<PAGE>   1



                                                                CONFORMED COPY


                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

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

                                    FORM 10-Q

(MARK ONE)


[X]      QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
         EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 1999
                               ---------------------------------

                                       OR

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

For the transition period from _________ to ____________

Commission file number 333-57925
                      ---------------

                             The Restaurant Company
--------------------------------------------------------------------------------
             (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)


              Delaware                                 62-1254388
--------------------------------------------------------------------------------
(STATE OR OTHER JURISDICTION OF            (I.R.S. EMPLOYER IDENTIFICATION NO.)
INCORPORATION OR ORGANIZATION)


  1 Pierce Place, Suite 100 East, Itasca, Illinois               60341
--------------------------------------------------------------------------------
 (ADDRESS OF PRINCIPAL EXECUTIVE OFFICES)                      (ZIP CODE)


                                 (901) 766-6400
--------------------------------------------------------------------------------
              (REGISTRANT'S TELEPHONE NUMBER, INCLUDING AREA CODE)

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





                                       1
<PAGE>   2

                         PART I - FINANCIAL INFORMATION
                          ITEM 1. FINANCIAL STATEMENTS
                     THE RESTAURANT COMPANY AND SUBSIDIARIES
                        CONSOLIDATED STATEMENTS OF INCOME
                                   (Unaudited)
                                 (In Thousands)

<TABLE>
<CAPTION>

                                                            Three Months Ended              Nine Months Ended
                                                               September 30                    September 30
                                                          -----------------------       -------------------------
                                                            1999           1998            1999           1998
                                                          --------       --------       ---------       ---------
<S>                                                       <C>            <C>            <C>             <C>
REVENUES:
   Food sales                                             $ 77,351       $ 72,798       $ 219,546       $ 203,980
   Franchise revenues and other                              5,738          5,988          16,432          16,628
                                                          --------       --------       ---------       ---------
Total Revenues                                              83,089         78,786         235,978         220,608
                                                          --------       --------       ---------       ---------

COSTS AND EXPENSES:
Cost of sales:
   Food cost                                                21,368         20,251          60,680          57,607
   Labor and benefits                                       26,482         25,553          76,895          70,974
   Operating expenses                                       14,719         14,440          42,886          40,855
General and administrative                                   7,725          7,562          22,780          21,626
Depreciation and amortization                                5,364          5,072          15,577          14,750
Interest, net                                                4,316          4,352          12,839          11,990
(Gain)/Loss on disposition of assets, net                       --             --            (427)            400
Asset write-down                                                --             --             420             500
Other, net                                                    (352)          (350)         (1,212)         (1,028)
                                                          --------       --------       ---------       ---------
Total Costs and Expenses                                    79,622         76,880         230,438         217,674
                                                          --------       --------       ---------       ---------
Income from operations before income taxes and
 cumulative effect of change in accounting principle         3,467          1,906           5,540           2,934
Provision for income taxes                                  (1,150)          (633)         (1,865)           (986)
                                                          --------       --------       ---------       ---------
Income from operations before cumulative effect
 of change in accounting principle                           2,317          1,273           3,675           1,948
Cumulative effect of change in accounting
 principle, net of income tax benefit of $188                   --             --            (340)             --
                                                          --------       --------       ---------       ---------
NET INCOME                                                $  2,317       $  1,273       $   3,335       $   1,948
                                                          ========       ========       =========       =========

</TABLE>




  The accompanying notes are an integral part of these consolidated statements.





                                       2
<PAGE>   3



                     THE RESTAURANT COMPANY AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEETS
                                 (In Thousands)

<TABLE>
<CAPTION>

                                                       September 30,
                                                           1999       December 31,
                                                        (Unaudited)      1998
                                                       -------------  ------------
<S>                                                    <C>            <C>
                             ASSETS

CURRENT ASSETS:
Cash and cash equivalents                                 $  2,706      $  3,150
Receivables, less allowance for
  doubtful accounts of $869 and $495                         7,882         7,178
Inventories, at the lower of first-
  in, first-out cost or market                               5,493         5,375
Prepaid expenses and other current assets                    1,728         1,999
Deferred income taxes                                          209           209
                                                          --------      --------
        Total current assets                                18,018        17,911
                                                          --------      --------
PROPERTY AND EQUIPMENT, at cost, net of
   accumulated depreciation and amortization               133,173       131,283

INTANGIBLE AND OTHER ASSETS, net of
   accumulated amortization of $31,660 and $30,147          47,159        46,444
                                                          --------      --------
                                                          $198,350      $195,638
                                                          ========      ========
</TABLE>


              The accompanying notes are an integral part of these
                          consolidated balance sheets.




                                       3

<PAGE>   4


                     THE RESTAURANT COMPANY AND SUBSIDIARIES
                           CONSOLIDATED BALANCE SHEETS
                      (In Thousands, Except Share Amounts)

<TABLE>
<CAPTION>

                                                        September 30,
                                                            1999         December 31,
                                                         (Unaudited)        1998
                                                        --------------   ------------
<S>                                                     <C>              <C>
       LIABILITIES AND STOCKHOLDERS' INVESTMENT

CURRENT LIABILITIES:
 Current maturities of capital lease obligations          $   1,044       $   1,229
 Accounts payable                                            12,714          11,568
 Accrued expenses                                            23,899          23,228
                                                          ---------       ---------
        Total current liabilities                            37,657          36,025
                                                          ---------       ---------

CAPITAL LEASE OBLIGATIONS, less
 current maturities                                           4,443           5,767

LONG-TERM DEBT                                              152,575         153,334

DEFERRED INCOME TAXES AND OTHER                               4,445           4,616

STOCKHOLDERS' INVESTMENT:
Common stock $.01 par value, 100,000 shares authorized,
  11,640 issued and outstanding                                   1               1
Additional paid-in capital                                      969             969
Accumulated deficit                                          (1,740)         (5,074)
                                                          ---------       ---------
        Total stockholders' deficit                            (770)         (4,104)
                                                          ---------       ---------
                                                          $ 198,350       $ 195,638
                                                          =========       =========

</TABLE>


              The accompanying notes are an integral part of these
                          consolidated balance sheets.




                                       4
<PAGE>   5


                     THE RESTAURANT COMPANY AND SUBSIDIARIES
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                   (Unaudited)
                                 (In Thousands)

<TABLE>
<CAPTION>


                                                                  Three Months Ended          Nine Months Ended
                                                                     September 30                September 30
                                                               -----------------------      -----------------------
                                                                 1999           1998          1999           1998
                                                               --------       --------      --------       --------
<S>                                                            <C>            <C>           <C>            <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income                                                     $  2,317       $ 1,273       $  3,335       $  1,948
Adjustments to reconcile net income to net cash
  provided by operating activities:
    Depreciation and amortization                                 5,364         5,072         15,577         14,750
    Change in accounting principle                                   --            --            340             --
    (Gain)/Loss on disposition of assets, net                        --            --           (427)           400
    Asset write-down                                                 --            --            420            500
    Other noncash income and expense items                          181          (370)           495           (876)
    Net changes in other operating assets and liabilities         2,665         2,625           (663)         1,193
                                                               --------       -------       --------       --------
      Total adjustments                                           8,210         7,327         15,742         15,967
                                                               --------       -------       --------       --------
Net cash provided by operating activities                        10,527         8,600         19,077         17,915
                                                               --------       -------       --------       --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Cash paid for property and equipment                             (5,906)       (6,488)       (15,861)       (18,260)
Proceeds from sale of property and equipment                         --             8             --             20
Payments on notes receivable                                         66           218            190            427
Distribution from/(Investment in) joint venture                     200            --            200           (110)
                                                               --------       --------      --------       --------
Net cash used in investing activities                            (5,640)       (6,262)       (15,471)       (17,923)
                                                               --------       -------       --------       --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from long-term debt                                         --            --             --         18,009
Net borrowings under (payments on) line of credit                (4,500)       (3,500)        (2,500)         4,000
Principal payments under capital lease obligations                 (311)         (322)        (1,508)        (1,010)
Repurchase of common stock                                           --            --             --        (17,282)
Purchase of minority interest                                       (10)          (55)           (42)       (16,296)
Deferred financing costs                                             --          (118)            --         (1,141)
                                                               --------       --------      --------       --------
Net cash used in financing activities                            (4,821)       (3,995)        (4,050)       (13,720)
                                                               --------       -------       --------       --------
Net increase (decrease) in cash and cash equivalents                 66        (1,657)          (444)       (13,728)
CASH AND CASH EQUIVALENTS:
Balance, beginning of period                                      2,640         3,956          3,150         16,027
                                                               --------       -------       --------       --------
Balance, end of period                                         $  2,706       $ 2,299       $  2,706       $  2,299
                                                               ========       =======       ========       ========

</TABLE>



  The accompanying notes are an integral part of these consolidated statements.




                                       5
<PAGE>   6




                     THE RESTAURANT COMPANY AND SUBSIDIARIES
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (Unaudited)

Organization

The Restaurant Company ("TRC" or the "Company") is a holding company whose
primary subsidiary is Perkins Family Restaurants, L.P. ("PFR"), which is
indirectly wholly-owned by TRC. TRC is the sole stockholder of Perkins
Restaurants, Inc. ("PRI"), which is a limited partner and the indirect owner of
100% of PFR and the parent corporation of PFR's general partner, Perkins
Management Company ("PMC"). TRC is also the sole stockholder of TRC Realty Co.
TRC has no significant assets other than its direct and indirect equity
interests in its subsidiaries. Except as the context otherwise requires,
references to the "Company" refer to TRC together with its subsidiaries,
including, without limitation, PFR.

Basis of Presentation

The accompanying unaudited consolidated financial statements of TRC have been
prepared in accordance with the instructions to Form 10-Q and therefore do not
include all information and notes necessary for complete financial statements in
conformity with generally accepted accounting principles. The results for the
periods indicated are unaudited but reflect all adjustments (consisting only of
normal recurring adjustments) which management considers necessary for a fair
presentation of the operating results. Results of operations for the interim
periods are not necessarily indicative of a full year of operations. The notes
to the financial statements contained in the 1998 Annual Report on Form 10-K
should be read in conjunction with these statements.

Certain prior year amounts have been reclassified to conform to current year
presentation.

Going Private Transaction

Prior to December 22, 1997, PFR was a limited partnership 48.6% indirectly owned
(including its general partner's interest) by TRC. The remainder of the limited
partnership units ("Units") were traded on the New York Stock Exchange under the
symbol "PFR". The Company's business was conducted through Perkins Restaurants
Operating Company, L.P. ("PROC"), a Delaware limited partnership. PFR was the
sole limited partner and owned 99% of PROC, and PMC was the sole general partner
and owned the remaining 1% of PROC. Upon a majority vote of the holders of the
publicly traded Units, 5.44 million Units held by persons other than TRC and its
subsidiaries were converted into the right to receive $14.00 in cash per Unit
(the "Going Private Transaction"). Additionally, PROC was merged into PFR, and
PMC's 1% general partnership interest in PROC was converted into a limited
partnership interest in PFR. Upon consummation of the Going Private Transaction
on December 22, 1997, PFR became an indirect wholly-owned subsidiary of TRC.

The Reorganization

On May 18, 1998, TRC redeemed 100% of Harrah's Entertainment, Inc. ("Harrah's")
interest in the Company ("the Reorganization"). As a result of the
Reorganization, TRC's common stock is owned 50.0% by Donald N. Smith, the
Company's Chairman and Chief Executive Officer, 42.3% by The Equitable Life
Assurance Society of the United States and 7.7% by others.



                                       6

<PAGE>   7


Loss of a Significant Franchisee

On February 4, 1999, Denny's (a subsidiary of Advantica Restaurant Group) was
the prevailing bidder in the court-supervised auction sale of 30 restaurants of
Perk Development Corporation ("Perk"), the Company's upstate New York
franchisee. These restaurants ceased operating as Perkins Family Restaurants on
February 28, 1999. The Company received approximately $1,783,000 in royalties
from Perk during 1998. The Company continues to recruit new franchise
restaurants with higher average sales volumes to replace this revenue stream.

Contingencies

The Company is a party to various legal proceedings in the ordinary course of
business. Management does not believe it is likely that these proceedings,
either individually or in the aggregate, will have a material adverse effect on
the Company's financial position or results of operations.

A franchisee of the Company which operated 20 restaurants as of September 30,
1999, filed a petition for reorganization under Chapter 11 of the United States
Bankruptcy Code in the United States Bankruptcy Court for the Southern District
of Ohio on October 27, 1999. Management believes it is likely that the majority
of these restaurants will remain in the Perkins system either by successful
restructure of the franchisee's obligations or acquisition of the franchisee's
operations by the Company or a third party. During 1998, the Company earned
royalties from those restaurants totaling approximately $948,000. As of
September 30, 1999, the franchisee was delinquent in its royalty obligations in
the amount of approximately $238,000. Although these delinquencies are
personally guaranteed by three principals of the franchisee, collection under
the guarantees is uncertain and the obligations are fully reserved.

In the past, the Company has sponsored financing programs offered by certain
lending institutions to assist its franchisees in procuring funds for the
construction of new franchised restaurants and to purchase and install in-store
bakeries. The Company provides a limited guaranty of the funds borrowed. At
September 30, 1999, there were approximately $2,795,000 in borrowings
outstanding under these programs. The Company has guaranteed $824,000 of these
borrowings. No additional borrowings are available under these programs. The
Company has also entered into a separate two year limited guaranty, which
expires on February 26, 2000, of $1,200,000 in borrowings of a franchisee which
were used to construct a new franchise restaurant. As of September 30, 1999, the
outstanding balance on the loan was $1,200,000.

The Company entered into an agreement to loan up to $775,000 to a franchisee to
be used in remodeling and upgrading existing restaurants. These funds are
primarily being used for improvements to sites owned or leased by the Company
which are being leased to the franchisee. The principal and interest will be
paid by the franchisee over a five year period beginning upon completion of the
remodels and equipment upgrades. As of September 30, 1999, there was $706,000
outstanding under the loan agreement.

TRC is a holding company which has no significant assets other than its direct
and indirect equity interest in its subsidiaries. Accordingly, TRC must rely
entirely upon distributions from its subsidiaries to generate the funds
necessary to meet its obligations. The ability of PFR to distribute funds to TRC
is restricted by PFR's Senior Notes Indenture and revolving credit agreement.




                                       7
<PAGE>   8


Supplemental Cash Flow Information

The increase or decrease in cash and cash equivalents due to changes in
operating assets and liabilities for the three and nine months ended September
30, consisted of the following (in thousands):

<TABLE>
<CAPTION>

                                  Three Months Ended         Nine Months Ended
                                     September 30               September 30
                               ----------------------      ----------------------
                                 1999          1998          1999          1998
                               --------      --------      --------      --------
<S>                            <C>           <C>           <C>           <C>
(Increase) Decrease in:
   Receivables                 $  (975)      $  (681)      $(2,019)      $(1,555)
   Inventories                    (172)         (352)         (118)         (763)
   Prepaid expenses and
     other current assets          (21)          111          (269)         (275)
   Other assets                    (97)           80        (2,316)          (23)

Increase (Decrease) in:
   Accounts payable              1,276           810         1,149           873
   Accrued expenses              3,449         3,095         1,266         2,893
   Other liabilities              (795)         (438)        1,644            43
                               -------       -------       -------       -------
                               $ 2,665       $ 2,625       $  (663)      $ 1,193
                               =======       =======       =======       =======
</TABLE>


Other supplemental cash flow information was as follows (in thousands):

<TABLE>
<CAPTION>
                                      Three Months Ended      Nine Months Ended
                                         September 30           September 30
                                      ------------------      ------------------
                                       1999        1998        1999        1998
                                      -------     ------      ------      ------

<S>                                   <C>         <C>         <C>         <C>
Cash paid for interest                $  194      $  361      $7,449      $7,249
Income taxes paid                      3,013       1,385       3,355       2,250
Income tax refunds received               21          --         103         690


</TABLE>





                                       8
<PAGE>   9


Segment Reporting

The following presents revenues and other financial information by business
segment for the periods ended September 30 (in thousands):

<TABLE>
<CAPTION>

Three Months Ended:
September 30, 1999:
                            Restaurant     Franchise   Manufacturing      Other          Totals
                            ----------     ---------   -------------    ---------       ---------
<S>                         <C>            <C>         <C>              <C>             <C>
Revenues from
    external customers       $ 69,221       $ 5,625       $ 8,028       $    215        $ 83,089
Intersegment revenues              --            --         2,352             --           2,352
Segment profit (loss)           8,613         4,932         1,765        (12,993)          2,317

<CAPTION>

September 30, 1998:
                            Restaurant     Franchise   Manufacturing      Other          Totals
                            ----------     ---------   -------------    ---------       ---------
<S>                         <C>            <C>         <C>              <C>             <C>
Revenues from
   external customers        $ 65,468       $ 5,817       $ 7,127       $    374        $ 78,786
Intersegment revenues              --            --         2,133             --           2,133
Segment profit (loss)           7,484         5,016         1,361        (12,588)          1,273

<CAPTION>

Nine Months Ended:
September 30, 1999:
                            Restaurant     Franchise   Manufacturing      Other          Totals
                            ----------     ---------   -------------    ---------       ---------
<S>                         <C>            <C>         <C>              <C>             <C>
Revenues from
    external customers       $198,280       $16,005       $20,847       $    846        $235,978
Intersegment revenues              --            --         6,774             --           6,774
Segment profit (loss)          22,690        13,879         4,313        (37,547)          3,335

<CAPTION>

September 30, 1998:
                            Restaurant     Franchise   Manufacturing      Other          Totals
                            ----------     ---------   -------------    ---------       ---------
<S>                         <C>            <C>         <C>              <C>             <C>
Revenues from
   external customers        $184,325       $16,097       $18,890       $  1,296        $220,608
Intersegment revenues              --            --         5,719             --           5,719
Segment profit (loss)          20,027        14,107         3,796        (35,982)          1,948


</TABLE>


                                       9

<PAGE>   10

A reconciliation of other segment loss is as follows (in thousands):

<TABLE>
<CAPTION>

                                               Three Months Ended           Nine Months Ended
                                                   September 30                September 30
                                            -----------------------       -----------------------
                                               1999          1998           1999           1998
                                            ---------      --------       --------       --------
<S>                                         <C>            <C>            <C>            <C>
General and administrative expenses         $  6,562       $  6,528       $ 19,725       $ 18,838
Depreciation and amortization expenses         1,485          1,564          4,431          4,743
Interest expense                               4,316          4,352         12,839         11,990
Change in accounting principle                    --             --            340             --
(Gain)/Loss on disposition of assets              --             --           (427)           400
Asset write-down                                  --             --            420            500
Provision for income taxes                     1,150            633          1,865            986
Other                                           (520)          (489)        (1,646)        (1,475)
                                            --------       --------       --------       --------
                                            $ 12,993       $ 12,588       $ 37,547       $ 35,982
                                            ========       ========       ========       ========
</TABLE>

Preopening Expenses

In April 1998, The American Institute of Certified Public Accountants issued
Statement of Position ("SOP") 98-5, "Reporting on the Costs of Start-Up
Activities," which the Company adopted in 1999. SOP 98-5 requires the costs of
start-up activities to be expensed as incurred. Upon adoption of SOP 98-5, the
Company recorded a cumulative effect of a change in accounting principle of
$340,000 net of income taxes of $188,000. Prior to 1999, the Company capitalized
new store opening costs and expensed these costs over the 12 months following
the opening of the restaurant.

Deferred Compensation

Effective January 1, 1999, the Company established a Deferred Compensation Plan
under which officers and key employees of the Company may defer specified
percentages of their salaries, annual incentives and long-term compensation
payments. The Company also makes matching contributions of the lesser of 3% of
eligible compensation or $4,800. Amounts deferred are excluded from the
participant's taxable income and are held in trust with a bank, where the funds
are invested at the direction of the participant. The total amount held in trust
as of September 30, 1999 was $1,623,000 and is included in other assets and
other liabilities in the accompanying balance sheets of the Company.





                                       10
<PAGE>   11


ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS FOR THE THIRD QUARTER  AND NINE MONTHS ENDED SEPTEMBER 30, 1998

RESULTS OF OPERATIONS

Overview:

The Company through its primary subsidiary, PFR, is a leading operator and
franchisor of full-service mid-scale restaurants located in 35 states and 5
Canadian provinces. As of September 30, 1999, the Company owned and operated 140
full-service restaurants and franchised 331 full-service restaurants. The
Company also manufactures and distributes bakery products which are sold to
Company-operated restaurants, franchisees, third-party bakers and food
distributors. The business of Perkins was founded in 1958, and since then
Perkins has continued to adapt its menus, product offerings, building designs
and decor to meet changing consumer preferences. Perkins is a highly recognized
brand in the geographic areas it serves.

The Company's revenues are derived primarily from the operation of full-service
restaurants, the sale of bakery products produced by its manufacturing division,
Foxtail Foods ("Foxtail"), and franchise fees. Foxtail offers cookie dough,
muffin batters, pancake mixes, pies and other food products to Company-operated
and franchised restaurants through food service distributors in order to ensure
consistency and availability of Perkins' proprietary products to each unit in
the system. Additionally, Foxtail manufactures certain proprietary and
non-proprietary products for sale to non-Perkins operations. Sales to
Company-operated restaurants are eliminated in the accompanying statements of
operations. In the nine months ended September 30, 1999, revenues from
Company-operated restaurants, Foxtail, and franchise fees and other accounted
for 84.2%, 8.8% and 7.0% of total revenues, respectively.

TRC leases an executive aircraft through TRC Realty Co. The aircraft is operated
for the benefit of, and all operating costs are reimbursed by, PFR and Friendly
Ice Cream Corporation.



                                       11

<PAGE>   12


A summary of the Company's results for the third quarter and nine months ended
September 30 are presented in the following table. All revenues, costs and
expenses are expressed as a percentage of total revenues. Certain prior year
amounts have been reclassified to conform to current year presentation.

<TABLE>
<CAPTION>

                                                         Three Months Ended      Nine Months Ended
                                                            September 30            September 30
                                                         ------------------     -------------------
                                                           1999       1998        1999        1998
                                                         --------    ------      ------      ------
<S>                                                        <C>        <C>         <C>         <C>
Revenues:
   Food sales                                              93.1%       92.4%       93.0%       92.5%
   Franchise revenues                                       6.9         7.6         7.0         7.5
                                                          -----       -----       -----       -----
Total Revenues                                            100.0       100.0       100.0       100.0
                                                          -----       -----       -----       -----
Costs and Expenses:
 Cost of sales:
      Food cost                                            25.7        25.7        25.7        26.2
      Labor and benefits                                   31.9        32.5        32.6        32.2
      Operating expenses                                   17.7        18.3        18.2        18.5
 General and administrative                                 9.3         9.6         9.7         9.8
 Depreciation and amortization                              6.4         6.4         6.6         6.7
 Interest, net                                              5.2         5.5         5.4         5.4
 (Gain)/Loss on disposition of assets, net                   --          --        (0.2)        0.2
 Asset write-down                                            --          --         0.2         0.2
 Other, net                                                (0.4)       (0.4)       (0.5)       (0.5)
                                                          -----       -----       -----       -----
Total Costs and Expenses                                   95.8        97.6        97.7        98.7
                                                          -----       -----       -----       -----
Income from operations before income taxes and
 cumulative effect of change in accounting principle        4.2         2.4         2.3         1.3
Provision for income taxes                                 (1.4)       (0.8)       (0.8)       (0.4)
                                                          -----       -----       -----       -----
Income from operations before cumulative effect
 of change in accounting principle                          2.8         1.6         1.5         0.9
Cumulative effect of change in accounting
 principle, net of income taxes                              --          --        (0.1)         --
                                                          -----       -----       -----       -----
Net Income                                                2.8 %       1.6 %       1.4 %       0.9 %
                                                          =====       =====       =====       =====

</TABLE>


Net income for the third quarter of 1999 was $2,317,000 versus net income of
$1,273,000 for the same period in 1998. For the nine months ended September 30,
1999 net income was $3,335,000 compared to $1,948,000 in the prior year.




                                       12
<PAGE>   13


Revenues:

Total revenues for the third quarter and first nine months of 1999 increased
5.5% and 7.0% over the same periods last year due primarily to higher comparable
restaurant sales, sales from stores which were not open during 1998, and
increased Foxtail sales.

The increase in restaurant revenue is primarily due to same store comparable
sales increases of 4.9% and 4.8% over the third quarter and first nine months of
1998, respectively. Additionally, six new Company-operated restaurants added in
1998 and three restaurants added in the first nine months of 1999 contributed to
the increase. Same store comparable sales increased due to selective menu price
increases in 1998 and guest trends toward higher-priced entrees. For the
quarter, a 0.5% increase in comparable customer counts contributed to the
increase in comparable sales. Year to date comparable guest counts decreased
0.7%. The shift in customer preference to higher-priced entrees can be
attributed to the Company's development and promotion of higher-priced menu
items. These increases were partially offset by the closing of two
Company-operated restaurants during 1998 and three stores during 1999.

Revenues from Foxtail increased approximately 12.6% and 10.4% over the three and
nine months ended September 30, 1998, and constituted approximately 9.7% and
8.8%, respectively, of the Company's revenues. The increase for the quarter is
due to bakery promotions throughout the Perkins system. The year to date
increase is due to additional sales of non-Perkins products combined with bakery
promotions throughout the system. The company continues to focus on developing
sales outside the Perkins system in order to maximize plant utilization.

Franchise revenues, which consist primarily of franchise royalties and sales
fees, decreased 3.7% over the third quarter of 1998 and 0.6% over the first nine
months of 1998. The decrease in revenue is due to fewer franchise openings in
1999, reducing the amount of revenue recognized for initial franchise fees.
Three franchise units opened in the third quarter of 1999 versus nine in 1998.
Fourteen franchise units opened in the first nine months of 1999 versus
twenty-five in the first nine months of 1998. The decrease in initial franchise
fees was partially offset by increased royalty revenue. The loss of royalties
from thirty-nine restaurants closed since January 1, 1999 has been replaced by
new restaurants with higher average sales generating higher royalties per store.

Costs and Expenses:

Food cost:

In terms of total revenues, food cost for the three months ended September 30,
1999 was equal to food cost for the same period in the prior year. Food cost for
first nine months decreased 0.5 percentage points over the 1998 period.

Food cost for the quarter was impacted favorably by lower commodity costs for
certain menu items and increased menu prices. Increased food cost related to
changes in menu items sold and bakery promotions offset these positive
variances. For the year, food cost decreased due to selective menu price
increases in 1998 and lower commodity costs. The decreases were partially offset
by the increased costs associated with product upgrades on certain key items.
Additionally, as Foxtail's revenues have increased as a percent of total
revenues, the relatively higher food cost percentages on Foxtail products has
impacted the Company's food cost percentages.




                                       13

<PAGE>   14


Labor and benefits:

Labor and benefits expense, as a percentage of total revenues, decreased 0.6 and
increased 0.4 percentage points for the third quarter and nine months ended
September 30, 1999, respectively. The impact of an increased average guest check
on labor and increased productivity in the company's restaurants combined with
improved productivity at Foxtail more than offset average wage rate increases in
the quarter.

Year to date, increases in group health insurance costs, lower productivity and
an increase in average wage rates drove the negative variance versus prior year.
The Company made significant changes to its group health insurance plan in July
1999, which the Company believes will mitigate future increases in certain
employee insurance costs.

The wage rates of the Company's hourly employees are impacted by Federal and
state minimum wage laws. Certain states do not allow tip credits for servers
which results in higher payroll costs as well as greater exposure to increases
in minimum wage rates. In the past, the Company has been able to offset
increases in labor costs through selective menu price increases and improvements
in labor productivity. The Company anticipates that it can offset future
increases in the Federal minimum wage rate through selective menu price
increases. However, there is no assurance that future increases can be mitigated
through raising menu prices.

Operating expenses:

Operating expenses, expressed as a percentage of total revenues, decreased 0.6
and 0.3 percentage points compared to the three and nine months ended September
30, 1998. The elimination of certain outside service expenses and the impact of
an increased guest check average on fixed expenses were the primary reasons for
the decreases from 1998 periods. The decreases were partially offset by
increases in Foxtail distribution costs and increased franchise operating costs.

General and administrative:

General and administrative expenses increased 2.2% and 5.3% over the three and
nine months ended September 30, 1999. This increase is due to higher incentive
costs associated with continued growth in Company performance and the higher
cost of administrative support.

Depreciation and amortization:

Depreciation and amortization expense for the three and nine months ended
September 30, 1999 increased 5.8% and 5.6% over the same periods last year due
primarily to the addition of new Company-operated restaurants and the upgrade
and maintenance of existing restaurants.

Interest, net:

Interest expense for the three and nine months ended September 30, 1999,
decreased 0.8% and increased 7.1%, respectively, over the same periods last
year. Decreased interest expense related to capital leases and lower average
borrowings and lower interest rates on the Company's revolving line of credit
facility contributed to the decrease for the quarter. Interest expense increased
for the nine month period primarily as the result of debt incurred in May 1998
which was used to consummate the Reorganization.




                                       14

<PAGE>   15


Other:

The Company recognized a gain in the second quarter of 1999 totaling $427,000
related to the early termination of a lease obligation. Losses for asset
write-downs totaled $420,000. This loss primarily relates to a property for
which the lease expired in September 1999 for which the Company did not exercise
an available lease option. As a result, the related leasehold improvements were
written off when the decision was made not to renew the lease. In addition,
development of two prospective restaurant sites was discontinued.

Results of operations for the nine months ended September 30, 1999 reflect a
$340,000 cumulative effect of change in accounting principle charge against
earnings, net of income taxes, related to the adoption of SOP 98-5 "Reporting on
the Costs of Start-Up Activities," which requires the costs of start-up
activities to be expensed as incurred. Prior to 1999, the Company deferred new
store preopening costs and amortized them over the twelve months following the
opening of the restaurant.

Results of operations for the nine months ended September 30, 1998 reflect a
$500,000 non-cash charge against earnings related to the write-down of certain
assets impaired under SFAS No. 121. In addition, the Company recorded a net loss
in the prior year of $400,000 related to the disposition of assets; this amount
included a loss of approximately $845,000 on the disposal of two properties and
the recognition of a previously deferred gain of approximately $445,000 under
SFAS No. 66, "Accounting for Sales of Real Estate," related to the sale of
property in 1994.

CAPITAL RESOURCES AND LIQUIDITY

Principal uses of cash during the third quarter and first nine months ended
September 30, 1999, were capital expenditures and net payments on the Company's
revolving line of credit. Capital expenditures consisted primarily of
development costs for new Company-operated restaurants and costs related to
remodels and maintenance of existing restaurants. One new restaurant was opened
in the third quarter of 1999 and four sites were under development as of
September 30, 1999, three of which are expected to open before December 31,
1999. The Company's primary source of funding was cash provided by operations.

The following table summarizes capital expenditures for each of the years in the
three-year period ended December 31, 1998 and the nine months ended September
30, 1999 and 1998, respectively (in thousands):

<TABLE>
<CAPTION>


                                                                        NINE MONTHS ENDED
                                     YEARS ENDED DECEMBER 31               SEPTEMBER 30
                                ---------------------------------      --------------------
                                  1998        1997         1996          1999        1998
                                -------      -------      -------      -------      -------
<S>                             <C>          <C>          <C>          <C>          <C>
Maintenance                     $ 4,141      $ 3,453      $ 2,987      $ 3,492      $ 2,590
New sites                        12,845        6,193        1,947        6,667        8,805
Manufacturing                     1,152          714          651          699          980
Remodeling and Reimaging          4,144        2,790        4,064        3,316        2,785
Other                             2,864        1,952        2,212        1,687        3,100
                                -------      -------      -------      -------      -------
Total Capital Expenditures      $25,146      $15,102      $11,861      $15,861      $18,260
                                =======      =======      =======      =======      =======
</TABLE>



                                       15


<PAGE>   16


The Company's capital budget for 1999 is $28.0 million. The Company plans to add
up to three additional Company-operated restaurants during the fourth quarter of
1999. The remaining capital budget will be primarily applied to remodels of
existing restaurants, restaurant maintenance, and improvements to the Company's
infrastructure equipment. The primary source of funding for these projects is
expected to be cash provided by operations and borrowings under the Company's
revolving credit facility. Capital spending could vary significantly from
estimated amounts as certain of these expenditures are discretionary in nature.

On December 22, 1997, PFR issued $130,000,000 of 10.125% Unsecured Senior Notes
(the "Notes") due December 15, 2007. The proceeds were used to repay outstanding
senior notes and borrowings under PFR's revolving line of credit, purchase Units
from the public and pay expenses relative to PFR's Going Private Transaction.

PFR maintains a secured $50,000,000 revolving line of credit facility (the
"Credit Facility") with a sublimit for up to $5,000,000 of letters of credit.
The Credit Facility is guaranteed by TRC, PRI, PMC and Perkins Finance Corp., a
wholly-owned subsidiary of PFR, and matures on January 1, 2003, at which time
all amounts become payable. All amounts under the facility bear interest at
floating rates based on the agent's base rate or Eurodollar rates as defined in
the agreement. All indebtedness under the Credit Facility is secured by a first
priority lien on substantially all of the assets of PFR. As of September 30,
1999, $1,500,000 in borrowings and $1,573,000 of letters of credit were
outstanding under the facility.

On May 18, 1998, TRC issued $31,100,000 of 11.25% Senior Discount Notes (the
"TRC Notes") maturing on May 15, 2008. The TRC Notes were issued at a discount
to their principal amount at maturity and generated gross proceeds to TRC of
approximately $18,009,000. The proceeds were used to purchase the shares of TRC
owned by Harrah's and pay expenses relative to the Reorganization.

Cash interest will not accrue or be payable on the TRC Notes prior to May 15,
2003, provided that on any semi-annual accrual date prior to May 15, 2003, TRC
may elect to begin accruing cash interest on the TRC Notes (the "Cash Interest
Election"). Cash interest on the TRC Notes will accrue at a rate of 11.25% per
annum from the earlier of May 15, 2003 or the semi-annual accrual date with
respect to which the Cash Interest Election is made, and will be payable
thereafter on each May 15 and November 15.

Prior to the earlier of May 15, 2003 or the semi-annual accrual date with
respect to which the Cash Interest Election is made, interest on the TRC Notes
will accrue at a rate of 11.25% per annum on each semi-annual accrual date and
the principal amount of each TRC Note will accrete by the amount of such accrued
interest (the "Accreted Value"). On May 15, 2003, TRC will be required to pay
all accrued but unpaid interest on the TRC Notes by redeeming an amount per note
equal to the Accreted Value of such TRC Note on May 15, 2003, less the issue
price of such TRC Note at a redemption price of 105.625% of the amount redeemed.
Assuming TRC does not make the Cash Interest Election, the aggregate Accreted
Value of the TRC Notes on May 15, 2003 will be $31,100,000 and the amount
required to be redeemed will be approximately $13,091,000.

Prior to the consummation of the Going Private Transaction, PFR had paid regular
quarterly cash distributions to its holders of units of limited partnership
interest. PFR expects to pay distributions to its general partner and limited
partners sufficient to satisfy estimated tax liabilities of its partners arising
out of the allocation of taxable income or gain from PFR and to pay interest on
the TRC Notes.



                                       16

<PAGE>   17


The Notes and the Credit Facility restrict the ability of PFR to pay dividends
or distributions to its equity holders. For the three and nine months ended
September 30, 1999, PFR made Tax Distributions totaling approximately $1,667,000
and $3,761,000, respectively, to its equity holders, all of whom are direct or
indirect wholly-owned subsidiaries of TRC.

The TRC Notes restrict the ability of TRC to pay dividends or distributions to
its equity holders as well.

TRC's and PFR's ability to make scheduled payments of principal of, or to pay
the interest or liquidated damages, if any, on, or to refinance, their
respective indebtedness, or to fund planned capital expenditures will depend on
the Company's future performance, which, to a certain extent, is subject to
general economic, financial, competitive, legislative, regulatory and other
factors that are beyond their control. Based upon the current level of
operations, management believes that cash flow from operations and available
cash, together with available borrowings under the Credit Facility, will be
adequate to meet the Company's liquidity needs for the foreseeable future. PFR
and TRC may, however, need to refinance all or a portion of the principal of the
TRC Notes and the Notes on or prior to maturity. There can be no assurance that
the Company will generate sufficient cash flow from operations, or that future
borrowings will be available under the Credit Facility in an amount sufficient
to enable TRC and PFR to service their respective indebtedness or to fund their
other liquidity needs. In addition, there can be no assurance that TRC and PFR
will be able to effect any such refinancing on commercially reasonable terms or
at all.

All significant operations of TRC are conducted through PFR. TRC's ability to
meet its obligations as they mature is primarily dependent on PFR's ability to
make distributions to TRC. Management currently believes that the distributions
allowed under the Credit Facility and the 10.125% Senior Note Indenture will be
adequate to allow TRC to meet its obligations for the foreseeable future.
However, there can be no assurance that PFR's future income will be sufficient
to allow for distributions in an amount required to meet all future obligations
of TRC.

The Company is exploring the possibility of acquiring all of the outstanding
stock of the Company not owned by Donald N. Smith for approximately $47.2
million. Any such transaction would be subject to the Company's ability to
finance the transaction which it would do through a combination of the issuance
of additional equity securities and debt. Any such transaction also would be
subject to the terms of the Credit Facility and bond indentures of PFR and TRC.

YEAR 2000

The Year 2000 presents a critical business issue due to the possibility that
many computerized systems will not be able to process information including
dates beginning in the Year 2000. In recent years, the Company has upgraded
computer hardware and software in the normal course of business to Year 2000
compliant technology. A review of computer systems and software, including
non-information technology systems, has been completed. No material costs
associated with achieving Year 2000 compliance internally have been experienced
or are anticipated based on this review.




                                       17

<PAGE>   18


The nature of the Company's business is such that the ability of outside vendors
to supply the Company's restaurants with food and related products and
preparedness of the Company's franchisees to appropriately assess and address
Year 2000 business risks represent the primary risks to the Company from third
parties. In response to these risks, questionnaires have been sent to all of the
Company's primary vendors to obtain reasonable assurances that adequate plans
have been developed to address the Year 2000 issue. The returned questionnaires
have been assessed by the Company. Based on these responses, the Company has no
reason to believe that significant business risks exist; however, the responses
do not provide any guarantees that unidentified failures by critical vendors
will not occur.

The Company's franchisees have been provided with information regarding the
potential business risks associated with the Year 2000 issue. The Year 2000
readiness of significant franchisees has been assessed and, although the Company
cannot provide assurance as to their readiness, no significant risks have been
identified. However, failures by significant franchisees could result in a
material adverse effect on the Company's operations. To mitigate exposure for
both Company-owned and franchised restaurants, the Company is developing
contingency plans to assist restaurant personnel in providing for quick response
and, if necessary, limited service in those restaurants that do experience
interruptions of service from critical vendors.

Unless public suppliers of water, electricity and natural gas are disrupted for
a substantial period of time (in which case the Company's business will be
materially adversely affected), based on information currently available,
management believes the most reasonably likely worst case scenario related to
Year 2000 compliance would not have a material impact on its financial position
or results of operations. However, unanticipated failures by critical vendors or
franchisees, as well as unidentified internal failures, could result in a
material adverse effect on the Company's operations. As a result, management
cannot reasonably predict what impact, if any, Year 2000 issues will have on the
Company.

SEASONALITY

Company revenues are subject to seasonal fluctuations. Customer traffic, and
consequently revenues, are highest in the summer months and lowest during the
winter months because of the high proportion of restaurants located in states
where inclement weather adversely affects guest visits.

Forward-Looking Statements

This discussion and the discussion following contain forward-looking statements
within the meaning of The Private Securities Litigation Reform Act of 1995. Such
forward-looking statements are based on current expectations that are subject to
known and unknown risks, uncertainties and other factors that could cause actual
results to differ materially from those contemplated by the forward-looking
statements. Such factors include, but are not limited to, the following: general
economic conditions, competitive factors, consumer taste and preferences,
adverse weather conditions, group health insurance costs, minimum wage rate
increases, availability and costs of commodities, interest rates and credit
availability. The Company does not undertake to publicly update or revise the
forward-looking statements even if experience or future changes make it clear
that the projected results expressed or implied therein will not be realized.




                                       18
<PAGE>   19


ITEM 2A.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Interest Rate Risk

The Company currently has market risk sensitive instruments related to interest
rates. The Company is not subject to significant exposure for changing interest
rates on the Notes or the TRC Notes because the interest rates are fixed. PFR
has in place a $50,000,000 line of credit facility which matures on January 1,
2003. All borrowings under the facility bear interest at floating rates based on
the agent's base rate or Eurodollar rates. PFR had $1,500,000 outstanding under
the line of credit facility at September 30, 1999. While changes in market
interest rates would affect the cost of funds borrowed in the future, the
Company believes that the effect, if any, of reasonably possible near-term
changes in interest rates on the Company's consolidated financial position,
results of operations or cash flows would not be material.

Commodity Price Risk

Many of the food products purchased by the Company are affected by commodity
pricing and are therefore subject to price volatility caused by weather,
production problems, delivery difficulties and other factors which are outside
the control of the Company. The majority of the Company's supplies and raw
materials are available from several sources and the Company is not dependent
upon any single source for these items. If any existing suppliers fail, or are
unable to deliver in quantities required by the Company, the Company believes
that there are sufficient other quality suppliers in the marketplace that its
sources of supply can be replaced as necessary. At times, the Company enters
into purchase contracts of one year or less or purchases bulk quantities for
future use of certain items in order to control commodity pricing risks. Certain
significant items that could be subject to price fluctuations are beef, pork,
coffee, eggs, vegetable oils, wheat products and corn products. The Company
believes it will be able to pass through increased commodity costs by adjusting
menu pricing in most cases. Additionally, the Company's product offerings and
marketing events are relatively diverse. Therefore the company has the
flexibility to adjust its product mix to take advantage of or limit exposure to
commodity cost fluctuations. The Company believes that any reasonably possible
near-term changes in commodity pricing which cannot be offset by changes in menu
pricing, or other product delivery strategies, would not be material.



                                       19

<PAGE>   20


PART II - OTHER INFORMATION

Item 5. Other Information

In October 1999, TRC Realty terminated its lease for an aircraft with GE Capital
Corporation which originally expired in May 2004. In November 1999, TRC Realty
entered into a lease with GE Capital Corporation for a new aircraft expiring in
November 2009.

Item 6. Exhibits and Reports on Form 8-K


(a)    Exhibits - Reference is made to the Index of Exhibits attached hereto as
       page 21 and made a part hereof.

(b)    Reports on Form 8-K -  None

Signature

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



                                          THE RESTAURANT COMPANY



DATE:  November 15, 1999                  BY: /s/ Steven R. McClellan
       ----------------------                -----------------------------------
                                             Steven R. McClellan
                                             Vice President,
                                             Chief Financial Officer





                                       20
<PAGE>   21


Exhibit Index

<TABLE>
<CAPTION>

         Exhibit No.              Description
         -----------              -----------
         <S>                      <C>
             10.1                 Airplane lease between TRC Realty and
                                  GE Capital Corporation

             27                   Financial Data Schedule

</TABLE>






                                       21