FORM 10-Q


                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549


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

                For the quarterly period ended October 11, 1997


                         Commission File Number 0-26602


                             THE GRAND UNION COMPANY
             (Exact name of registrant as specified in its charter)


           Delaware                                    22 - 1518276
 (State or other jurisdiction of            (I.R.S. Employer Identification No.)
   incorporation or organization)


201 Willowbrook Boulevard, Wayne, New Jersey                07470 - 0966
  (Address of principal executive offices)                   (Zip Code)


                                  973-890-6000
              (Registrant's telephone number, including area code)


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

                         Yes _X_.     No ___ .

     Indicate by check mark whether the  registrant  has filed all documents and
reports  required  to be  filed by  Section  12,  13 or 15(d) of the  Securities
Exchange Act of 1934 subsequent to the  distribution of securities  under a plan
confirmed by a court.

                         Yes _X_.     No ___ .


     As of  November  25,  1997,  there were issued and  outstanding  10,000,000
shares, par value $0.01 per share, of the Registrant's common stock.


                                       1
<PAGE>



                             THE GRAND UNION COMPANY
                                      INDEX

PART I - FINANCIAL INFORMATION (Unaudited)
Item 1.  Financial Statements.
                                                                        Page No.


Consolidated  Statements  of  Operations - 12 weeks ended
 October 11, 1997 and  October 12, 1996 and  28 weeks ended
 October 11, 1997 and October 12, 1996                                        3

Consolidated Balance Sheets -  October 11, 1997 and March 29, 1997            4


Consolidated Statements of Cash Flows - 28 weeks ended                        5
  October 11, 1997 and October 12, 1996


Notes to Consolidated Financial Statements                                    6


Item 2. Management's  Discussion and Analysis of Financial Condition 
        and Results of Operations.                                            9


PART II - OTHER INFORMATION

Item 5.  Other Information                                                   11


Item 6.  Exhibits and Report on Form 8-K                                     11


All items which are not  applicable or to which the answer is negative have been
omitted from this report.


                                       2
<PAGE>



PART I - FINANCIAL INFORMATION

Item 1. Financial Statements.


                             THE GRAND UNION COMPANY
                      CONSOLIDATED STATEMENTS OF OPERATIONS
                  (dollars in thousands, except per share data)
                                   (unaudited)


<TABLE>
<CAPTION>
                                                    12 WEEKS ENDED                 28 WEEKS ENDED
                                              --------------------------    --------------------------
                                              October 11,    October 12,    October 11,    October 12,
                                                 1997            1996           1997          1996
                                              -----------    -----------    -----------    -----------
<S>                                           <C>            <C>            <C>            <C>        
Sales                                         $   518,910    $   533,412    $ 1,226,893    $ 1,260,235

Cost of sales                                    (370,246)      (371,254)      (888,760)      (876,178)
                                              -----------    -----------    -----------    -----------

Gross profit                                      148,664        162,158        338,133        384,057

Operating and administrative expenses            (135,193)      (131,809)      (315,015)      (312,687)

Depreciation and amortization                     (20,309)       (19,732)       (44,776)       (45,145)

Amortization of excess reorganization value       (24,076)       (23,678)       (56,178)       (55,250)

Interest expense, net                             (26,012)       (24,574)       (58,332)       (56,861)
                                              -----------    -----------    -----------    -----------

Loss before income taxes                          (56,926)       (37,635)      (136,168)       (85,886)

Income tax benefit                                   --            6,982           --           11,421
                                              -----------    -----------    -----------    -----------

Net (loss)                                        (56,926)       (30,653)      (136,168)       (74,465)

Accrued dividends on preferred stock               (2,074)          (243)        (4,131)          (243)
                                              -----------    -----------    -----------    -----------

Net (loss) applicable to common stock         $   (59,000)   $   (30,896)   $  (140,299)   $   (74,708)
                                              ===========    ===========    ===========    ===========

Net (loss) per common share                   $     (5.90)   $     (3.09)   $    (14.03)   $     (7.47)
                                              ===========    ===========    ===========    ===========
</TABLE>


    See accompanying notes to consolidated financial statements (unaudited).


                                       3
<PAGE>

                             THE GRAND UNION COMPANY
                           CONSOLIDATED BALANCE SHEETS
                  (dollars in thousands, except per share data)
                                   (unaudited)

<TABLE>
<CAPTION>
                                                                         October 11,             March 29,
                                                                            1997                    1997
                                                                         -----------             -----------
<S>                                                                      <C>                     <C>        
ASSETS
Current assets:
 Cash                                                                    $    29,688             $    34,119
 Receivables                                                                     293                  17,975
 Inventories                                                                 129,848                 131,409
 Other current assets                                                         12,766                  14,326
                                                                         -----------             -----------
   Total current assets                                                      172,595                 197,829
Property, net                                                                418,814                 411,911
Excess reorganization value, net                                             278,887                 335,065
Deferred tax asset                                                            51,393                  51,393
Beneficial leases, net                                                        45,854                  52,266
Other assets                                                                  20,292                  12,375
                                                                         -----------             -----------
                                                                         $   987,835             $ 1,060,839
                                                                         ===========             ===========

LIABILITIES AND STOCKHOLDERS' (DEFICIT)
Current liabilities:
  Current maturities of long-term debt                                          --                        46
  Current portion of obligations under capital leases                          7,495                   8,045
  Accounts payable and accrued liabilities                                   139,134                 164,549
                                                                         -----------             -----------
     Total current liabilities                                               146,629                 172,640
Long-term debt                                                               786,843                 740,207
Obligations under capital leases                                             147,950                 140,058
Other noncurrent liabilities                                                  90,791                  96,144
                                                                         -----------             -----------
     Total liabilities                                                   $ 1,172,213             $ 1,149,049
                                                                         -----------             -----------

Redeemable  Class A  Preferred  Stock, $1.00 par
    value, 3,500,000 shares authorized, 1,300,566 shares
    issued  and  outstanding, liquidation preference $67,994
    and $65,000, respectively                                                 67,994                  65,000
                                                                         -----------             -----------

Redeemable  Class B Preferred  Stock, $1.00 par
     value, 1,400,000  shares authorized, 800,000 shares
     issued and outstanding, liquidation preference $41,137                   41,137                    --
                                                                         -----------             -----------
Stockholders' (deficit):
   Common stock, $.01 par value; 60,000,000 shares
     authorized, 10,000,000 shares issued and outstanding                        100                     100
   Preferred stock, $1.00 par value; 10,000,000 shares
     authorized, less amount authorized as Class A and Class
     B preferred stock, no shares issued and outstanding                        --                      --
                                                                          
   Capital in excess of par value                                            135,769                 139,900
   Accumulated deficit                                                      (429,378)               (293,210)
                                                                         -----------             -----------
     Total stockholders' (deficit)                                          (293,509)               (153,210)
                                                                         -----------             ===========
                                                                         $   987,835             $ 1,060,839
                                                                         ===========             ===========
</TABLE>


    See accompanying notes to consolidated financial statements (unaudited).



                                       4
<PAGE>


                             THE GRAND UNION COMPANY
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                             (dollars in thousands)
                                   (unaudited)

                                                            28 Weeks Ended
                                                        ------------------------
                                                        October 11,  October 12,
                                                           1997          1996
                                                        ----------   -----------
OPERATING ACTIVITIES:
 Net (loss)                                              $(136,168)   $ (74,465)
 Adjustments to reconcile net (loss) to
   net cash (used for) operating
   activities before reorganization items paid:
    Depreciation and amortization                          100,954      100,395
    Deferred taxes                                            --        (11,421)
    Noncash interest                                           158         (102)
 Net changes in assets and liabilities:
   Receivables                                              17,682       (5,107)
   Inventories                                               1,561       (4,566)
   Other current assets                                      1,560          158
   Accounts payable and accrued liabilities                (23,702)     (17,525)
   Other                                                    (6,953)      (2,183)
                                                         ---------    ---------
 Net cash (used for) operating
   activities before reorganization items paid             (44,908)     (14,816)
 Reorganization items paid                                  (3,431)      (3,720)
                                                         ---------    ---------
 Net cash (used for) operating activities                  (48,339)     (18,536)
                                                         ---------    ---------
INVESTMENT ACTIVITIES:
  Capital expenditures                                     (28,712)     (18,226)
  Disposals of property                                         60        7,901
                                                         ---------    ---------
 Net cash (used for) investment activities                 (28,652)     (10,325)
                                                         ---------    ---------
FINANCING ACTIVITIES:
  Net proceeds from sale of preferred stock                 40,000       28,000
  Proceeds from long-term debt                              77,978        6,000
  Loan placement fees                                       (9,446)        --
  Obligations under capital leases discharged               (4,926)      (6,600)
  Repayment of long-term debt                              (31,046)      (6,425)
                                                         ---------    ---------
 Net cash provided by financing activities                  72,560       20,975
                                                         ---------    ---------
(Decrease) in cash and temporary investments                (4,431)      (7,886)
Cash and temporary investments at beginning of year         34,119       39,425
                                                         ---------    ---------
Cash                                                     $  29,688    $  31,539
                                                         =========    =========
Supplemental disclosure of cash flow information:
  Interest payments                                      $  55,644    $  55,034
  Capital lease obligations incurred                        12,268       15,999
  Accrued dividends                                          4,131          243



    See accompanying notes to consolidated financial statements (unaudited).


                                       5
<PAGE>
 
                             THE GRAND UNION COMPANY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (unaudited)

NOTE 1 - Basis of Accounting

     The accompanying  interim  consolidated  financial  statements of The Grand
Union  Company  (the  "Company")  include  the  accounts  of the Company and its
subsidiaries,  all of which are wholly-owned.  In the opinion of management, the
consolidated financial statements include all adjustments, which consist only of
normal  recurring  adjustments  necessary for a fair  presentation  of operating
results for the interim periods.

     These consolidated  financial statements should be read in conjunction with
the  consolidated  financial  statements  and  related  notes  contained  in the
Company's  Annual Report on Form 10-K for the 52 weeks ended March 29, 1997, and
the  Company's  Quarterly  Report on Form 10-Q for the 16 weeks  ended  July 19,
1997. Operating results for the periods presented are not necessarily indicative
of results for the full fiscal year.

     Certain items  reported on the  Consolidated  Statements of Cash Flows have
been reclassified from last year's presentation for comparative purposes.

NOTE 2 - Preferred Stock Issuances

     In a series of related  transactions  commencing on July 30, 1996,  Trefoil
Capital Purchasers II, L. P., a Delaware limited partnership,  and GE Investment
Private  Placement  Partners  II, A  Limited  Partnership,  a  Delaware  limited
partnership (collectively,  the "Purchasers"),  acquired beneficial ownership of
an aggregate of approximately 70.77% of the Company's  outstanding voting stock.
On July 30, 1996,  the Company  entered into a definitive  agreement (the "Stock
Purchase  Agreement")  to  sell  $100  million  of  Preferred  Stock  A  to  the
Purchasers.  Each share of the Preferred  Stock A was to be  convertible  at the
option of the holder, at any time, into 6.8966 shares of Common Stock.  Pursuant
to the Stock  Purchase  Agreement,  the Purchasers  agreed to purchase,  and the
Company agreed to sell, an aggregate of 2,000,000 shares of Preferred Stock A at
a  purchase  price of $50 per share  (the  "Stated  Value")  in  stages  through
February 25, 1998. On September 17, 1996, the first stage of the transaction was
closed,  and the Purchasers  acquired 800,000 shares of Preferred Stock A for an
aggregate purchase price of $40 million.

     At a subsequent closing held on February 25, 1997, the Purchasers purchased
an  additional  400,000  shares of Preferred  Stock A for an aggregate  purchase
price of $20 million.  Additional  subsequent closings were scheduled for August
25, 1997 and February 25, 1998 (the  "Subsequent  Closings").  At the Subsequent
Closings,  the  Purchasers  would have been  required to purchase an  additional
800,000  shares of  Preferred  Stock A for an  aggregate  purchase  price of $40
million.

     Pursuant to an  Acceleration  and  Exchange  Agreement  (the  "Acceleration
Agreement"),  dated June 12,  1997,  among the Company and the  Purchasers,  the
Company and the  Purchasers  agreed to  accelerate  the sale and purchase of the
800,000 shares of Preferred Stock A to have occurred at the Subsequent  Closings
(the "Accelerated  Shares") to June 12, 1997 (the "Accelerated  Closing") and to
exchange the  Accelerated  Shares for 800,000  shares of Preferred  Stock B (the
"Exchange").  At the Accelerated  Closing,  the Company received the $40 million
purchase price for the sale of the Accelerated Shares. Immediately following the
Accelerated  Closing,  the Purchasers  completed the Exchange  pursuant to which
they  received  an  aggregate  of 800,000  shares of the  Preferred  Stock B, in
consideration  for their  surrender  of the  Accelerated  Shares.  Each share of
Preferred Stock B is convertible at the option of the holder,  at any time, into
20.8333  shares  of  Common  Stock.  This  conversion  ratio is to be reset to a
conversion ratio based upon a 20% premium to the average trading price of Common
Stock during a twenty-day  period following the earlier of: (i) three days after
the release of the January 3, 1998 quarterly results, or (ii) February 20, 1998.
The Purchasers obtained the necessary funds to purchase the Preferred Stock from
capital contributions from their respective partners.

     On March 20, 1997, the Company consummated the sale to The Roger Stangeland
Family Limited  Partnership (the  "Stangeland  Partnership") of 60,000 shares of
Preferred  Stock A at a  purchase  price of $50.00  per share  (the  "Stangeland
Shares"),  pursuant to the terms of a Stock Purchase  Agreement,  dated February
25, 1997,  as amended by Amendment  No. 1 thereto dated as of March 20, 1997 (as
so amended, the "Stangeland Stock Purchase Agreement"),  between the Company and
Mr. Stangeland. Pursuant to a Stockholder Agreement dated February 25, 1997 (the
"Stangeland Stockholder  Agreement"),  among the Purchasers,  Mr. Stangeland and
the  Company,  Mr.  Stangeland  has granted the  Purchasers  certain  take-along
rights, the Purchasers have granted Mr. Stangeland certain tag-along rights, and
the Purchasers and the Company have granted Mr. Stangeland certain  registration
rights related to the Stangeland Shares and any shares of Preferred Stock A, and
Common Stock,  if any, paid as dividends  with respect to the Preferred  Stock A
(collectively,  "Securities").  Pursuant to an  Addendum,  dated as of March 20,
1997, to the Stangeland  Stockholder  Agreement,  the Stangeland Partnership has
succeeded to all of the rights,  and has assumed all of the obligations,  of Mr.

                                       6
<PAGE>


Stangeland  pursuant to the  Stangeland  Stockholder  Agreement.  The Purchasers
disclaim  any and all  ownership  of the  Stangeland  Shares  or any  additional
Securities acquired by the Partnership in respect of the Stangeland Shares.

     At October 11, 1997, there were a total of 1,300,566  outstanding shares of
Preferred Stock A, which were  convertible into an aggregate of 8,969,483 shares
of Common Stock, and a total of 800,000 outstanding shares of Preferred Stock B,
which were convertible  into an aggregate of 16,666,640  shares of Common Stock.
Together,  the  aggregate  shares of  Preferred  Stock A and  Preferred  Stock B
account for approximately 71.94% of the Company's outstanding voting stock.

        The  Class A  Preferred  Stock  and Class B  Preferred  Stock  have been
classified as redeemable  Class A Preferred Stock and Class B Preferred Stock in
the  accompanying  Consolidated  Balance Sheets.  On March 31, 1997, the Company
paid  dividends  on the Class A Preferred  Stock  through the issuance of 20,866
shares of Class A Preferred Stock, with an aggregate Stated Value of $1,043,300.
The Company elected to suspend the declaration of the dividends payable June 30,
1997 and  September 30, 1997.  The dividends on the Class A Preferred  Stock and
the Class B Preferred Stock and the accrued and unpaid dividends through October
11, 1997 have been  accounted for by a charge  against  Capital in Excess of Par
Value  and a  corresponding  increase  in the  carrying  amounts  of the Class A
Preferred Stock and Class B Preferred  Stock.  The Class A and Class B Preferred
Stock have a  Liquidation  Preference  over the Common Stock equal to the Stated
Value of the outstanding shares of the Preferred Stock plus all accrued,  unpaid
dividends.

NOTE 3 - Net Loss Per Share

     The  Company's  outstanding  warrants and options to purchase  Common Stock
under the  Company's  1995  Non-Employee  Director's  Stock Option Plan and 1995
Equity Incentive Plan are considered common stock equivalents.  The inclusion of
these  common  stock  equivalents  in the  Company's  primary net loss per share
calculation   would  have  been   anti-dilutive   for  the  periods   presented.
Accordingly,  only the weighted  average  number of common  shares  outstanding,
totaling 10,000,000, were included in the calculation.

     The Company's  Class A Preferred  Stock and Class B Preferred Stock are not
deemed  to be  common  stock  equivalents.  A fully  diluted  net loss per share
calculation is not presented  because  inclusion of the Class A Preferred  Stock
and Class B Preferred Stock in the calculation would have been anti-dilutive for
the periods presented.

NOTE 4 - Stock Option Grants

     On August 1, 1997, the Board of Directors  elected J. Wayne Harris Chairman
of the Board and Chief Executive Office of the Company.  In connection with such
appointment,  the Company granted Mr. Harris options to purchase up to 1,250,000
shares of the  Company's  Common  Stock,  pursuant to the 1995 Equity  Incentive
Plan, subject to stockholder approval. The exercise price for the options ranges
from $1.375 to $4.375 per share.  The options expire on July 31, 2007,  although
their expiration may be accelerated by certain events.

     The  Board of  Directors,  pursuant  to the  1995  Equity  Incentive  Plan,
authorized a stock  option grant of 1,800,000  shares of common stock to certain
associates of the Company,  including store managers,  management  personnel and
other bi-weekly, exempt associates. On October 1, 1997, eligible associates were
granted  options at an exercise price of $1.84375 and the options will expire on
September 30, 2007,  although  their  expiration  may be  accelerated by certain
events.

     On  October  3,  1997,  the  Board of  Directors  elected  Gary M.  Philbin
President and Chief  Merchandising  Officer of the Company.  In connection  with
such  appointment,  the Company  granted Mr.  Philbin  options to purchase up to
450,000  shares of the  Company's  Common  Stock,  pursuant  to the 1995  Equity
Incentive  Plan,  subject to  stockholder  approval.  The exercise price for the
options ranges from $2.125 to $4.315 per share. The options expire on October 2,
2007, although their expiration may be accelerated by certain events.

NOTE 5 - Amendment to Bank Facility

     Effective  August 29,  1997,  the Company  executed an amended and restated
Bank  Facility  (as amended and  restated,  the "Bank  Facility")  to  eliminate
existing  technical  defaults  and relax  covenants  relating  to the  Company's
performance in the future, thereby providing the Company access to the Revolving
Credit Facility. The Bank Facility also provides for a new term loan facility of
approximately  $78  million.  The  amount  available  to the  Company  under the
Revolving  Credit  Facility  was  reduced  to  approximately  $68  million.  The
additional  funds made available to the Company  through the Bank Facility raise
the Company's  total secured  credit  facility to $250 million.  For  additional
information regarding the Bank Facility, please see the Company's Report on Form
8-K filed on September 4, 1997.


                                       7
<PAGE>


NOTE 6 - Related Party Transactions

     Mr.  Geoffrey T. Moore,  a director,  is a managing  director and executive
officer of Shamrock Capital  Advisors,  Inc.  ("SCA").  Pursuant to a three-year
management  services  agreement (the "Services  Agreement") dated July 30, 1996,
between the Company and SCA, SCA shall  consult  with and provide  advice to the
officers  and  management  of the  Company  concerning  matters  relating to the
Company's financial  policies,  development and implementation of business plans
and general business  affairs.  The Services  Agreement  expires by its terms in
September 1999. SCA's  compensation for such management and consulting  services
under the Services  Agreement was $300,000 in the fiscal year ending in 1997 and
will be $400,000 for the fiscal year ending in 1998. The Company also reimburses
SCA for its reasonable  out-of-pocket  costs and expenses incurred in connection
with the performance of its services under the Services  Agreement.  The Company
has agreed to indemnify SCA against all claims, liabilities, expenses, losses or
damages  (or  actions in respect  thereof)  related to or arising out of actions
taken (or  omitted  to be taken) by SCA  pursuant  to the terms of the  Services
Agreement;  provided that such liabilities did not result primarily from actions
taken,  or  omitted  to be  taken,  by SCA in bad  faith or due to  SCA's  gross
negligence.

NOTE 7 - Common Stock Traded on Nasdaq SmallCap Market

     On September 19, 1997, the Nasdaq Listing  Qualifications  Panel determined
that the  Company's  Common Stock no longer  qualified for trading on the Nasdaq
National  Market and would be transferred  to the Nasdaq  SmallCap  Market.  The
transfer to the  SmallCap  Market was  completed  as of the close of business on
October 21, 1997.


                                       8
<PAGE>


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


Results of Operations

     The following  table sets forth certain  statements of operations and other
data (all dollars in millions).

<TABLE>
<CAPTION>
                                                                   12 Weeks Ended                   28 Weeks Ended
                                                            ----------------------------     -----------------------------
                                                            October 11,      October 12,     October 11,       October 12,
                                                                1997           1996              1997             1996
                                                            -----------     -----------      -----------       -----------
<S>                                                            <C>             <C>             <C>               <C>     
Sales                                                          $518.9          $533.4          $1,226.9          $1,260.2
Gross profit                                                    148.7           162.2             338.1             384.1
Operating and administrative expenses                          (135.2)         (131.8)           (315.0)           (312.7)
Depreciation and amortization                                   (20.3)          (19.7)            (44.8)            (45.1)
Amortization of excess reorganization value                     (24.1)          (23.7)            (56.2)            (55.3)
Interest expense, net                                           (26.0)          (24.6)            (58.3)            (56.9)
Income tax benefit                                                 --             7.0                --              11.4
Net (loss)                                                      (56.9)          (30.7)           (136.2)            (74.5)

Sales percentage increase (decrease)                             (2.7%)           1.9%             (2.6%)             1.3%
Same store sales percentage increase (decrease)                  (1.6%)           2.0%             (1.7%)             1.4%
Gross profit as a percentage of sales                            28.7            30.4              27.6              30.5
Operating and administrative
  expenses as a percentage of sales                              26.1            24.7              25.7              24.8
</TABLE>

     Sales for the 12 (the "second  quarter")  and 28 (the "year to date") weeks
ended October 11, 1997,  decreased $14.5 million, or 2.7%, and $33.3 million, or
2.6%,  respectively,  as compared to the 12 and 28 weeks ended October 12, 1996.
Comparable store sales,  including  replacement stores,  decreased 1.6% and 1.7%
during the second quarter and year to date, respectively,  compared to the prior
year.  The Company  opened one new and two  replacement  stores and closed seven
stores (one due to fire) during the 28 weeks ended October 11, 1997.  Same store
sales decreased for the second quarter and year to date resulting primarily from
continued competitive activity within the Company's operating area offset by new
marketing  strategies.  The Company opened one new and one replacement store and
closed three stores during the 28 weeks ended October 12, 1996.

     Gross profit,  as a percentage  of sales,  decreased to 28.7% in the second
quarter  compared  to the prior year mainly due to a  reduction  in  promotional
income.  Gross profit,  as a percentage of sales,  decreased to 27.6% for the 28
weeks ended October 11, 1997, compared to the prior year.

     Operating and administrative  expenses, as a percentage of sales, increased
to 26.1% for the second  quarter,  which  resulted  primarily from the Company's
occupancy costs being affected by new stores in the current  quarter.  Operating
and administrative  expenses,  as a percentage of sales,  increased to 25.7% for
the 28 weeks ended October 11, 1997, compared to the prior year.

     Depreciation  and  amortization  increased to $20.3  million for the second
quarter and  decreased to $44.8  million for the year to date.  The increase for
the  quarter  is due  primarily  to the asset  values in the  newly  opened  and
replacement stores.

     Interest  expense  increased  to $26.0  million  and $58.3  million for the
second  quarter  and year to date  periods,  respectively.  The  second  quarter
increase is  principally a result of additional  interest  expense from the Bank
Facility as amended and restated on August 29, 1997.

     The Company recorded no net income tax benefit or provision during the 1998
second quarter and year to date periods.  A tax benefit related to the potential
use of operating loss carryforwards was offset by a valuation allowance.

     The Company has made progress in stabilizing  its financial,  merchandising
and  operational  performance.   Overall  margins  and   advertising/promotional
allowance  income funds have  returned to more  normalized  levels and excessive
inventory has been reduced.  Also, sales in the latter part of the quarter ended
October 11, 1997, showed improvement in the Company's Southern Division.



                                       9
<PAGE>


Liquidity and Capital Resources

     The  Company  continues  to be highly  leveraged.  Cash  interest  payments
totaled  approximately  $56 million for the 28 weeks ended October 11, 1997, and
will be  approximately  $113  million for the fiscal year ending  March 28, 1998
("Fiscal 1998").  Capital expenditures totaled approximately $29 million for the
28 weeks ended  October 11, 1997,  and are expected to total between $35 and $38
million for Fiscal 1998.

     The Company  plans to finance its working  capital,  debt and capital lease
repayments, and capital expenditure requirements from proceeds received from the
sale of convertible preferred stock, operations,  its Bank Facility dated August
29,  1997,  and,  to a  limited  extent,  equipment  leases  or  purchase  money
mortgages.  The  Company's  ability  to fund the  payment of  interest,  capital
expenditures,  and other  obligations when due is dependent  principally on cash
generated from its operations,  net of cash capital expenditures.  The Company's
ability to complete  its capital  expenditure  program is dependent on operating
performance.  There are no significant debt principal repayments scheduled prior
to June 2000.

     The Bank Facility  provides the Company with a revolving  line of credit of
approximately $68 million. Of that amount, $44 million is extended on letters of
credit and $5 million has been drawn at the end of the quarter.  The  additional
funds  made  available  to the  Company  through  the Bank  Facility  raise  the
Company's total secured credit facility to a total of $250 million. The majority
of interest  payments  due during the balance of Fiscal Year 1998 are payable on
March 2, 1998. Approximately $36 million will be due on the Company's 12% Senior
Notes and approximately $6 million will be due on the Bank Facility.

Impact of New Accounting Standards

     In February 1997, the FASB issued FAS No. 128, "Earnings Per Share",  which
is effective  for interim and year end periods  ending after  December 15, 1997.
This Statement requires entities to present, on the face of the income statement
for all periods  presented,  basic and diluted per share amounts for income from
continuing  operations  and for net income.  Basic earnings per share ("EPS") is
computed by dividing  income  available to common  stockholders  by the weighted
average number of shares outstanding. Fully diluted EPS has been renamed diluted
EPS with a few changes in the computation methodology.  Diluted EPS gives effect
to all  dilutive  potential  common  shares  that were  outstanding  during  the
reporting period.  The computation  excludes  security  conversions that have an
anti-dilutive  effect on EPS.  FAS No.  128  currently  has no  impact  upon the
Company's  reported  per share  results  as all  common  stock  equivalents  are
anti-dilutive.

     With the exception of historical information, some matters discussed herein
are  "forward-looking  statements"  within the meaning of the Private Securities
Litigation  Reform Act of 1995. Such  forward-looking  statements are subject to
risks,  uncertainties  and other  factors  which could cause  actual  results to
differ   materially   from  future   results   expressed   or  implied  by  such
forward-looking  statements.  Potential risks and uncertainties include, but are
not limited to, the competitive  environment in which the Company operates,  and
the general  economic  conditions in the  geographic  areas in which the Company
operates.  For  additional  information  about the Company and its operating and
financial condition, please see the Company's most recent Form 10-K for the year
ended March 29, 1997, as filed with the SEC.


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<PAGE>


PART II - OTHER INFORMATION

Item 5. Other Information

     On July 28, 1997,  the Company filed a Proxy  Statement with the Securities
and Exchange  Commission  ("SEC")  relating to an annual meeting of stockholders
for its fiscal year ended March 29, 1997. The Proxy  Statement was not mailed to
stockholders and the annual meeting originally scheduled to be held on September
25, 1997, was re-scheduled for November 20, 1997. An amended Proxy Statement was
filed with the SEC on October 31, 1997, and mailed to  stockholders  on November
3, 1997.

     During the quarter,  three directors of the Company,  David Y. Ying, Daniel
E. Josephs and William G. Kagler,  resigned.  On August 1, 1997,  Mr. Harris was
named Chairman of the Board and Mr. Stangeland,  the former Chairman,  was named
Chairman Emeritus. Additionally, on October 30, 1997, the Board elected four new
Directors.  They are: 1) Mr. Philbin,  who was earlier named President and Chief
Merchandising Officer of the Company on October 3, 1997; 2) Jordan H. Krimstein,
retired  Executive Vice President and Executive  Creative  Director of Campbell,
Mithun Esty,  Inc., a large  advertising  agency  headquartered  in Minneapolis,
Minnesota;  3) Mark H. Manski,  President  and Founder of the  RoundHill  Group,
Ltd., a strategic,  operational,  management and financial advisory firm located
in Norwalk,  Connecticut,  and; 4) Martha A.  Pritchard,  a Principal  with Bick
Capital Advisors,  Inc., a financial advisory firm located in Chapel Hill, North
Carolina.

     Also during the quarter, the Board of Directors announced the commencement,
on November 1, 1997,  subject to shareholder  approval,  of the Associate  Stock
Purchase Plan (the "ASPP"). The ASPP provides associates of the Company with the
opportunity to purchase the Company's Common Stock at a 15% discount through the
convenience of payroll deductions.  One million shares of Common Stock have been
allocated to the ASPP.

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

(a)  Exhibits

     Exhibit Number

          27.1 Financial Data Schedule


(b) Report on Form 8-K dated  August 29, 1997 as filed with the SEC on 
    September 4, 1997.


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<PAGE>


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.


                                     THE GRAND UNION COMPANY
                                           (Registrant)

                                     /s/ Jeffrey P. Freimark
                                     ------------------------------------------
                                     Jeffrey P. Freimark,
                                     Executive Vice President,
                                     Chief Financial and Administrative Officer

Date:  November 25, 1997


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