UNITED STATES SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                    FORM 10-Q

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

For the quarterly period ended January 3, 1998

_____     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 0-26602


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


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


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 ___.

                      APPLICABLE ONLY TO CORPORATE ISSUERS:

As of February 17, 1998,  there were issued and outstanding  10,182,371  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.

<TABLE>
<CAPTION>
                                                                                                               Page No.
<S>                                                                                                              <C>
Consolidated  Statements  of  Operations - 12 weeks ended  January 3, 1998 and 
     January 4, 1997 and 40 weeks ended January 3, 1998 and January 4, 1997. .................................    3

Consolidated Balance Sheets -  January 3, 1998 and March 29, 1997 ............................................    4


Consolidated Statements of Cash Flows - 40 weeks ended January 3, 1998 and
      January 4, 1997 ........................................................................................    5


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 4.  Submission of Matters to a Vote of Security Holders .................................................   11


Item 5.  Other Information ...................................................................................   12


Item 6.  Exhibits and Reports on Form 8-K. ...................................................................   13
</TABLE>


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               40 WEEKS ENDED
                                              --------------------------    --------------------------
                                               January 3,     January 4,     January 3,     January 4,
                                                 1998           1997           1998            1997
                                              -----------    -----------    -----------    -----------
<S>                                           <C>            <C>            <C>            <C>        
Sales                                         $   534,320    $   537,151    $ 1,761,214    $ 1,797,386

Cost of sales                                    (378,115)      (372,816)    (1,269,566)    (1,248,994)
                                              -----------    -----------    -----------    -----------

Gross profit                                      156,205        164,335        491,648        548,392

Operating and administrative expenses            (130,044)      (138,373)      (442,369)      (451,060)

Depreciation and amortization                     (16,593)       (16,257)       (61,369)       (61,402)

Amortization of excess reorganization value       (24,077)       (23,678)       (80,255)       (78,928)

Unusual items                                      (3,665)            --         (3,665)            --

Interest expense, net                             (27,654)       (24,391)       (85,986)       (81,252)
                                              -----------    -----------    -----------    -----------

(Loss) before income taxes                        (45,828)       (38,364)      (181,996)      (124,250)

Income tax benefit                                     --          6,687             --         18,108
                                              -----------    -----------    -----------    -----------
Net (loss)                                        (45,828)       (31,677)      (181,996)      (106,142)

Accrued dividends on preferred stock               (2,096)          (788)        (6,226)        (1,031)
                                              -----------    -----------    -----------    -----------

Net (loss) applicable to common stock         $   (47,924)   $   (32,465)   $  (188,222)   $  (107,173)
                                              ===========    ===========    ===========    ===========

Basic and diluted net (loss) per share        $     (4.79)   $     (3.25)   $    (18.82)   $    (10.72)
                                              ===========    ===========    ===========    ===========
</TABLE>

    See accompanying notes to consolidated financial statements (unaudited).



                                       3

<PAGE>




                             THE GRAND UNION COMPANY
                           CONSOLIDATED BALANCE SHEETS
                  (dollars in thousands, except par value data)
                                   (unaudited)
<TABLE>
<CAPTION>
                                                                     January 3,     March 29,
                                                                       1998           1997
                                                                    -----------    -----------
<S>                                                                 <C>            <C>
ASSETS
Current assets:
     Cash                                                           $    38,084    $    34,119
     Receivables                                                         26,845         28,966
     Inventories                                                        134,597        131,409
     Other current assets                                                15,585         14,326
                                                                    -----------    -----------
          Total current assets                                          215,111        208,820
Property, net                                                           416,324        411,911
Excess reorganization value, net                                        254,810        335,065
Deferred tax asset                                                       51,393         51,393
Beneficial leases, net                                                   43,112         52,266
Other assets                                                             21,417         12,375
                                                                    -----------    -----------
                                                                    $ 1,002,167    $ 1,071,830
                                                                    ===========    ===========

LIABILITIES AND STOCKHOLDERS' (DEFICIT)
Current liabilities:
     Current maturities of long-term debt                           $        --    $        46
     Current portion of obligations under capital leases                  7,434          8,045
     Accounts payable and accrued liabilities                           180,781        175,540
                                                                    -----------    -----------
          Total current liabilities                                     188,215        183,631
Long-term debt                                                          796,697        740,207
Obligations under capital leases                                        154,637        140,058
Other noncurrent liabilities                                             92,824         96,144
                                                                    -----------    -----------
          Total liabilities                                           1,232,373      1,160,040
                                                                    -----------    -----------

Redeemable Class A Preferred Stock, $1.00 par
     value, 3,500,000 shares authorized,  1,300,566 shares
     issued and outstanding, liquidation preference $69,311
     and $65,000, respectively                                           69,311         65,000
                                                                    -----------    -----------

Redeemable Class B Preferred Stock, $1.00 par
     value, 1,400,000 shares authorized, 800,000 shares
  issued and outstanding, liquidation preference $41,915                 41,915             --
                                                                    -----------    -----------

Stockholders' (deficit):
     Common stock, $.01 par value; 60,000,000 shares                        100            100
          authorized, 10,000,000 shares issued and outstanding
     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                                     133,674        139,900
     Accumulated (deficit)                                             (475,206)      (293,210)
                                                                    -----------    -----------
          Total stockholders' (deficit)                                (341,432)      (153,210)
                                                                    -----------    -----------
                                                                    $ 1,002,167    $ 1,071,830
                                                                    ===========    ===========
</TABLE>


    See accompanying notes to consolidated financial statements (unaudited).


                                       4

<PAGE>

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

                                                             40 WEEKS ENDED
                                                         ----------------------
                                                         January 3,   January 4,
                                                            1998         1997
                                                         ---------    ---------
OPERATING ACTIVITIES:
Net (loss)                                               $(181,996)   $(106,142)
Adjustments to reconcile net (loss) to
     net cash (used for) operating
     activities before reorganization items paid:
          Depreciation and amortization                    141,624      140,330
          Deferred taxes                                        --      (18,108)
          Noncash interest                                     531         (145)
Net changes in assets and liabilities:
     Receivables                                            (8,870)     (12,241)
     Inventories                                            (3,188)      (5,598)
     Other current assets                                   (1,259)        (279)
     Accounts payable and accrued liabilities               17,634       10,357
     Other                                                  (7,550)      (4,399)
                                                         ---------    ---------
Net cash (used for) operating
     activities before reorganization items paid           (43,074)       3,775
     Reorganization items paid                              (3,681)      (4,492)
                                                         ---------    ---------
Net cash (used for) operating activities                   (46,755)        (717)
                                                         ---------    ---------
INVESTMENT ACTIVITIES:
     Capital expenditures                                  (35,465)     (31,430)
     Disposals of property                                   5,863        7,942
                                                         ---------    ---------
Net cash (used for) investment activities                  (29,602)     (23,488)
                                                         ---------    ---------
FINANCING ACTIVITIES:
     Net proceeds from sale of preferred stock              4O,000       28,O00
     Net proceeds from long-term debt                       77,978        9,000
     Loan placement fees                                    (9,744)          --
     Obligations under capital leases discharged            (6,866)      (8,434)
     Net repayment of long-term debt                       (21,046)      (7,695)
                                                         ---------    ---------
     Net cash provided by financing activities              80,322       20,871
                                                         ---------    ---------
Net increase (decrease) in cash                              3,965       (3,334)
Cash at beginning of year                                   34,119       39,425
                                                         ---------    ---------
Cash at end of period                                    $  38,084    $  36,091
                                                         =========    =========

Supplemental disclosure of cash flow information:
     Interest payments                                   $  64,245    $  62,705
     Capital lease obligations incurred                     20,835       16,758
     Accrued dividends                                       6,226        1,031
     Decrease in common stock par value                         --        9,900



    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  Reports on Form 10-Q for the 16 weeks  ended July 19,
1997,  and 28 weeks ended  October 11, 1997.  Operating  results for the periods
presented are not necessarily indicative of results for the full fiscal year.

     Certain  reclassifications  have  been made to the prior  year  amounts  to
conform to the current period presentation.


NOTE 2 - Preferred Stock Issuances

     Pursuant to 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"),   currently  maintains
beneficial  ownership of an aggregate of  approximately  70.41% of the Company's
outstanding voting stock as of the date of the filing of this Form 10-Q. 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,  between 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 the twenty-day period  commencing  January 30, 1998 and ending with
the close of the market on  February  27,  1998.  The  Purchasers  obtained  the
necessary funds to purchase the Preferred Stock from capital  contributions from
their respective partners.



                                       6
<PAGE>


     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.
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 January 3, 1998, 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.
As of the  date of the  filing  of this  Form  10-Q,  the  aggregate  shares  of
Preferred  Stock A and  Preferred  Stock B together  account  for  approximately
71.57% 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,  September  30, 1997 and December 31, 1997.  The  dividends on the Class A
Preferred  Stock and the Class B  Preferred  Stock and the  accrued  and  unpaid
dividends  through December 31, 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 - Unusual Items

     The Company recorded a charge to operations in the quarter ended January 3,
1998 of $3,665,000.  This charge included a $3,000,000  supplement for a reserve
set at fiscal year end 1997 for the  reorganization of the Company during fiscal
1998 and additional  charges of $665,000 for legal costs to supplement a reserve
created as a result of the  Company's  Chapter 11 filing in calendar  year 1995.
The above reserves are included in accounts payable and accrued  liabilities and
other noncurrent liabilities in the accompanying balance sheets.

NOTE 4 - Net Loss Per Share

     The net loss  per  share is  computed  in  accordance  with  SFAS No.  128,
"Earnings Per Share," which is effective for interim and year end periods ending
after December 15, 1997. This statement  requires that entities present,  on the
face of the income  statement for all periods  presented,  basic and diluted per
share amounts.  Basic earnings per share is computed using the weighted  average
number of common shares  outstanding for the period.  Diluted earnings per share
is computed  using the  weighted  average  number of common  shares  outstanding
adjusted for dilutive  potential common shares.  There were 10,000,000  weighted
average shares outstanding for both basic and diluted earnings per share for all
periods   presented.   All  potential  common  shares  were  excluded  from  the
computation of the Company's diluted earnings per share because the effect would
have been antidilutive.


                                       7
<PAGE>


NOTE 5 - Stock Option Grants

     On November 20, 1997,  the Board of Directors,  pursuant to the 1995 Equity
Incentive  Plan,  authorized a stock  option  grant of 100,000  shares of common
stock as a supplement to the 1,800,000  share stock option grant of the Board of
Directors on October 1, 1997 to certain  associates  of the  Company,  including
store managers,  management personnel and other bi-weekly, exempt associates. On
November 20, 1997,  eligible  associates  were granted the 100,000 options at an
exercise price of $2.15625 per share and the options will expire on November 19,
2007, although their expiration may be accelerated by certain events.

NOTE 6 - 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,  see the Company's  Report on Form 8-K
filed on  September  4, 1997.  On October 15,  1997,  the Company  executed  the
Eleventh Amendment to the Bank Facility. The Eleventh Amendment,  which was made
effective  retroactively  to August 29, 1997,  provided  that  certain  interest
calculations and dates for those  calculations under Section 1.8 (d) of the Bank
Facility would be adjusted to reflect the original intent of the August 29, 1997
amendment. Effective January 9, 1998, the Company executed the Twelfth Amendment
to the Bank Facility, which provided for the modification of certain real estate
security  provisions  relating  to Section  7.11 of the Bank  Facility  and also
granted  the  Company   permission  to  transact  certain   property   exchanges
notwithstanding  the  provisions of Section 8.1 of the Bank  Facility.  For more
information concerning the Eleventh and Twelfth Amendments to the Bank Facility,
see Exhibits 10.1 and 10.2 to this Form 10-Q.

NOTE 7 - 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.


                                       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            40 WEEKS ENDED
                                                  ---------------------     ---------------------
                                                  January 3,   January 4,   January 3,   January 4,
                                                    1998         1997         1998         1997
                                                  --------     --------     --------     --------
<S>                                               <C>          <C>          <C>          <C>     
Sales                                             $  534.3     $  537.2     $1,761.2     $1,797.4
Gross profit                                         156.2        164.3        491.6        548.4
Operating and administrative expenses               (130.0)      (138.4)      (442.4)      (451.1)
Depreciation and amortization                        (16.6)       (16.3)       (61.4)       (61.4)
Amortization of excess reorganization value          (24.1)       (23.7)       (80.3)       (78.9)
Unusual item                                          (3.7)          --         (3.7)          --
Interest expense, net                                (27.7)       (24.4)       (86.0)       (81.3)
Income tax benefit                                      --          6.7           --         18.1
Net (loss)                                           (45.8)       (31.7)      (182.0)      (106.1)
                                                                            
Sales percentage increase (decrease)                  (0.5%)       (1.2%)       (0.2%)        0.5%
Same store sales percentage increase (decrease)        0.8%        (0.8%)       (0.9%)        0.8%
Gross profit as a percentage of sales                 29.2%        30.6%        27.9%        30.5%
Operating and administrative                                                
  expenses as a percentage of sales                   24.3%        25.8%        25.1%        25.1%
</TABLE>


     Sales for the 12 (the "third  quarter")  and 40 (the "year to date")  weeks
ended January 3, 1998,  decreased $2.9 million,  or 0.5%, and $36.2 million,  or
2.0%,  respectively,  as compared to the 12 and 40 weeks ended  January 4, 1997.
Comparable  store  sales,  including  replacement  stores,  increased  0.8%  and
decreased 0.9% during the third quarter and year to date, respectively, compared
to the prior  year.  The  Company  opened one new store and closed one  existing
store during the third quarter ended January 3, 1998. The Company has opened two
new stores and two replacement  stores and closed eight stores (one due to fire)
for the year to date.  The increase in same store sales for the third quarter is
mainly due to marketing  strategies and initiatives  instituted by the Company's
new management  team.  Same store sales  decreased year to date primarily due to
continued competitive activity within the Company's operating area offset by the
new marketing strategies and initiatives.

     Gross profit,  as a percentage of sales,  decreased to 29.2% from 30.6% for
the third  quarter  compared to the prior year due  primarily  to a reduction in
promotional  income.  On a year to date basis, it decreased to 27.9% from 30.5%,
compared to the prior year due to a reduction in promotional income.

     Operating and administrative  expenses, as a percentage of sales, decreased
to 24.3% from 25.8% for the third quarter  compared to the prior year  primarily
as a result of measures undertaken by the Company to reduce expenses.  Operating
and  administrative  expenses,  as a percentage of sales,  remained  constant at
25.1% year to date, compared to the prior year.

     Depreciation and amortization increased to $16.6 million from $16.3 million
for the third  quarter  compared to the prior year due primarily to newly opened
and replacement stores. Depreciation and amortization remained constant at $61.4
million year to date, compared to the prior year.

     Interest  expense  increased to $27.7  million  from $24.4  million for the
third quarter and to $86.0 million from $81.3 million year to date,  compared to
the prior year.  The third  quarter and year to date increase is mainly 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
third quarter and year to date periods.  A tax benefit  related to the potential
use of operating loss carryforwards was offset by a valuation allowance.


                                       9
<PAGE>


Liquidity and Capital Resources

     As announced on January 27, 1998,  the Company has retained  Salomon  Smith
Barney as  financial  advisor  to  assist  the  Company  in  evaluating  various
financial   alternatives,   including  a  possible  capital  restructuring.   In
connection  with this  retention,  the  Company  has had and  continues  to have
discussions with an unofficial committee (the "Unofficial Committee") of holders
of its 12% Senior Notes due  September 1, 2004 (the  "Notes")  regarding  such a
restructuring.  In connection therewith, the Company has determined that it will
not pay the  approximately $36 million interest payment due March 2, 1998 on the
Notes.  The failure to make this  payment will  constitute  a default  under the
Indenture  governing the Notes,  subject to a thirty day grace period,  and will
also  constitute a default under the  Company's  Bank  Facility.  The Company is
currently in discussions with the lenders party to the Bank Facility  concerning
a waiver of such default and is  optimistic  that it will be able to obtain such
waiver.  No  assurances  can  be  made,  however,  as to  whether  such  capital
restructuring will be agreed upon with the Unofficial Committee or other holders
of the Notes or the terms  thereof,  nor whether such waiver will be obtained or
the terms thereof.  The Company anticipates that it will continue its operations
in the ordinary course and will timely pay all of its ordinary course  operating
expenses.  For more information concerning the retention of Salomon Smith Barney
and any potential capital  restructuring,  reference is made to Exhibit 99.2 the
Company's  Report on Form 8-K dated  January  27, 1998 and filed with the SEC on
January 28, 1998.

     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 $15 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.

     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.



                                       10
<PAGE>


PART II - OTHER INFORMATION

Item 4. Submission of Matters to a Vote of Security Holders.

     The Company held its annual meeting of  stockholders  on November 20, 1997,
and the following matters were voted on at that meeting:

     (a)  Votes cast in favor of and  withheld  from voting with  respect to the
          election of each nominee for director were as follows:


           DIRECTOR                VOTES FOR         VOTES AGAINST OR WITHHELD
           --------                ---------         -------------------------

     J. Wayne Harris              34,204,242                 89,883
     Gary M. Philbin              34,205,909                 88,216
     Roger E. Stangeland          34,205,909                 88,216
     James J. Costello            34,205,909                 88,216
     Jordan H. Krimstein          34,205,409                 88,716
     Mark H. Manski               34,205,909                 88,216
     Clifford A. Miller           34,205,909                 88,216
     Geoffrey T. Moore            34,206,409                 87,716
     Martha A. Pritchard          34,206,409                 87,716
     J. Richard Stonesifer        34,205,909                 88,216

     (b)  The  Associate  Stock  Purchase  Plan (the  "ASPP")  which  will allow
          Company  associates  an  opportunity  to purchase  common stock of the
          Company  through  payroll  deduction and direct purchase was approved,
          with 29,904,408 votes in favor, 208,933 against,  48,058 in abstention
          and 4,132,726 broker non-votes.

     (c)  The Executive  Annual Incentive Bonus Plan (the "Bonus Plan") in order
          to qualify certain incentive  compensation under Section 162(m) of the
          Internal  Revenue  Code of 1986,  as  amended  (the  "Code"),  and the
          regulations promulgated thereunder was approved, with 33,163,060 votes
          in favor,  248,377  against,  60,501 in abstention  and 822,187 broker
          non-votes.

     (d)  The  amendments  to the  Company's  1995  Equity  Incentive  Plan (the
          "Employee  Plan") to increase the number of shares  issuable under the
          Employee  Plan to an aggregate of 6,000,000 and to increase the number
          of shares and stock  appreciation  rights  issuable under the Employee
          Plan to any individual to an aggregate of 2,000,000 was approved, with
          27,043,237 votes in favor, 3,054,081 against, 64,081 in abstention and
          4,132,726 broker non-votes.

     (e)  The appointment of Price Waterhouse LLP as independent  accountants of
          the Company for the fiscal  year ending  March 28, 1998 was  ratified,
          with 34,192,044 votes in favor,  69,745 votes against and 32,336 votes
          in abstention, with no broker non-votes.


                                       11
<PAGE>


Item 5. Other Information.

     On January 5,  1998,  the Board of  Directors,  pursuant  to an  employment
agreement between Jack W. Partridge,  Jr. and the Company, elected Mr. Partridge
to the position of Chief Administrative  Officer of the Company. Mr. Partridge's
employment  agreement  is  incorporated  by  reference  to Exhibit 99.1 to Grand
Union's  Report  on Form 8-K dated  January  27,  1998 as filed  with the SEC on
January 28, 1998. On January 15, 1998, the Board elected Mr.  Partridge to serve
as a Director and Vice Chairman of the Board. In connection with Mr. Partridge's
election to the Board,  the Company  modified and amended its By-Laws.  For more
information concerning the amended and restated By-Laws,  please see Exhibit 3.1
to this Form 10-Q.

     On January 27, 1998, the Company retained Salomon Smith Barney as financial
advisor  to assist the  Company in  evaluating  various  financial  alternatives
available to the Company, including a possible capital restructuring.

     On January 27, 1998,  the Company  suspended the Associate  Stock  Purchase
Plan (the "ASPP") until further  notice.  The ASPP began  November 1, 1997,  and
provided  associates  of the  Company  with  the  opportunity  to  purchase  the
Company's  Common Stock at a 15% discount  through  payroll  deductions or other
permissible contributions under the ASPP.




                                       12
<PAGE>


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

(a)  Exhibits 

     Exhibit Number

          3.1       By-Laws of The Grand Union Company,  as amended and restated
                    through January 15, 1998.

          10.1      Eleventh  Amendment  to  the  Amended  and  Restated  Credit
                    Agreement  ("Bank  Facility")  dated as of August 29,  1997,
                    among Grand Union, the lending institutions listed from time
                    to time on Schedule 1 thereto, and Bankers Trust as Agent.

          10.2      Twelfth Amendment to the Bank Facility.

          27.1      Financial Data Schedule

(b)  Reports on Form 8-K

     1.   Report on Form 8-K dated  October  28,  1997 as filed  with the SEC on
          October 29, 1997.

     2.   Report on Form 8-K dated  January  27,  1998 as filed  with the SEC on
          January 28, 1998.


                                       13
<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 Officer

Date:  February 17, 1998


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