UNITED STATES SECURITIES AND EXCHANGE COMMISSION
                                WASHINGTON, D.C.
                                    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 28, 1996

                                       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 0-17229


                            DAKA INTERNATIONAL, INC.
             (Exact name of registrant as specified in its charter)


Delaware                                                              04-3024178
(State or other jurisdiction of                                 (I.R.S. Employer
incorporation or organization)                               Identification No.)


One Corporate Place, 55 Ferncroft Road, Danvers, MA                        01923
(Address of principal executive offices)                              (Zip Code)


                                 (508) 774-9115
              (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

Number of shares of Common  Stock,  $.01 par value,  outstanding  at November 7,
1996: 11,129,058.



<PAGE>


PART I - FINANCIAL INFORMATION

ITEM 1.   Financial Statements
                            DAKA INTERNATIONAL, INC.
                           CONSOLIDATED BALANCE SHEETS
                  (Dollars in thousands, except per share data)
                                  (Unaudited)
<TABLE>
<CAPTION>
                                                                                           September 28,      June 29,
                                                                                               1996             1996
                                                                                             --------         --------
    <S>                                                                                       <C>             <C>   
    ASSETS:
    Current assets:
       Cash and cash equivalents ..........................................................   $ 19,969        $ 11,708
       Accounts receivable, net ...........................................................     41,678          36,699
       Inventories ........................................................................     11,657          10,119
       Prepaid expenses and other current assets ..........................................      6,701           5,265
                                                                                              --------        --------
         Total current assets .............................................................     80,005          63,791

                                                                                              --------        --------
    Property and equipment, net ...........................................................    126,738         124,563
    Investments in, and advances to, affiliates ...........................................      5,000           5,000
    Other assets, net .....................................................................     32,046          32,717
    Deferred income taxes .................................................................      5,486           5,486
                                                                                              --------        --------

                                                                                              $249,275        $231,557
                                                                                              ========        ========
    LIABILITIES AND STOCKHOLDERS' EQUITY:
    Current liabilities:
       Accounts payable ...................................................................   $ 25,388        $ 17,772
       Accrued expenses ...................................................................     13,848          15,110
       Current portion of long-term debt ..................................................      1,267           1,507
       Deferred income taxes ..............................................................        787             787
                                                                                              --------        --------
         Total current liabilities ........................................................     41,290          35,176
                                                                                              --------        --------

    Long-term debt ........................................................................    114,831          98,355
    Other long-term liabilities ...........................................................     12,489          12,978
    Minority interests ....................................................................      2,155           2,181

    Commitments and contingencies (Note 3)
    Stockholders' equity:
    Series A Preferred Stock, $.01 par value; $100 liquidation preference; 1,000,000
       shares authorized ; 11,912 shares issued and outstanding at
       September  28, 1996 and June 29, 1996, respectively ................................       --         --
    Common Stock, $.01 par value; 30,000,000 shares authorized; 11,125,920
       and 11,120,900 shares issued and outstanding at September 28, 1996
       and June 29, 1996, respectively ....................................................        111             111
    Capital in excess of par value ........................................................     71,966          71,907
    Retained earnings .....................................................................      6,433          10,849
                                                                                              --------        --------
       Total stockholders' equity .........................................................     78,510          82,867
                                                                                              --------        --------
                                                                                              $249,275        $231,557
                                                                                              ========        ========
</TABLE>


See notes to unaudited condensed consolidated financial statements


<PAGE>


                            DAKA INTERNATIONAL, INC.
                      CONSOLIDATED STATEMENTS OF OPERATIONS
               Three Months Ended September 28, 1996 and September
                                    30, 1995
                      (In thousands, except per share data)
                                   (Unaudited)

<TABLE>
<CAPTION>
                                                                                              1996        1995
                                                                                             ------      ------
        <S>                                                                                 <C>         <C> 
        Revenues:
          Sales .........................................................................   $ 90,220    $ 90,250
          Management and other fees .....................................................      2,317       3,233
                                                                                            --------    --------
                                                                                              92,537      93,483
                                                                                            --------    --------
        Costs and expenses:
          Cost of sales and operating expenses ..........................................     81,147      75,455
          Selling, general and administrative expenses ..................................     10,870       9,130
          Depreciation and amortization .................................................      5,485       4,001
          Interest expense ..............................................................      1,968       1,339
          Interest income ...............................................................       (113)       (104)
                                                                                            --------    --------
                                                                                              99,357      89,821
                                                                                            --------    --------
        Income (loss) before income taxes and minority interests.........................     (6,820)      3,662
        Income tax expense (benefit) ....................................................     (2,378)      1,380
        Minority interests ..............................................................        (26)         27
                                                                                            --------    --------
        Net income (loss) ...............................................................   $ (4,416)   $  2,255
                                                                                            ========    ========

        Earnings (loss)  per share:
          Primary .......................................................................   $  (0.40)   $   0.27
          Fully diluted .................................................................   $  (0.40)   $   0.22
</TABLE>




See notes to unaudited condensed consolidated financial statements.


<PAGE>


                            DAKA INTERNATIONAL, INC.
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
               Three Months Ended September 28, 1996 and September
                                    30, 1995
                                 (In thousands)
                                   (Unaudited)
<TABLE>
<CAPTION>       
                                                                                                1996        1995
                                                                                               ------      ------
       <S>                                                                                    <C>         <C>
       Cash flows from operating activities:
       Net income (loss) ..................................................................   $ (4,416)   $  2,255
       Adjustments to reconcile net income (loss) to net cash provided by
          (used in) operating activities:
            Depreciation and amortization .................................................      5,485       4,001
            Minority interests ............................................................        (26)         27
       Change in assets and liabilities:
            Accounts receivable ...........................................................     (4,979)     (8,945)
            Inventories ...................................................................     (1,538)     (1,876)
            Other assets ..................................................................     (2,404)     (2,098)
            Accounts payable and accrued expenses .........................................      6,354       3,757
            Other long-term liabilities ...................................................       (489)        776
                                                                                              --------    --------

              Net cash used in operating activities .......................................     (2,013)     (2,103)
                                                                                              --------    --------
       Cash flows from investing activities:
       Purchase of property and equipment .................................................    (10,956)    (13,835)
       Proceeds from sale of property and equipment .......................................       --            43
       Investments in and advances to affiliates ..........................................       --           (16)
                                                                                              --------    --------

          Net cash used in investing activities ...........................................    (10,956)    (13,808)
                                                                                              --------    --------

       Cash flows from financing activities:
       Borrowings under line-of-credit ....................................................     15,800      10,600
       Other long-term borrowings .........................................................       --         1,600
       Repayment of long-term debt ........................................................       (690)       (495)
       Proceeds from sale-leaseback facility ..............................................      6,061       5,850
       Other, net .........................................................................         59         455
                                                                                              --------    --------
          Net cash provided by financing activities .......................................     21,230      18,010
                                                                                              --------    --------

       Net increase in cash and cash equivalents ..........................................      8,261       2,099

       Cash and cash equivalents, beginning of period .....................................     11,708      10,538
                                                                                              --------    --------    -------
       Cash and cash equivalents, end of period ...........................................   $ 19,969    $ 12,637
                                                                                              ========    ========

       Supplemental cash flow disclosures: Cash paid for (received from):
       Interest ...........................................................................   $  1,817    $  1,736
       Income taxes .......................................................................   $ (1,423)   $  1,920

</TABLE>

The Company acquired  equipment by entering into capital leases in the amount of
$1,126 and $271 during 1996 and 1995, respectively.

See notes to unaudited condensed consolidated financial statements.


<PAGE>


                            DAKA INTERNATIONAL, INC.
                    NOTES TO CONDENSED CONSOLIDATED FINANCIAL
              STATEMENTS Three Months Ended September 28, 1996 and
                               September 30, 1995
                  (Dollars in thousands, except per share data)
                                   (Unaudited)

1.  Summary of Significant Accounting Policies

Basis of Presentation and Business

The accompanying  unaudited condensed  consolidated financial statements include
the  accounts  of  DAKA   International,   Inc.   and  its   majority-controlled
subsidiaries   ("DAKA"  or  the  "Company")   including  Daka,  Inc.   ("Daka"),
Fuddruckers,  Inc.  ("Fuddruckers"),   Champps  Entertainment,  Inc.  ("CEI"  or
"Champps"),  The Great Bagel and Coffee  Company  ("Great Bagel and Coffee") and
Americana Dining Corp.  ("ADC").  The accompanying  September 30, 1995 unaudited
condensed  consolidated  financial statements have also been restated to reflect
the business  combinations  accounted  for as  poolings-of-interests  more fully
described in Note 2. Significant  intercompany  balances and  transactions  have
been eliminated in consolidation.

The Company is a diversified  restaurant  company  serving  customers  through a
variety of channels.  The Company's Fuddruckers and Champps subsidiaries operate
in casual and upscale restaurant settings,  respectively,  throughout the United
States and in Canada, Australia, Europe and the Middle East. The Company's Great
Bagel and Coffee subsidiary  serves coffee,  bagels and sandwich items in a cafe
setting in western  locations of the United  States.  Restaurant  operations are
conducted  through  company-owned  and  franchised  stores.  The Company's  Daka
subsidiary is a leading contract foodservice  management  corporation throughout
the United States.

In the opinion of management,  the accompanying unaudited condensed consolidated
financial  statements  include all  adjustments,  consisting of normal recurring
adjustments,  necessary  for the fair  presentation  of  financial  position and
results  of  operations.   The  accompanying  unaudited  condensed  consolidated
financial statements should be read in conjunction with the audited consolidated
financial  statements and notes thereto  included in the Company's Annual Report
on Form 10-K for the fiscal year ended June 29, 1996. The unaudited consolidated
results  of  operations  for the  three  months  ended  September  28,  1996 and
September 30, 1995 are not  necessarily  indicative of the results that could be
expected for a full year.

Fiscal Year

The Company's  fiscal year ends on the Saturday closest to June 30. For purposes
of these notes to the consolidated financial statements,  the three months ended
September  28, 1996 and  September  30,  1995 are  referred to as 1996 and 1995,
respectively.

Classifications

Certain   reclassifications  have  been  made  to  the  prior  year's  financial
statements in order to conform to the 1996 presentation.  Such reclassifications
had no effect on previously reported results of operations.


<PAGE>



Significant Estimates

In the process of preparing its financial statements,  the Company estimates the
appropriate  carrying  value of  certain  assets and  liabilities  which are not
readily  apparent  from other  sources.  The primary  estimates  underlying  the
Company's  financial  statements  include  allowances for potential bad debts on
accounts and notes receivable, the useful lives and recoverability of its assets
such as property  and  intangibles,  fair values of financial  instruments,  the
realizable  value of its tax assets and accruals for health  insurance and other
matters.  Management  bases its  estimates  on certain  assumptions,  which they
believe are  reasonable  in the  circumstances,  and while actual  results could
differ from those estimates management does not believe that any change in those
assumptions  in the near term  would  have a  material  effect on the  Company's
financial position or the results of operations.

Earnings (Loss) Per Share

Primary earnings (loss) per share are computed using the weighted average number
of  common  and  common   equivalent  shares  (dilutive  options  and  warrants)
outstanding.  In  addition  to the  inclusion  of common and  common  equivalent
shares,  the calculation of fully diluted earnings (loss) per share includes the
shares  issuable  upon  conversion  of the  Preferred  Stock  which  amounted to
approximately  2,222,200  shares in 1995 and the shares issuable upon conversion
of the 7%  Convertible  Subordinated  Notes  (the  "Notes")  which  amounted  to
1,291,666 in 1995. All Notes were converted by the third quarter of fiscal 1996.
Fully diluted  earnings  (loss) per share  assumes that the Preferred  Stock and
Notes were  converted  into Common Stock as of the beginning of the fiscal year,
unless they are  anti-dilutive,  and reflect the elimination of interest expense
related to the Notes, net of the related income tax effect,  and the elimination
of dividends related to the Preferred Stock.

The weighted  average  number of shares used in the  computation of earnings per
share for 1996 and 1995 are as follows:

                                                1996             1995
                                               ------           ------
Primary .................................... 11,124,014        8,374,658
Fully Diluted .............................. 11,124,014       11,342,878


2.  Merger  with  Champps  Entertainment,  Inc.  and The Great  Bagel and Coffee
    Company

In February 1996,  CEI  Acquisition,  Corp., a wholly-owned  subsidiary of DAKA,
merged with Champps whereupon Champps became a wholly-owned  subsidiary of DAKA.
In April 1996,  the Company also merged with The Great Bagel and Coffee  Company
("Great  Bagel  and  Coffee")   whereupon   Great  Bagel  and  Coffee  became  a
wholly-owned subsidiary of DAKA (collectively the "Mergers").

The Mergers have been accounted for as  poolings-of-interests  and, accordingly,
the condensed financial statements have been restated to include the accounts of
Champps and Great Bagel and Coffee for all periods presented.


<PAGE>


3.  Commitments and Contingencies

Leases

In October 1995,  Fuddruckers obtained a commitment for a $25,000 sale-leaseback
financing  facility from  Franchise  Finance  Corporation  of America  ("FFCA").
Pursuant to the terms of the facility, Fuddruckers will sell and lease back from
FFCA up to 20 Fuddruckers  restaurants to be constructed,  in which  Fuddruckers
has an ownership  interest in the real estate and will pay a  commitment  fee of
1.5% of the sale price of each property sold to FFCA.  The sale price is limited
to the lesser of 80% of the fair market  value of the  property  or $1,250.  The
unused  commitment  expired on October 31, 1996.  The leases provide for a fixed
minimum rent plus additional rent based on a percentage of sales and provide for
an initial lease term of 20 years with two 5-year renewal options exercisable at
the option of Fuddruckers.  The terms and conditions of the  sale-leaseback  are
such that they do not meet the  criteria for  treatment as capital  leases under
Statement of Financial  Accounting  Standards  ("SFAS") No. 13 - "Accounting for
Leases." As of September 28, 1996, 14 Fuddruckers  restaurants have been sold to
FFCA.  The  Company is  currently  negotiating  a $15 million  future  financing
commitment with FFCA.

In December  1995,  CEI  obtained a  commitment  for a $40,000  development  and
sale-leaseback  financing  facility  from AEI  Fund  Management,  Inc.  ("AEI").
Pursuant  to the terms of the  agreement,  CEI will sell and lease back from AEI
Champps restaurants to be constructed, in which CEI has an ownership interest in
the real  estate and will pay a  commitment  fee of 1% of the sale price of each
property sold to AEI. The purchase price will be equal to the total project cost
of the property, as defined in the agreement,  not to exceed its appraised value
(the "Purchase Price").  The unused  commitment,  if any, expires on December 6,
1997.  The leases,  to be guaranteed  by DAKA,  provide for a fixed minimum rent
based on a percentage of the respective  property's  Purchase Price,  subject to
subsequent CPI-based  increases.  The leases also provide for an initial term of
20 years with two 5-year renewal  options  exercisable at the option of CEI. The
terms and  conditions of the  sale-leaseback  are such that they do not meet the
criteria for treatment as capital  leases under SFAS No. 13. As of September 28,
1996 no Champps restaurants have been sold to AEI.

Put/Call Agreement

In fiscal 1995, Daka,  through a newly formed 80.01% owned limited  partnership,
Daka Restaurants,  L.P. ("DRLP"),  acquired certain educational  foodservice and
corporate  dining  contracts  from   ServiceMaster   Management   Services  L.P.
("SMMSLP").

In connection  with the acquisition by DRLP, the Company and SMMSLP entered into
a Put/Call  Agreement  whereby  SMMSLP is  permitted  to require  the Company to
purchase its 19.99%  limited  partnership  interest in DRLP  anytime  during the
ten-year term of the partnership for a purchase price equal to $2,600,  adjusted
for SMMSLP's portion of any net undistributed  earnings/losses  of DRLP. On July
13, 1996,  SMMSLP  exercised  its Put right  pursuant to the  provisions  of the
Put/Call  Agreement.  Subsequent  to September  28,  1996,  the Company has paid
approximately  $2,500 to SMMSLP for its 19.99% limited  partnership  interest in
DRLP.



<PAGE>


Litigation

In certain circumstances, where management and legal counsel believe that a loss
has been incurred, the Company has recorded an estimate of such loss. On October
18,  1996,  a purported  class  action  lawsuit  was filed in the United  States
District  Court for the  District  of  Massachusetts  on behalf of  persons  who
acquired the  Company's  stock  between  October 30, 1995 and  September 9, 1996
(Venturino et al. V. DAKA  International,  Inc. And William H. Baumhauer,  Civil
Action No. 96-12109-GAO).  The complaint alleges violations of federal and state
securities  laws  by,  among  other  things,  allegedly  misrepresenting  and/or
omitting   material   information   concerning  the  results  and  prospects  of
Fuddruckers  during that period and seeks  compensatory  damages and  reasonable
costs and expenses,  including  counsel fees. Due to the timing of the filing of
this  lawsuit,  management  of the  Company  and  outside  counsel  have not yet
determined the possible  effect,  if any, of an adverse outcome to the Company's
financial condition, results of operations or liquidity.

The  Company is also  engaged  in various  other  legal  actions  arising in the
ordinary  course of business  which,  in the judgment of  management  based upon
consultation  with legal  counsel,  the Company has adequate  legal  defenses or
insurance  coverage  with respect to these other legal  actions or believes that
the ultimate  outcome will not have a material  adverse  effect on the Company's
financial condition, results of operations or liquidity.

Letters of Credit

As  of  September  28,  1996,  the  Company  has  approximately  $5  million  of
outstanding  letters of credit.  The  outstanding  letters of credit  reduce the
Company's borrowing capacity under its line-of-credit agreement.

4.       Long-Term Debt

On October 15, 1996,  the Company  renegotiated  certain terms and conditions of
its  credit  agreement  (the  "October  Agreement"),  decreasing  the  Company's
borrowing  limit  from $150  million  to $125  million  (further  reduced by $20
million  on June 30,  1997),  changing  the  maturity  date to  October 1, 1997,
restricting  restaurant  expansion and capital expenditures and amending certain
loan covenants. Borrowing rates were increased to a 3% margin and a 1.75% margin
on fixed basis and variable basis borrowings,  respectively,  and the commitment
fee  increased to .50% per annum on the unused  portion.  At September 28, 1996,
the  Company  has   available   borrowings   under  the  October   Agreement  of
approximately $11.2 million.

During 1995,  $5,038 of Notes were converted into Common Stock by the Holders of
such  Notes.  In  connection  with  the   conversion,   the  Company   increased
Stockholders'  Equity by $4,859 net of related  unamortized  deferred debt issue
costs,  in 1995.  All  remaining  Notes were  converted by the third  quarter of
fiscal  1996.  The  conversion  and  redemption  had no effect on fully  diluted
earnings per share since the shares  issuable per  conversion  of the Notes were
included in the calculation of fully diluted earnings per share.



<PAGE>


5.   Segment Information

The Company  operates in the  contract  foodservice  management  and  restaurant
industries.  The table below  presents  selected  results of operations  for the
Company's businesses for the three months ended September 28, 1996 and September
30, 1995.
<TABLE>
<CAPTION>
                                                                              1996               1995
                                                                             ------             ------
<S>                                                                        <C>                <C>
Revenues:
   Sales from profit and loss contracts ...................................$ 40,649           $ 48,838
   Management and other fees ..............................................     953              1,070
   Restaurant sales - Fuddruckers .........................................  34,945             33,528
   Franchising income - Fuddruckers .......................................     907              1,972
   Restaurant sales - Champps .............................................  13,480              7,293
   Franchising income - Champps ...........................................     117                107
   Unit sales - Specialty Concepts ........................................   1,146                591
   Franchising income - Specialty Concepts ................................     340                 84
                                                                           --------           --------
   Total revenues .........................................................  92,537             93,483
                                                                           ========           =========

Foodservice:
   Sales from profit and loss contracts ...................................  40,649             48,838
   Operating expenses:
     Labor costs ..........................................................  14,750             16,634
     Product costs ........................................................  15,133             17,216
     Other operating expenses .............................................   6,766              7,617
     Depreciation and amortization ........................................   1,298              1,289
                                                                           --------           --------
   Income from profit and loss contracts ..................................   2,702              6,082
   Management and other fees ..............................................     953              1,070
                                                                           --------           --------
   Income from foodservice operations .....................................   3,655              7,152
                                                                           --------           --------

Fuddruckers:
   Sales from restaurant operations .......................................  34,945             33,528
   Operating expenses:
     Labor costs ..........................................................  10,829              9,264
     Product costs ........................................................   9,925              9,291
     Other operating expenses .............................................  10,777              8,946
     Depreciation and amortization ........................................   2,311              1,887
                                                                           --------           --------
   Income from restaurant operations ......................................   1,103              4,140
   Franchising income .....................................................     907              1,972
                                                                           --------           --------
   Income from restaurant and franchising operations ......................   2,010              6,112
                                                                           --------           --------
<PAGE>
                                                                              1996               1995
                                                                             ------             ------
Champps:
   Sales from restaurant operations .......................................  13,480              7,293
   Operating expenses:
     Labor costs ..........................................................   4,562              2,254
     Product costs ........................................................   3,980              2,064
     Other operating expenses .............................................   3,174              1,707
     Depreciation and amortization ........................................   1,230                539
                                                                           --------           --------
   Income from restaurant operations ......................................     534                729
    Franchising income ....................................................     117                107
                                                                           --------           --------
    Income from restaurant and franchising operations .....................     651                836
                                                                           --------           --------

Specialty Concepts:
   Sales from unit operations .............................................   1,146                591
   Operating expenses:
      Labor costs .........................................................     490                130
      Product costs .......................................................     430                258
      Other operating expenses ............................................     331                 74
      Depreciation and amortization .......................................     118                 21
                                                                           --------           --------
   Income (loss)  from unit operations ....................................    (223)               108
   Franchising income .....................................................     340                 84
                                                                           --------           --------
   Income from unit and franchising operations ............................     117                192
                                                                           --------           --------

Income from operations before selling, general
   and administrative expenses ............................................   6,433             14,292

Selling, general and administrative expenses (1):
   Foodservice ............................................................   2,093              2,283
   Fuddruckers ............................................................   3,084              2,835
   Champps ................................................................   1,030                755
   Specialty Concepts .....................................................     625                 70
   Corporate ..............................................................   4,566              3,452
                                                                           --------           --------
     Total ................................................................  11,398              9,395

Operating income (loss) ...................................................  (4,965)             4,897

Interest expense ..........................................................   1,968              1,339
Interest income ...........................................................    (113)              (104)
                                                                           --------           --------
Income (loss) before income taxes and minority interests...................  (6,820)             3,662
Income tax expense (benefit) ..............................................  (2,378)             1,380
Minority interests ........................................................     (26)                27
                                                                           --------           --------
Net income (loss) .........................................................$ (4,416)          $  2,255
                                                                           ========           ========
</TABLE>

(1) Selling, general and administrative expenses include depreciation expense of
    $528 and $265 in 1996 and 1995, respectively.


<PAGE>


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

                              RESULTS OF OPERATIONS

Certain Factors Affecting Future Operating Results

This Form 10-Q contains forward-looking statements within the meaning of Section
27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act
of 1934.  The Company's  actual results could differ  materially  from those set
forth in the forward-looking statements.  Certain factors which may cause such a
difference include among the following:  the impact of increased  competition in
the  bidding  process  for  foodservice   contracts  against   competitors  with
significant  financial  resources and market share;  the exercise by foodservice
clients of their  right to  terminate  contracts  which  typically  provide  for
termination upon 30 to 60 days notice;  the impact of increasing  competition in
the casual and upscale casual dining segment of the restaurant industry; changes
in general  economic  conditions  which impact consumer  spending for restaurant
occasions;  adverse weather conditions,  competition among restaurant  companies
for attractive  sites and  unforeseen  events which increase the cost to develop
and/or delay the  development and opening of new  restaurants;  increases in the
cost of  product,  labor and  other  resources  necessary  to  operate  both the
restaurants  and  the  foodservice   facilities;   unforeseen   difficulties  in
integrating  acquired  businesses;  the amount and rate of growth of general and
administrative  expenses  associated  with  building  a  strengthened  corporate
infrastructure  to support  operations;  the availability and terms of financing
for the Company and any changes to that financing; the revaluation of any of the
Company's assets (and related expenses);  and the amount of, and any changes to,
tax rates.

Summary

The Company  recorded a loss for the quarter  ended  September  28, 1996 of $4.4
million on revenues of $92.5  million as compared to net income of $2.3  million
on revenues of $93.5 million for the quarter ended September 30, 1995. Operating
results reflect higher corporate selling, general and administrative expenses, a
lower contract  retention rate in the foodservice  segment and lower  comparable
restaurant sales in the Fuddruckers segment. The results of the prior year first
quarter are restated to reflect the Company's merger with Champps Entertainment,
Inc. and The Great Bagel and Coffee  Company in fiscal 1996 which were accounted
for as  poolings-of-interests.  Fully  diluted loss per share of $(0.40) for the
quarter,  compared  to  fully  diluted  earnings  per  share  of  $0.22  for the
comparable quarter of last year,  primarily reflects the significant decrease in
operating results for the quarter.

<PAGE>

Foodservice

The following table sets forth,  for the periods  presented,  certain  financial
information  for the  Company's  foodservice  business.  For  further  financial
information  relating  to  the  foodservice  business  see  Note 5 to  Notes  to
Condensed Consolidated Financial Statements.

                                                 1996         1995
                                                ------       ------
Managed volume:
  Management fee contracts .................. $ 19,299      $ 21,371
  Profit and loss contracts .................   40,649        48,838
                                              --------      --------
  Total managed volume ...................... $ 59,948      $ 70,209
                                              ========      ========
                                                           
Sales from profit and loss contracts ........    100.0%        100.0%
Operating expenses:
  Labor costs ...............................    (36.3)        (34.1)
  Product costs .............................    (37.2)        (35.3)
  Other operating expenses ..................    (16.6)        (15.6)
  Depreciation and amortization .............     (3.2)         (2.6)
                                              --------      --------
Income from profit and loss contracts .......      6.7%         12.4%
                                              ========      ========

Income from profit and loss contracts ....... $  2,702      $  6,082
Management and other fees ...................      953         1,070
                                              --------      --------
Income from foodservice operations .......... $  3,655      $  7,152
                                              ========      ========


Daka conducts its operations on the basis of two types of foodservice  contracts
with its clients.  The first type is a management fee contract pursuant to which
a client  pays  Daka a  negotiated  fee for  overseeing  and  administering  its
foodservice  operations and reimburses  Daka for all costs incurred in providing
such service.  Management fee contracts are prevalent where companies  subsidize
foodservice as part of the benefits  provided to employees and in elementary and
secondary  schools.  The second type of  contract is a profit and loss  contract
whereby Daka assumes the risk of profit or loss from the foodservice operations.
While Daka manages the total sales volume  attributable  to both contract types,
generally accepted  accounting  principles require that Daka recognize sales and
expenses  from profit and loss  contracts,  but only the  management  fee amount
derived from  management  fee contracts as earned.  Consequently,  Daka does not
recognize  sales and  related  costs of sales  with  respect to  management  fee
contracts.

Managed volume in the Company's foodservice business decreased $10.3 million, or
14.7%,  to $59.9 million for the quarter ended September 28, 1996 as compared to
$70.2 million in the comparable  quarter of 1995. The decrease in managed volume
primarily  reflects the impact of Daka's 89% contract retention rate experienced
during fiscal 1996, as compared to its historical retention rate of 92%, coupled
by additional contracts lost during the quarter.

Income  from  foodservice  operations  decreased  48.6% to $3.7  million for the
quarter ended  September 28, 1996 as compared to $7.2 million in the  comparable
quarter of last year. Income from profit and loss contracts,  as a percentage of
sales from profit and loss  contracts,  also  decreased  for the  quarter  ended
September  28, 1996 compared to the same quarter of last year.  These  decreases
reflect the impact of Daka's  lower  fiscal  1996  contract  retention  rate and
contracts lost during the quarter,  compounded by higher labor and product costs
within  the  foodservice   segment.   Operating  margins   associated  with  the
educational  foodservice  contracts acquired from SMMSLP in fiscal 1995 remained
consistent with the operating margins experienced by Daka's existing educational
foodservice business.


<PAGE>



Fuddruckers

The following table sets forth,  for the periods  presented,  certain  financial
information for Fuddruckers. For further information relating to Fuddruckers see
Note 5 to Notes to Condensed Consolidated Financial Statements.

                                                         1996            1995
                                                        ------          ------

Restaurant sales ....................................  $ 34,945        $ 33,528
                                                       ========        ========

Sales from Fuddruckers-owned restaurants: ...........     100.0%          100.0%
Operating expenses:
  Labor costs .......................................     (31.0)          (27.6)
  Product costs .....................................     (28.4)          (27.7)
  Other operating expenses ..........................     (30.8)          (26.7)
  Depreciation and amortization
                                                           (6.6)           (5.6)
                                                       --------        --------
Income from restaurant operations ...................       3.2%           12.4%
                                                       ========        ========
                                                                          

Income from restaurant operations ...................  $  1,103        $  4,140
Franchising income ..................................       907           1,972
                                                       --------        --------
Income from restaurant and franchising operations ...  $  2,010        $  6,112
                                                       ========        ========

Number of restaurants (end of period):
  Fuddruckers-owned .................................       120              99
  Franchised ........................................        76              72
                                                       --------        --------
    Total restaurants                                       196             171
                                                       ========        ========


Sales in Fuddruckers-owned  restaurants increased $1.4 million, or 4.2%, for the
quarter ended  September  28, 1996  compared to the quarter ended  September 30,
1995.  This  increase  results from $5.6 million of sales at 26 new  restaurants
opened in fiscal 1996 offset by a 10.4% decrease in comparable  restaurant sales
for the quarter  and a $0.9  million  decrease  in sales  related to the closing
and/or sale of three restaurants in fiscal 1996.

Income from  restaurant  operations  decreased $3.0 million,  or 73.2%,  to $1.1
million for the quarter  ended  September  28, 1996 compared to $4.1 million for
the  comparable  quarter of last year.  The decrease is  primarily  due to lower
comparable  sales and higher  pre-opening  costs associated with new restaurants
opened in fiscal 1996.  Franchising  income decreased $1.0 million,  or 54%, due
principally  to  revenue  generated  from the sale of  international  multi-unit
development  agreements  in the first  quarter of the last  year.  There were no
multi-unit  development  agreements  sold during the quarter ended September 28,
1996.




<PAGE>


Champps

The following table sets forth,  for the periods  presented,  certain  financial
information for Champps restaurants. For further information related to Champps,
see Note 5 to Notes to Condensed Consolidated Financial Statements.

                                                           1996         1995
                                                          ------       ------

Restaurant sales ......................................  $ 13,480     $  7,293
                                                         ========     ========

Sales from Champps-owned restaurants ..................     100.0%       100.0%
Operating expenses:
  Labor costs .........................................     (33.8)       (30.9)
  Product costs .......................................     (29.5)       (28.3)
  Other operating expenses ............................     (23.5)       (23.4)
  Depreciation and amortization .......................      (9.1)        (7.4)
                                                         --------     --------
Income from restaurant operations .....................       4.1%        10.0%
                                                         ========     ========

Income from restaurant operations .....................  $    534     $    729
Franchising income ....................................       117          107
                                                         --------     --------
Income from restaurant and franchising operations        $    651     $    836
                                                         ========     ========

Number of restaurants (end of period)
   Champps-owned ......................................        10            6
   Franchised .........................................        10            9
                                                         --------     --------
   Total restaurants ..................................        20           15
                                                         ========     ========


Sales in Champps-owned  restaurants  increased $6.2 million,  or 84.9%, to $13.5
million for the quarter  ended  September  28, 1996 compared to $7.3 million for
the quarter ended September 30, 1995. This increase  results from the opening of
six new  restaurants  in fiscal  1996  offset  by the sale of one  Champps-owned
restaurant in the last quarter of fiscal 1996.

Income  from  restaurant  operations  decreased  28.6% to $0.5  million  for the
quarter ended  September 28, 1996 as compared to $0.7 million for the comparable
quarter of last year. This decrease results primarily from revenues derived from
new restaurant openings offset by increased labor, overhead and depreciation and
amortization expenses associated with these restaurant openings.

<PAGE>

Specialty Concepts

The following table sets forth,  for the periods  presented,  certain  financial
information for Specialty Concepts. For further information related to Specialty
Concepts, see Note 5 to Notes to Condensed Consolidated Financial Statements.

                                                           1996          1995
                                                          ------        ------

Unit sales ............................................. $ 1,146       $   591
                                                         =======       =======

Sales from unit operations .............................   100.0%        100.0%
Operating expenses:
  Labor costs ..........................................    42.8          22.0
  Product costs ........................................    37.5          43.7
  Other operating expenses .............................    28.9          12.5
Depreciation and amortization                               10.3           3.6
                                                         -------       -------
Income from unit operations ............................    19.5%         18.2%
                                                         =======       =======

Income (loss) from unit operations ..................... $  (223)      $   108
Franchising income .....................................     340            84
                                                         -------       -------
Income from unit and franchising operations ............ $   117       $   192
                                                         =======       =======


Sales in Specialty  Concepts  units  increased $0.5 million,  or 93.9%,  to $1.1
million for the quarter  ended  September  28, 1996 compared to $0.6 million for
the  comparable  quarter  last  year.  This  increase  is due  primarily  to the
continued expansion of operations in nontraditional  foodservice venues.  Income
from unit sales and  franchising  operations  was  break-even  primarily  due to
higher  operating  costs in the Fudd Cafe units.  Prior year quarterly  results,
which were  immaterial  for  reporting  purposes in fiscal 1996,  were  combined
within the foodservice and  Fuddruckers  operations.  At the end of the quarter,
Specialty Concepts  consisted of seven Fudd Cafes, three  Company-owned and over
20 franchised  Great Bagel and Coffee units and over 400 French  Quarter  Coffee
locations.

Selling, General and Administrative Expenses

Selling,  general and  administrative  expenses  increased $2.0 million to $11.4
million for the quarter ended September 28, 1996 compared to $9.4 million in the
quarter ended September 30, 1995. Selling,  general and administrative  expenses
as a percentage of managed  volume of $110.7 million and $113.8  million,  which
includes   foodservice   managed  volume  as  well  as  sales  at  Company-owned
restaurants,  increased  to 10.3%  during the  quarter  compared  to 8.3% in the
comparable  quarter  of  last  year.  The  increase  in  selling,   general  and
administrative expenses as a percentage of managed volume results primarily from
costs  associated with the Kmart joint venture  proposal which was terminated in
the quarter,  increased  Fuddruckers marketing efforts and costs associated with
the continued expansion of Specialty Concepts within non-traditional foodservice
venues.

Interest Expense

Interest expense increased $0.6 million to $2.0 million during the quarter ended
September  28, 1996  compared to $1.3 million in the first quarter of last year.
The  increase is  primarily  due to  increased  borrowings  under the  Company's
line-of-credit  used to  finance  capital  expenditures  for  new  Company-owned
restaurants and at client facilities.

Income Taxes

The Company's effective tax benefit rate was 35% for the quarter ended September
28, 1996,  compared to an effective  tax expense rate of 38% for the  comparable
quarter  last  year,  which  reflects  the  impact  of  nondeductible   goodwill
amortization  expense  and an  increase in the  valuation  allowance  related to
losses by Fuddruckers' 63% owned subsidiary, Atlantic Restaurant Ventures, Inc.

<PAGE>

Earnings (Loss) Per Share

Primary and fully diluted (loss) earnings per share decreased  significantly for
the quarter ended  September 28, 1996 as compared to the same quarter last year.
The  decrease  in  primary  and  fully  diluted  earnings  (loss)  per share was
primarily due to increases in the weighted average number of shares  outstanding
at the end of the quarter ended September 28, 1996 compounded by the significant
loss incurred for the quarter.



                       FINANCIAL CONDITION AND LIQUIDITY

Working capital  amounted to $38.7 million at September 28, 1996, an increase of
$10.1 million compared to working capital of $28.6 million at June 29, 1996. The
increase in working  capital is principally  due to the use of borrowings  under
the Company's  line-of-credit  agreement,  classified as long-term debt, to fund
operating activities as a result of the seasonal increase in accounts receivable
due to the commencement of foodservice operations at schools and colleges served
by the Company.

On October 15, 1996,  the Company  renegotiated  certain terms and conditions of
its credit  agreement  (the "October  Agreement"),  including (i) decreasing the
Company's  borrowing limit from $150 million to $125 million (further reduced by
$20 million on June 30,  1997);  (ii)  changing the maturity  date to October 1,
1997; (iii) restricting  capital  expenditures  during the remaining term of the
October  Agreement;  and (iv) the  addition  of  financial  covenants  which are
restrictive  to the  Company's  business  activities  (see  Note 4 to  Condensed
Consolidated  Financial  Statements).  At September  28,  1996,  the Company had
available  borrowing  capacity of approximately  $11.2 million under the October
Agreement.

In fiscal  1996,  the  Company  also  obtained  $40  million  of  sale-leaseback
financing for the construction of up to 10 new Champps restaurants.  At June 29,
1996, the entire $40 million sale-leaseback financing was available for use. Any
unused commitment expires in December 1997. In fiscal 1995, the Company obtained
$25 million of  sale-leaseback  financing for the  construction  of up to 20 new
Fuddruckers  restaurants.  At September 28, 1996, approximately $8.2 million of
the sale-leaseback  financing was available for use. The Company does not expect
to use the entire commitment provided under the sale-leaseback facilities.

Capital  expenditures  for the  quarter  ended  September  28,  1996  aggregated
approximately  $11.0 million,  and consisted of $6.0 million for new Fuddruckers
restaurants and upgrades at existing  restaurants,  $2.1 million for new Champps
restaurants  under  construction,   $1.3  million  for  updating  the  Company's
information  systems,  $0.5 million for development of Specialty  Concepts units
and $1.1 million for improvements at facilities of foodservice clients.  Capital
expenditures were funded through a combination of borrowings under the Company's
line-of-credit  agreement  and  approximately  $6.1 million of proceeds from its
sale-leaseback facility.

The Company plans to open, or have under  development,  7 new  Fuddruckers and 9
new Champps restaurants in fiscal 1997, continue, to the extent permitted by the
October Agreement, to make improvements at facilities of its foodservice clients
and  invest in  improved  data  processing  systems,  pursuant  to the terms and
conditions of its new credit agreement. Management believes that cash flows from
operations,  existing cash,  sale-leaseback  financing and available  borrowings
under  its  line-of-credit   will  provide  sufficient   liquidity  to  pay  its
liabilities  in the normal  course of business,  fund capital  expenditures  and
service debt requirements for the foreseeable future.


On July 13, 1996,  SMMSLP  exercised its Put right pursuant to the provisions of
the  Put/Call  Agreement  entered  into by SMMSLP and the Company on February 8,
1995 (see Note 3 to Condensed Consolidated Financial Statements).  Subsequent to
September 28, 1996,  the Company paid  approximately  $2.5 million to SMMSLP for
its 19.99% limited partnership interest in DRLP.


<PAGE>



                           PART II - OTHER INFORMATION


Item 6:  Exhibits and Reports on Form 8-K

(a)      Exhibits

10.24    Third Amended and Restated  Credit  Agreement,  dated as of October 15,
         1996, by and among the Company,  Fuddruckers,  Inc., Daka, Inc., Casual
         Dining  Ventures,   Inc.,  Atlantic  Restaurant  Ventures,  Inc.,  Daka
         Restaurants,  L.P.,  French Quarter Coffee  Company,  Americana  Dining
         Corp., Champps  Entertainment of Edison, Inc., Champps Entertainment of
         Texas,   Inc.,   Champps   Entertainment  of  Wayzata,   Inc.,  Champps
         Entertainment,  Inc.,  Specialty  Concepts,  Inc., The Chase  Manhattan
         Bank,  N.A.,  Fleet  National  Bank,  Mellon  Bank,  N.A. and The First
         National Bank of Boston.

11       Computation Regarding Per Share Earnings

(b)      Reports on Form 8-K

         Not applicable

                                   SIGNATURES

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

                                              DAKA INTERNATIONAL, INC.
                                              (Registrant)


                                              By:/s/William T. Freeman
                                              ------------------------
                                              William T. Freeman
                                              Chief Financial Officer
                                              (Principal Financial and Principal
                                              Accounting Officer)




November 8, 1996