sales, were higher primarily due
to lower average restaurant sales, a higher average wage, and higher workers
compensation and medical benefits costs.

Occupancy
and other expenses as a percentage of sales were 32.8% for the first quarter of
2004 compared to 32.2% of sales in the first quarter of 2003, an increase of
0.6%, as a percent of sales.  This
increase is due primarily to the higher occupancy costs as a percent of average
restaurant sales resulting from the lower than expected sales from the Companys
newer restaurants.

Depreciation and Amortization.  Depreciation and amortization expenses in
the first quarter of 2004 were 4.4% of sales, a decrease of 0.1%, as a percent
of sales.  The decline is primarily the
result of older restaurants assets becoming fully depreciated and the
impairment of assets in fiscal 2003.

General and Administrative Expenses.  General and administrative expenses were
6.7% of sales in the first quarter of 2004 compared to 7.7% of sales in the
first quarter of 2003.  The decrease is
primarily the result of reduced spending compared to last year resulting from
staff reductions taken in the second quarter of 2003, and higher sales.

Restaurant Opening Costs.  The Company had no restaurant opening costs
in the first quarter of 2004 versus $192,000 in the first quarter of 2003.  The Company opened no new locations in the
first quarter of 2004.

Interest Expense, net.  Interest expense, net was  $93,000 in the first quarter of 2004
compared to $77,000 in the first quarter of 2003. This increase is primarily
due to additional equipment lease financing for the new stores.  Interest expense consists of fees related to
securing the Companys borrowing arrangements and interest expense on
outstanding borrowings and capital lease obligations.

Income
Taxes.  The Company recorded no tax benefit from its
operating loss in the first quarter of 2004 or the first quarter of 2003 due to
valuation allowances against its net deferred tax assets.  The Companys net deferred tax assets
consist primarily of the tax benefit related to operating loss carryforwards,
alternative minimum tax credits and asset write-downs, in connection with store
asset impairments, that are not deductible for tax purposes until the assets
are disposed.  The Company will continue
to provide a full valuation allowance for its deferred tax assets until it becomes
more likely than not, in managements assessment, that any portion of the
Companys deferred tax assets will be realized.

Item 3  -
Quantitative and Qualitative Disclosures About Market Risk

The Company
is exposed to interest rate risk primarily through its borrowing
activities.  The Company has not used
derivative financial instruments to hedge such risks.  There is inherent rollover risk for borrowings as they mature and
are renewed at current market rates.  The
extent of this risk is not quantifiable or predictable because of the variability
of future interest rates and business financing requirements.  If market rates were to increase immediately
by 10 percent from levels at March 21, 2004, the fair value of the Companys
borrowings would not be materially affected as borrowings are primarily subject
to variable interest rates.

18

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Item 4  -
Controls and Procedures

Under the
supervision and with the participation of management, including the principal
executive and principal financial officers, we evaluated the effectiveness of
our disclosure controls and procedures; as such term is defined under Rule
13a-15(e) promulgated under the Securities Exchange Act of 1934, as amended.
Based on this evaluation, our principal executive officer and principal
financial officer concluded that the Companys disclosure controls and
procedures were effective as of the end of the period covered by this quarterly
report. There were no changes in internal control over financial reporting that
would require additional disclosure under Regulation S-K 308(c).

PART II.OTHERINFORMATION

|Item 1 -
  Legal Proceedings                                   | Not Applicable.
|-------------------------------------------------------------- | ---------------
|                                                               |                
|Item 2 -
  Changes in Securities                               | Not Applicable.
|                                                               |                
|Item 3 -
  Defaults upon Senior Securities                     | Not Applicable.
|                                                               |                
|Item 4 -
  Submission of Matters to a Vote of Security Holders | Not Applicable.
|                                                               |                
|Item 5 -
  Other Information                                   | Not Applicable.

Item 6 -
Exhibits and Reports on Form 8-K

|(a) | Exhibits.  The exhibits listed in the accompanying
  index to Form 10-Q Exhibits are filed or incorporated by reference as part of
  this report.
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                  
|(b) | Reports on Form 8-K.  The registrant filed the following report
  on Form 8-K during the quarter ended March 21, 2004.                           
|    | -                                                                                                                                                

19

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SIGNATURES

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.

|                       | FRESH CHOICE, INC.                                  | 
|---------------------- | --------------------------------------------------- | 
|                       | (Registrant)                                        | 
|                       |                                                     | 
|                       |                                                     | 
|                       | /S/ Everett F. Jefferson                            | 
|                       |                                                     | 
|                       | Everett F. Jefferson                                | 
|                       | President and Chief
  Executive Officer             | 
|                       | (Principal Executive
  Officer)                     | 
|                       |                                                     | 
|                       |                                                     | 
|                       | /S/ David E. Pertl                                  | 
|                       |                                                     | 
|                       | David E. Pertl                                      | 
|                       | Senior Vice President and
  Chief Financial Officer | 
|                       | (Principal Financial and
  Accounting Officer)      | 
|                       |                                                     | 
|Dated:  April 21, 2004 |                                                     | 

20

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---

INDEX TO FORM 10-Q EXHIBITS

|Exhibit
      No. |      | Description
|----------------- | ---- | -----------
|                  |      |            
|                  |      |            
|3.1               | (1)  |            
|                  |      |            
|3.2               | (8)  |            
|                  |      |            
|3.3               | (10) |            
|                  |      |            
|3.4               | (10) |            
|                  |      |            
|3.5               | (10) |            
|                  |      |            
|3.6               | (10) |            
|                  |      |            
|4.1               | (10) |            
|                  |      |            
|10.1              | (1)  |            
|                  |      |            
|10.2              | (2)  | (3)        
|                  |      |            
|10.3              | (2)  | (3)        
|                  |      |            
|10.8              | (8)  |            
|                  |      |            
|10.18             | (6)  |            
|                  |      |            
|10.19             | (6)  |            
|                  |      |            
|10.26             | (11) | (3)        
|                  |      |            
|10.27             | (11) | (3)        
|                  |      |            
|10.28             | (11) | (3)        
|                  |      |            
|10.34             | (13) | (3)        
|                  |      |            
|10.36             | (14) |            
|                  |      |            
|10.37             | (14) | (3)        
|                  |      |            
|10.43             | (17) | (3)        
|                  |      |            
|10.44             | (17) | (3)        
|                  |      |            
|10.45             | (17) | (3)        
|                  |      |            
|10.46             | (17) | (3)        
|                  |      |            
|10.47             | (17) | (3)        
|                  |      |            
|10.48             | (17) |            
|                  |      |            
|10.49             | (17) |            
|                  |      |            
|10.50             | (17) |            

21

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INDEX
TO FORM 10-Q EXHIBITS(continued)

|EXHIBIT
  NO. |      | DESCRIPTION
|------------- | ---- | -----------
|              |      |            
|              |      |            
|10.51         | (17) |            
|              |      |            
|10.52         | (17) |            
|              |      |            
|10.55         | (18) | (3)        
|              |      |            
|10.56         | (18) | (3)        
|              |      |            
|10.57         | (19) |            
|              |      |            
|10.58         | (20) |            
|              |      |            
|10.59         | (21) |            
|              |      |            
|10.60         | (21) | (3)        
|              |      |            
|10.61         | (22) |            
|              |      |            
|10.62         | (23) |            
|              |      |            
|10.63         | (23) |            
|              |      |            
|10.64         | (24) |            
|              |      |            
|10.65         | (24) |            
|              |      |            
|10.66         | (24) | (3)        
|              |      |            
|10.67         | (24) |            
|              |      |            
|10.68         |      |            
|              |      |            
|31.1          |      |            
|              |      |            
|31.2          |      |            
|              |      |            
|32.1          |      |            
|              |      |            
|32.2          |      |            

22

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INDEX
TO FORM 10-Q EXHIBITS  (continued)

|(1)  | Incorporated by reference
  from the Exhibits with corresponding numbers filed with the Companys
  Registration Statement on Form S-1 (No. 33-53904) filed October 29, 1992, as
  amended by Amendment No. 1 to Form S-1 (No. 33-53904) filed December 7, 1992,
  except that Exhibit 3.1 is incorporated by reference from Exhibit 3.1C and
  Exhibit 3.2 is incorporated by reference from Exhibit 3.2B.
|---- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|     |                                                                                                                                                                                                                                                                                                                                                                                                            
|(2)  | Incorporated
  by reference from the Exhibits with corresponding numbers filed with the
  Companys Quarterly Report on Form 10-Q for the quarter ended September 4,
  1994.                                                                                                                                                                                                                               
|     |                                                                                                                                                                                                                                                                                                                                                                                                            
|(3)  | Agreements
  or compensatory plans covering executive officers and directors of Fresh
  Choice, Inc.                                                                                                                                                                                                                                                                                                       
|     |                                                                                                                                                                                                                                                                                                                                                                                                            
|(6)  | Incorporated
  by reference from the Exhibits with corresponding numbers filed with the
  Companys Annual Report on Form 10-K for the year ended December 31, 1995.                                                                                                                                                                                                                                       
|     |                                                                                                                                                                                                                                                                                                                                                                                                            
|(8)  | Incorporated
  by reference from the Exhibits with corresponding numbers filed with the
  Companys Quarterly Report on form 10-Q for the quarter ended March 24, 1996.                                                                                                                                                                                                                                    
|     |                                                                                                                                                                                                                                                                                                                                                                                                            
|(10) | Incorporated
  by reference from the Exhibits with corresponding numbers filed with the
  Companys Quarterly Report on Form 10-Q for the quarter ended September 8,
  1996.                                                                                                                                                                                                                               
|     |                                                                                                                                                                                                                                                                                                                                                                                                            
|(11) | Incorporated
  by reference from the Exhibits with corresponding numbers filed with the
  Companys Annual Report on Form 10-K for the year ended December 29, 1996.                                                                                                                                                                                                                                       
|     |                                                                                                                                                                                                                                                                                                                                                                                                            
|(13) | Incorporated
  by reference from Exhibits with corresponding numbers filed with the
  Companys Quarterly Report on Form 10-Q for the quarter ended June 14, 1998.                                                                                                                                                                                                                                         
|     |                                                                                                                                                                                                                                                                                                                                                                                                            
|(14) | Incorporated
  by reference from the Exhibits with corresponding numbers filed with the
  Companys Annual Report on Form 10-K for the year ended December 27, 1998.                                                                                                                                                                                                                                       
|     |                                                                                                                                                                                                                                                                                                                                                                                                            
|(17) | Incorporated
  by reference from Exhibits with corresponding numbers filed with the
  Companys Quarterly Report on Form 10-Q for the quarter ended March 24, 2002.                                                                                                                                                                                                                                        
|     |                                                                                                                                                                                                                                                                                                                                                                                                            
|(18) | Incorporated
  by reference from the Exhibits with corresponding numbers filed with the
  Companys Annual Report on Form 10-K for the year ended December 30, 2001.                                                                                                                                                                                                                                       
|     |                                                                                                                                                                                                                                                                                                                                                                                                            
|(19) | Incorporated
  by reference from Exhibits with corresponding numbers filed with the
  Companys Quarterly Report on Form 10-Q for the quarter ended March 24, 2002.                                                                                                                                                                                                                                        
|     |                                                                                                                                                                                                                                                                                                                                                                                                            
|(20) | Incorporated
  by reference from Exhibits with corresponding numbers filed with the
  Companys Quarterly Report on Form 10-Q for the quarter ended June 16, 2002.                                                                                                                                                                                                                                         
|     |                                                                                                                                                                                                                                                                                                                                                                                                            
|(21) | Incorporated
  by reference from Exhibits with corresponding numbers filed with the
  Companys Annual Report on Form 10-K for the year ended December 29, 2002.                                                                                                                                                                                                                                           
|     |                                                                                                                                                                                                                                                                                                                                                                                                            
|(22) | Incorporated
  by reference from Exhibits with corresponding numbers filed with the Companys
  Quarterly Report on Form 10-Q for the quarter ended March 23, 2003.                                                                                                                                                                                                                                        
|     |                                                                                                                                                                                                                                                                                                                                                                                                            
|(23) | Incorporated
  by reference from Exhibits with corresponding numbers filed with the
  Companys Quarterly Report on Form 10-Q for the quarter ended September 7,
  2003.                                                                                                                                                                                                                                   
|     |                                                                                                                                                                                                                                                                                                                                                                                                            
|(24) | Incorporated
  by reference from Exhibits with corresponding numbers filed with the
  Companys Annual Report on Form 10-K for the year ended December 28, 2003.                                                                                                                                                                                                                                           

23

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