See accompanying notes to unaudited condensed consolidated financial statements

FLANIGAN’S ENTERPRISES, INC. AND SUBSIARIESSUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

MARCH 30,JUNE 29, 2013

(1) BASIS OF PRESENTATION:

The accompanying condensed consolidated financial information for the periods ended March 30,June 29, 2013 and March 31,June 30, 2012 are unaudited. Financial information as of September 29, 2012 has been derived from the audited financial statements of the Company, but does not include all disclosures required by generally accepted accounting principles. In the opinion of management, all adjustments, consisting of normal recurring adjustments, necessary for a fair presentation of the financial information for the periods indicated have been included. For further information regarding the Company's accounting policies, refer to the Consolidated Financial Statements and related notes included in the Company's Annual Report on Form 10-K for the year ended September 29, 2012. Operating results for interim periods are not necessarily indicative of results to be expected for a full year.

The condensed consolidated financial statements include the accounts of the Company, its wholly-owned subsidiaries and the accounts of the nine limited partnerships in which we act as general partner and have controlling interests. All intercompany balances and transactions have been eliminated. Non-controlling interest represents the limited partners’ proportionate share of the net assets and results of operations of the nine limited partnerships.

These condensed consolidated financial statements include estimates relating to performance based officers’ bonuses. The estimates are reviewed periodically and the effects of any revisions are reflected in the financial statements in the period they are determined to be necessary. Although these estimates are based on management’s knowledge of current events and actions it may take in the future, they may ultimately differ from actual results.

(2) EARNINGS PER SHARE:

We follow Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC) Section 260 - “Earnings per Share”. This section provides for the calculation of basic and diluted earnings per share. The data on Page 2 shows the amounts used in computing earnings per share and the effects on income and the weighted average number of shares of potentially dilutive common stock equivalents. As of March 30,June 29, 2013 and March 31,June 30, 2012, no stock options were outstanding.

(3) RECENT ADOPTED AND RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS:

Adopted

In May 2011, the FASB issued an update to ASC Topic 820 – “Fair Value Measurements and Disclosures”. This update provides guidance on how fair value accounting should be applied where its use is already required or permitted by other standards and does not extend the use of fair value accounting. We adopted this guidance in the first quarter of our fiscal year 2013 as required, and the adoption did not have a significant impact on our consolidated financial statements.

Issued

There were no recently issued accounting pronouncements during the secondthird quarter of our fiscal year 2013 that we believe will have a material impact on our consolidated financial statements.

(4) INVESTMENT IN REAL PROPERTY FINANCED BY DEBT:

N. Miami, Florida

During the first quarter of our fiscal year 2013, we closed on the purchase of two parcels of real property (the “Two Mortgaged Parcels”), one of which (the “Near Parcel”) is contiguous to the real property we own where our combination package liquor store and restaurantlocated at 13205 Biscayne Boulevard, North Miami, Florida, (Store #20) operates and the other of which is contiguous to the Near Parcel (the “Other Parcel”). We previously leased the Near Parcel for non-exclusive parking. Each of the Two Mortgaged Parcels contains a building of approximately 2,600 square feet, but we intend to demolish the building on the Near Parcel to provide for a larger parking lot to be used by our customers. We intend to offer the building on the Other Parcel for lease. We paid $2,900,000 for the Two Mortgaged Parcels, $1,950,000 of which was financed by the seller pursuant to a purchase money mortgage (the “$1.95M Mortgage Loan”). Our repayment obligations under the $1.95M Mortgage Loan are secured by a first mortgage on the Two Mortgaged Parcels. The $1.95M Mortgage Loan bears interest at the rate of 7.5% annually and is amortized over twenty (20) years, with our monthly payment of principal and interest totaling $15,700. The entire principal balance, in the approximate amount of $1,331,000 and all accrued but unpaid interest under the $1.95M Mortgage Loan is due on December 31, 2022.

(5) DEBT:

Re-Financing of Mortgage

During the second quarter of our fiscal year 2013, in order to refinance our third party debt secured by our real property located at 4 N. Federal Highway, Hallandale, Florida where our combination package liquor store and restaurant (Store #31) operates, we (i) re-financed with a non-affiliated third party lender, the mortgage loan encumbering the property which mortgage loan was held by another non-affiliated third party lender (the “$1.405M Loan”); and (ii) borrowed $1,595,000 from a non-affiliated third party lender, (the “$1.595M Term Loan”). The $1.405M Loan is in the original principal amount of $1,405,000 and bears interest at a variable rate equal to the BBA LIBOR – 1 Month plus 2.25%. We entered into an interest rate swap agreement to hedge the interest rate risk, which fixed the interest rate on the $1.405M Loan at 4.35% per annum throughout its term. The $1.405M Loan is amortized over twenty (20) years, with our current monthly payment of principal and interest totaling $8,415, with the entire principal balance and all accrued but unpaid interest due January 31, 2023. The $1.595M Term Loan is in the principal amount of $1,595,000 and bears interest at a variable interest rate equal to the BBA LIBOR – 1 Month plus 3.25%. We entered into an interest rate swap agreement to hedge the interest rate risk, which fixed the interest rate on the $1.595M Term Loan at 4.00% per annum throughout its term. The $1.595M Term Loan is fully amortized over forty two (42) months, with our monthly payment of principal and interest, totaling $41,000. We granted our lender a security interest in substantially all of our assets as collateral to secure our repayment obligations under the $1.595M Term Loan. As a part of the refinancing, we prepaid the outstanding balance, ($325,000), on an existing term loan with the lender, including a $1,600 pre-payment penalty.

Line of Credit

During the second quarter of our fiscal year 2013, we obtained a $500,000 line of credit from a non affiliated third party lender, (the “Line of Credit”). The Line of Credit earned interest at the floating rate of prime plus 1.5%. The entire principal balance and all accrued but unpaid interest under the Line of Credit was due April 30, 2013. We granted the lender a security interest in substantially all of our assets as collateral to secure our repayment obligations under the Line of Credit. No amounts were drawn on the line of credit by us, so there were no amounts outstanding under the Line of Credit when it terminated subsequent toduring the end of the secondthird quarter of our fiscal year 2013.

(6) INCOME TAXES:

We account for our income taxes using FASB ASC Topic 740, “Income Taxes”, which requires among other things, recognition of future tax benefits measured at enacted rates attributable to deductible temporary differences between financial statement and income tax basis of assets and liabilities and to tax net operating loss carryforwards and tax credits to the extent that realization of said tax benefits is more likely than not.

(7) STOCK OPTION PLANS:

We have one stock option plan under which qualified stock options may be granted to our officers and other employees. Under this plan, the exercise price for the qualified stock options must be no less than 100% of the fair market value of the Company’s Common Stock on the date the options are granted. In general, options granted under our stock option plan expire after a five (5) year period and generally vest no later than one (1) year from the date of grant. As of March 30,June 29, 2013, no options to acquire shares were outstanding. Under this plan, options to acquire an aggregate of 45,000 shares are available for grant.

No stock options were granted during the twenty sixthirty nine weeks ended March 30,June 29, 2013, nor were stock options granted during the twenty sixthirty nine weeks ended March 31,June 30, 2012.

No stock options were exercised during the twenty sixthirty nine weeks ended March 30,June 29, 2013, nor were stock options exercised during the twenty sixthirty nine weeks ended March 31,June 30, 2012.

There was no stock option activity during the twenty sixthirty nine weeks ended March 30,June 29, 2013, nor was there stock option activity during the twenty sixthirty nine weeks ended March 31,June 30, 2012.

(8) ACQUISITIONS:

Purchase of Company Common Stock

Pursuant to a discretionary plan approved by the Board of Directors at its meeting on May 17, 2007, during the thirteen weeks ended March 30,June 29, 2013, we did not purchase any shares of our common stock. During the twenty sixthirty nine weeks ended March 30,June 29, 2013, we purchased 800 shares of our common stock from the Joseph G. Flanigan Charitable Trust for an aggregate purchase price of $6,200. During the thirteen weeks ended March 31,June 30, 2012, we did not purchase any shares of our common stock. During the twenty sixthirty nine weeks ended March 31,June 30, 2012, we purchased 800 shares of our common stock from the Joseph G. Flanigan Charitable Trust for an aggregate purchase price of $6,200.

(9) COMMITMENTS AND CONTINGENCIES:

Litigation

Litigation

From time to time, we are a defendant in litigation arising in the ordinary course of our business, including claims resulting from “slip and fall” accidents, claims under federal and state laws governing access to public accommodations, employment-related claims and claims from guests alleging illness, injury or other food quality, health or operational concerns. To date, none of this litigation, some of which is covered by insurance, has had a material effect on us.\

During the 3rd quarter of our fiscal year 2011, suit was filed against us alleging that we charge employees for required uniforms in violation of the Florida Minimum Wage Act. The Plaintiff is attempting to certify the suit as a class action and we are both defending vigorously against the class certification as well as the allegations contained in the lawsuit. This lawsuit is uninsured and an adverse decision could have a material effect on us.

(10) SUBSEQUENT EVENTS:

Subsequent events have been evaluated through the date these condensed consolidated financial statements were issued. No events required disclosure.

(11) BUSINESS SEGMENTS:

We operate principally in two reportable segments – package stores and restaurants. The operation of package stores consists of retail liquor sales and related items. Information concerning the revenues and operating income for the thirteen weeks and twenty sixthirty nine weeks ended March 30,June 29, 2013 and March 31,June 30, 2012, and identifiable assets for the two reportable segments in which we operate, are shown in the following table. Operating income is total revenue less cost of merchandise sold and operating expenses relative to each segment. In computing operating income, none of the following items have been included: interest expense, other non-operating income and expenses and income taxes. Identifiable assets by segment are those assets that are used in our operations in each segment. Corporate assets are principally cash and real property, improvements, furniture, equipment and vehicles used at our corporate headquarters. We do not have any operations outside of the United States and transactions between restaurants and package liquor stores are not material. For the thirteen and twenty sixthirty nine weeks ended March 30,June 29, 2013, we generated revenue of $149,000$144,000 and $301,000$445,000 from our leasing to unaffiliated third parties of retail space.

Reported financial results may not be indicative of the financial results of future periods. All non-historical information contained in the following discussion constitutes 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. Words such as “anticipates, appears, expects, trends, intends, hopes, plans, believes, seeks, estimates, may, will,” and variations of these words or similar expressions are intended to identify forward-looking statements. These statements are not guarantees of future performance and involve a number of risks and uncertainties, including but not limited to customer demand and competitive conditions. Factors that could cause actual results to differ materially are included in, but not limited to, those identified in the “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” in the Annual Report on our Form 10-K for the fiscal year ended September 29, 2012 and in this Quarterly Report on Form 10-Q. We undertake no obligation to publicly release the results of any revisions to these forward-looking statements that may reflect events or circumstances after the date of this report.

OVERVIEW

At March 30,June 29, 2013, we (i) operated 25 units, (excluding the adult entertainment club referenced in (ii) below), consisting of restaurants, package stores and combination restaurants/package stores that we either own or have operational control over and partial ownership in; (ii) own but do not operate one adult entertainment club; and (iii) franchise an additional five units, consisting of two restaurants, (one restaurant of which we operate), and three combination restaurants/package stores. The table below provides information concerning the type (i.e. restaurant, package store or combination restaurant/package liquor store) and ownership of the units (i.e. whether (i) we own 100% of the unit; (ii) the unit is owned by a limited partnership of which we are the sole general partner and/or have invested in; or (iii) the unit is franchised by us), as of March 30,June 29, 2013 and as compared to March 31,June 30, 2012 and September 29, 2012. With the exception of “The Whale’s Rib”, a restaurant we operate but do not own, all of the restaurants operate under our service mark “Flanigan’s Seafood Bar and Grill” and all of the package liquor stores operate under our service mark “Big Daddy’s Liquors”.

Notes:

(1)During the first quarter of our fiscal year 2013, theIncludes a limited partnership which owns the newowned restaurant located in Miami, Florida completed its renovations and the restaurantwhich opened for business on December 27, 2012 as a limited partnership owned restaurant.(the “New Restaurant”).

(2)We operate a restaurant for one (1) franchisee. This unit is included in the table both as a franchised restaurant, as well as a restaurant operated by us.

Franchise Financial Arrangement: In exchange for our providing management and related services to our franchisees and granting them the right to use our service marks “Flanigan’s Seafood Bar and Grill” and “Big Daddy’s Liquors”, our franchisees (four of which are franchised to members of the family of our Chairman of the Board, officers and/or directors), are required to (i) pay to us a royalty equal to 1% of gross package sales and 3% of gross restaurant sales; and (ii) make advertising expenditures equal to between 1.5% to 3% of all gross sales based upon our actual advertising costs allocated between stores, pro-rata, based upon gross sales.

Limited Partnership Financial Arrangement: We manage and control the operations of all restaurants owned by limited partnerships, except the Fort Lauderdale, Florida restaurant which is owned and managed by a related franchisee. Accordingly, the results of operations of all limited partnership owned restaurants, except the Fort Lauderdale, Florida restaurant are consolidated into our operations for accounting purposes. The results of operations of the Fort Lauderdale, Florida restaurant are accounted for by us utilizing the equity method. In general, until the investors’ cash investment in a limited partnership (including any cash invested by us and our affiliates) is returned in full, the limited partnership distributes to the investors annually out of available cash from the operation of the restaurant up to 25% of the cash invested in the limited partnership, with no management fee paid to us. Any available cash in excess of the 25% of the cash invested in the limited partnership distributed to the investors annually, is paid one-half (½) to us as a management fee, with the balance distributed to the investors. Once the investors in the limited partnership have received, in full, amounts equal to their cash invested, an annual management fee is payable to us equal to one-half (½) of available cash to the limited partnership, with the other one half (½) of available cash distributed to the investors (including us and our affiliates). As of March 30,June 29, 2013, limited partnerships owning three (3) restaurants, (Surfside, Florida, Kendall, Florida and West Miami, Florida locations), have returned all cash invested and we receive an annual management fee equal to one-half (½) of the cash available for distribution by the limited partnership. In addition to its receipt of distributable amounts from the limited partnerships, we receive a fee equal to 3% of gross sales for use of the service mark “Flanigan’s Seafood Bar and Grill”.

RESULTS OF OPERATIONS

RESULTS OF OPERATIONS

Comparison of Thirteen Weeks Ended March 30,June 29, 2013 and March 31,June 30, 2012.

Revenues. Total revenue for the thirteen weeks ended March 30,June 29, 2013 increased $1,637,000$1,630,000 or 7.94%8.41% to $22,255,000$21,012,000 from $20,618,000$19,382,000 for the thirteen weeks ended March 31,June 30, 2012. This increase resulted from sales at our newlimited partnership-owned restaurant location inMiami, Florida ($924,000)839,000), which opened for business on December 27, 2012 (the “New Restaurant”) andincreased menu prices offset by a small decrease in package store sales.prices. Without giving effect to the revenue generated at the New Restaurant, total revenue for the thirteen weeks ended March 30,June 29, 2013 would have increased $693,000$791,000 or 3.36%4.08% to $21,311,000$20,173,000 from $20,618,000$19,382,000 for the thirteen weeks ended March 31,June 30, 2012.

Restaurant Food Sales.Restaurant revenue generated from the sale of food at restaurants (food sales) totaled $13,994,000$13,526,000 for the thirteen weeks ended March 30,June 29, 2013 as compared to $13,007,000$12,443,000 for the thirteen weeks ended March 31,June 30, 2012. The increase in restaurant food sales resulted primarily from sales at the New Restaurant($660,000589,000 of food sales during the thirteen weeks ended March 30,June 29, 2013) andtomenu price increases. Without giving effect to the revenue generated at the New Restaurant, food sales for the thirteen weeks ended March 30,June 29, 2013 would have increased $327,000$494,000 or 2.51%3.97% to $13,334,000$12,937,000 from $13,007,000$12,443,000 for the thirteen weeks ended March 31,June 30, 2012.Comparable weekly food sales (for restaurants open for all of the secondthird quarter of our fiscal yearyears 2013 and the second quarter of our fiscal year 2012, which consists of eightnine restaurants owned by us and eight restaurants owned by affiliated limited partnerships) was $1,026,000$995,000 and $1,000,000$957,000 for the thirteen weeks ended March 30,June 29, 2013 and March 31,June 30, 2012, respectively, an increase of 2.60%3.98%. Comparable weekly food sales for Company owned restaurants was $495,000$468,000 and $476,000$439,000 for the secondthird quarter of our fiscal year 2013 and the secondthird quarter of our fiscal year 2012, respectively, an increase of 3.99%6.61%. Comparable weekly food sales for affiliated limited partnership owned restaurants was $531,000$527,000 and $524,000$518,000 for the secondthird quarter of our fiscal year 2013 and the secondthird quarter of our fiscal year 2012, respectively, an increase of 1.34%1.74%. We anticipate that restaurant food sales will continue to increase throughout the balance of our fiscal year 2013 due to, primarily, the operation of the New Restaurant.

Restaurant Bar Sales. Restaurant revenue generated from the sale of alcoholic beverages at restaurants (bar sales) totaled $4,007,000$3,841,000 for the thirteen weeks ended March 30,June 29, 2013 as compared to $3,522,000$3,428,000 for the thirteen weeks ended March 31,June 30, 2012 primarily due to an increase in prices and to a lesser extent,sales at the New Restaurant($264,000250,000 of revenue from New Restaurant bar sales during the thirteen weeks ended March 30,June 29, 2013). Without giving effect to the revenue from bar sales generated at the New Restaurant, restaurant revenue generated from bar sales during the thirteen weeks ended March 30, 2013, would have increased $221,000 or 6.27% to $3,743,000 from $3,522,000 for the thirteen weeks ended March 31, 2012.Comparable weekly bar sales (for restaurants open for all of the secondthird quarter of our fiscal years 2013 and 2012, which consists of eightnine restaurants owned by us and eight restaurants owned by affiliated limited partnerships) was $288,000$276,000 for the thirteen weeks ended March 30,June 29, 2013 and $271,000$264,000 for the thirteen weeks ended March 31June 30, 2012, an increase of 6.27%4.55%. Comparable weekly bar sales for Company owned restaurants was $132,000$121,000 and $122,000$114,000 for the secondthird quarter of our fiscal year 2013 and the secondthird quarter of our fiscal year 2012, respectively, an increase of 8.20%6.14%. Comparable weekly bar sales for affiliated limited partnership owned restaurants was $156,000$155,000 and $149,000$150,000 for the secondthird quarter of our fiscal year 2013 and the secondthird quarter of our fiscal year 2012, respectively, an increase of 4.70%3.33%.We anticipate that restaurant bar sales will continue to increase throughout the balance of our fiscal year 2013 due to, primarilythe operation of the New Restaurant.

Package Store Sales. Revenue generated from sales of liquor and related items at package liquor stores (package store sales) totaled $3,716,000$3,066,000 for the thirteen weeks ended March 30,June 29, 2013 as compared to $3,575,000$3,050,000 for the thirteen weeks ended March 31,June 30, 2012, an increase of $141,000.$16,000. The weekly average of same store package store sales, (which includes all nine (9) Company owned package liquor stores open for all of the secondthird quarter of our fiscal years 2013 and 2012), was $286,000$236,000 for the thirteen weeks ended March 30,June 29, 2013 as compared to $275,000$235,000 for the thirteen weeks ended March 31,June 30, 2012, an increase of 4.00%0.43%.Package liquor store sales increased primarily due to the fact that the second quarter of our fiscal year 2013 began two (2) days prior to New Year’s Eve, while the second quarter of our fiscal year 2012 began the day after New Year’s Eve, offset by increased competition. We expect package liquor store sales to remain stable throughout the balance of our fiscal year 2013.

Operating Costs and Expenses. Operating costs and expenses, (consisting of cost of merchandise sold, payroll and related costs, occupancy costs and selling, general and administrative expenses), for the thirteen weeks ended March 30,June 29, 2013 increased$1,345,000 $970,000 or 6.90%5.27% to $20,850,000$19,383,000 from $19,505,000$18,413,000 for the thirteen weeks ended March 31,June 30, 2012.The increase was primarily due to the costs related to the New Restaurant and to an expected general increase in food costs, including an increase in the cost of poultry, offset by a decrease in the cost of ribs and actions taken by management to reduce and/or control costs and expenses. We anticipate that our operating costs and expenses will continue to increase through our fiscal year 2013 for the same reasons.Operating costs and expenses decreased as a percentage of total sales to approximately 93.69%92.25% in the secondthird quarter of our fiscal year 2013 from 94.60%95.00% in the secondthird quarter of our fiscal year 2012.

Gross Profit. Gross profit is calculated by subtracting the cost of merchandise sold from sales.

Restaurant Food Sales and Bar Sales. Gross profit for food sales and bar sales for the thirteen weeks ended March 30,June 29, 2013 increased to $11,666,000$11,403,000 from $10,684,000$10,093,000 for the thirteen weeks ended March 31,June 30, 2012. Our gross profit margin for food sales and bar sales (calculated as gross profit reflected as a percentage of restaurant food sales and bar sales), was 64.81%65.66% for the thirteen weeks ended March 30,June 29, 2013 and 64.64%63.59% for the thirteen weeks ended March 31,June 30, 2012. The increase in our gross profit margin, (+2.07%), was primarily due to increases in our menu pricing during the end of the third quarter of our fiscal year 2012 that were in effect the entire third quarter of our fiscal year 2013 and a decrease in our cost of ribs and poultry, which was only partially offset by higher food costs.We anticipate that our gross profit for restaurant food and bar sales will decreasethroughoutremain stable during the balance of our fiscal year 2013 due to higher food costs, including our cost of poultry, offset by a decrease in our cost of ribs during calendar year 2013. for the same reasons.

Package Store Sales. Gross profit for package store sales for the thirteen weeks ended March 30,June 29, 2013 increaseddecreased to $1,086,000$959,000 from $1,064,000$980,000 for the thirteen weeks ended March 31,June 30, 2012. Our gross profit margin, (calculated as gross profit reflected as a percentage of package liquor store sales), for package liquor store sales was 29.22%31.28% for the thirteen weeks ended March 30,June 29, 2013 and 29.76%32.13% for the thirteen weeks ended March 31,June 30, 2012. We anticipate that the gross profit margin for package store sales will remainbe stable throughout the balance of our fiscal year 2013.

Payroll and Related Costs.Payroll and related costs for the thirteen weeks ended March 30,June 29, 2013 increased $553,000$649,000 or 8.79%11.14% to $6,842,000$6,477,000 from $6,289,000$5,828,000 for the thirteen weeks ended March 31,June 30, 2012due primarily to payroll and related costs associated with the New Restaurant ($310,000)286,000).We anticipate that our payroll and related costs will increase throughout the balance of our fiscal year 2013 due primarily to payroll and related costs associated with the New Restaurant which opened for business on December 27, 2012.estaurant. Payroll and related costs as a percentage of total sales was 30.74%30.83% in the secondthird quarter of our fiscal year 2013 and 30.50%30.07% of total sales in the secondthird quarter of our fiscal year 2012.

Occupancy Costs.Occupancy costs (consisting of rent, common area maintenance, repairs, real property taxes and amortization of leasehold purchases)for the thirteen weeks ended March 30,June 29, 2013 decreased $7,000$10,000 or 0.64%0.90% to $1,093,000$1,105,000 from $1,100,000$1,115,000 for the thirteen weeks ended March 31,June 30, 2012. Our occupancy costs decreased primarily due to the elimination of rent (as a result of our acquiring the parcels) for thetwo parcels of real property contiguous to the real property we own where our combination package liquor store and restaurantlocated at 13205 Biscayne Boulevard, North Miami, Florida, (Store #20) operates and which we leased for non-exclusive parking offset byincreasing percentagecontractually obligated escalating rents at various locations and our rental payments for the New Restaurant made for the entire second quarter of our fiscal year 2013 (as opposed to only paying the rent for the New Restaurant for part of the second quarter of our fiscal year 2012).locations.We anticipate that our occupancy costs will remain stable throughout the balance of our fiscal year 2013.

Selling, General and Administrative Expenses.Selling, general and administrative expenses (consisting of general corporate expenses, including but not limited to advertising, insurance, professional costs, clerical and administrative overhead)for the thirteen weeks ended March 30,June 29, 2013 increased $190,000$108,000 or 5.05%2.98% to $3,950,000$3,730,000 from $3,760,000$3,622,000 for the thirteen weeks ended March 31,June 30, 2012. Selling, general and administrative expenses decreased as a percentage of total sales in the secondthird quarter of our fiscal year 2013 to approximately 17.75% as compared to 18.24%18.69% in the secondthird quarter of our fiscal year 2012. We anticipate that our selling, general and administrative expenses will increase throughout the balance of our fiscal year 2013 due primarily to the New Restaurant, as well as increases across all categories.

Depreciation and Amortization.Depreciation and amortization expense for the thirteen weeks ended March 30,June 29, 2013 increased $31,000$27,000 or 4.89%4.31% to $665,000$653,000 from $634,000$626,000 from the thirteen weeks ended March 31,June 30, 2012. As a percentage of total revenue, depreciation and amortization expense was 2.99%3.11% of revenue in the thirteen weeks ended March 30,June 29, 2013 and 3.07%3.23% of revenue in the thirteen weeks ended March 31,June 30, 2012.

Interest Expense, Net.Interest expense, net, for the thirteen weeks ended March 30,June 29, 2013 decreased $19,000increased $2,000 to $198,000$210,000 from $217,000$208,000 for the thirteen weeks ended March 31,June 30, 2012.

Net Income.Net income for the thirteen weeks ended June 29, 2013 increased$424,000 or 179.66% to $660,000 from $236,000for the thirteen weeks ended June 30, 2012. As a percentage of sales, net income for the third quarter of our fiscal year 2013 is 3.14%, as compared to 1.22% in the third quarter of our fiscal year 2012.

Comparison of Thirty-Nine Weeks Ended June 29, 2013 and June 30, 2012.

Revenues. Total revenue for the thirty nine weeks ended June 29, 2013 increased $3,965,000 or 6.73% to $62,880,000 from $58,915,000 for the thirty nine weeks ended June 30, 2012. This increase resulted from sales at the New Restaurant ($1,799,000) andincreased menu prices. Without giving effect to the revenue generated at the New Restaurant, total revenue for the thirty nine weeks ended June 29, 2013 would have increased $2,166,000 or 3.68% to $61,081,000 from $58,915,000 for the thirty nine weeks ended June 30, 2012.

Restaurant Food Sales.Restaurant revenue generated from the sale of food at restaurants (food sales) totaled $39,562,000 for the thirty nine weeks ended June 29, 2013 as compared to $37,141,000 for the thirty nine weeks ended June 30, 2012. Comparable weekly food sales(for restaurants open for all of the thirty nine weeks of our fiscal years 2013 and 2012, which consists of nine restaurants owned by us and eight restaurants owned by affiliated limited partnerships) was $982,000 and $952,000 for the thirty nine weeks ended June 29, 2013 and June 30, 2012, respectively, an increase of 3.15%.Comparable weekly food sales for Company owned restaurants was $463,000 and $442,000 for the thirty nine weeks ended June 29, 2013 and June 30, 2012, respectively, an increase of 4.75%. Comparable weekly food sales for affiliated limited partnership owned restaurants was $519,000 and $510,000 for the thirty nine weeks ended June 29, 2013 and June 30, 2012, respectively, an increase of 1.77%.We anticipate that restaurant food sales will continue to increase throughout the balance of our fiscal year 2013 due to, primarily, the operation of the New Restaurant.

Restaurant Bar Sales. Restaurant revenue generated from the sale of alcoholic beverages at restaurants (bar sales) totaled $11,325,000 for the thirty nine weeks ended June 29, 2013 as compared to $10,043,000 for the thirty nine weeks ended June 30, 2012.Comparable weekly bar sales (for restaurants open for all of the thirty nine weeks of our fiscal years 2013 and 2012, which consists of nine restaurants owned by us and eight restaurants owned by affiliated limited partnerships) was $276,000 for the thirty nine weeks ended June 29, 2013 and $257,000 for the thirty nine weeks ended June 30, 2012, an increase of 7.39%. Comparable weekly bar sales for Company owned restaurants was $123,000 and $114,000 for the thirty nine weeks ended June 29, 2013 and June 30, 2012, respectively, an increase of 7.89%. Comparable weekly bar sales for affiliated limited partnership owned restaurants was $153,000 and $143,000 for the thirty nine weeks ended June 29, 2013 and June 30, 2012, respectively, an increase of 6.99%.We anticipate that restaurant bar sales will continue to increase throughout the balance of our fiscal year 2013 due to, primarily,the operation of the New Restaurant.

Package Store Sales. Revenue generated from sales of liquor and related items at package stores (package store sales) totaled $10,332,000 for the thirty nine weeks ended June 29, 2013 as compared to $10,407,000 for the thirty nine weeks ended June 30, 2012, a decrease of $75,000. The weekly average of same store package store sales, (which includes all nine (9) Company owned package liquor stores open for all of the thirty nine weeks of our fiscal years 2013 and 2012) was $265,000 and $267,000 for the thirty nine weeks ended June 29, 2013 and June 30, 2012, respectively, a decrease of 0.75%. Package liquor store sales are expected to remain stable throughout the balance of our fiscal year 2013.

Operating Costs and Expenses. Operating costs and expenses, (consisting of cost of merchandise sold, payroll and related costs, occupancy costs and selling, general and administrative expenses), for the thirty nine weeks ended June 29, 2013 increased$2,937,000 or 5.23% to $59,110,000 from $56,173,000 for the thirty nine weeks ended June 30, 2012.The increase was primarily due to the costs related to the New Restaurant and to an expected general increase in food costs, offset by a decrease in the cost of ribs and actions taken by management to reduce and/or control costs and expenses. We anticipate that our operating costs and expenses will continue to increase through our fiscal year 2013 for the same reasons.Operating costs and expenses decreased as a percentage of total sales to approximately 94.0% for the thirty nine weeks ended June 29, 2013 from 95.35% for the thirty nine weeks ended June 30, 2012.

Gross Profit. Gross profit is calculated by subtracting the cost of merchandise sold from sales.

Restaurant Food and Bar Sales. Gross profit for food and bar sales for the thirty nine weeks ended June 29, 2013 increased to $33,036,000 from $30,457,000 for the thirty nine weeks ended June 30, 2012. Our gross profit margin for food sales and bar sales (calculated as gross profit reflected as a percentage of food sales and bar sales), was 64.92% for the thirty nine weeks ended June 29, 2013 and 64.55% for the thirty nine weeks ended June 30, 2012.We anticipate that our gross profit for restaurant food and bar sales will decrease during the balance of our fiscal year 2013 due to higher food costs, offset by a decrease in our cost of ribs during calendar year 2013.

Package Store Sales. Gross profit for package store sales for the thirty nine weeks ended June 29, 2013 decreased to $3,092,000 from $3,152,000 for the thirty nine weeks ended June 30, 2012. Our gross profit margin, (calculated as gross profit reflected as a percentage of package store sales), was 29.93% for the thirty nine weeks ended June 29, 2013 compared to 30.29% for the thirty nine weeks ended June 30, 2012. We anticipate that the gross profit margin for package store sales will remain stable throughout the balance of our fiscal year 2013.

Payroll and Related Costs.Payroll and related costs for the thirty nine weeks ended June 29, 2013 increased $1,507,000 or 8.51% to $19,208,000 from $17,701,000 for the thirty nine weeks ended June 30, 2012 due primarilyto payroll and related costs associated with the New Restaurant.Payroll and related costs as a percentage of total sales was 30.55% for the thirty nine weeks ended June 29, 2013 and 30.04% of total sales for the thirty nine weeks ended June 30, 2012.

Occupancy Costs.Occupancy costs (consisting of rent, common area maintenance, repairs, real property taxes and amortization of leasehold purchases)for the thirty nine weeks ended June 29, 2013 increased $34,000 or 1.04% to $3,281,000 from $3,247,000 for the thirty nine weeks ended June 30, 2012. Our occupancy costs increased primarily due to contractually obligated escalating rents at various locations, offset in part bythe termination of rent (as a result of our acquiring the parcels) forthetwo parcels of real property contiguous to the real property we own where our combination package liquor store and restaurantlocated at 13205 Biscayne Boulevard, North Miami, Florida, (Store #20) operates and which we leased for non-exclusive parking.We anticipate that our occupancy costs will remain stable throughout the balance of our fiscal year 2013 for the same reasons.

Selling, General and Administrative Expenses. Selling, general and administrative expenses (consisting of general corporate expenses, including but not limited to advertising, insurance, professional costs, clerical and administrative overhead)for the thirty nine weeks ended June 29, 2013 increased $287,000 or 2.55% to $11,530,000 from $11,243,000 for the thirty nine weeks ended June 30, 2012. Selling, general and administrative expenses decreased as a percentage of total sales for the thirty nine weeks ended June 29, 2013 to 18.34% as compared to 19.08% for the thirty nine weeks ended June 30, 2012. We anticipate that our selling, general and administrative expenses will increase throughout the balance of our fiscal year 2013 due primarily to the New Restaurant, as well as increases across all categories.

Depreciation and Amortization.Depreciation and amortization expense for the thirty nine weeks ended June 29, 2013 and June 30, 2012 was $1,946,000 and $1,895,000 respectively. As a percentage of revenue, depreciation and amortization expense was 3.09% of revenue in the thirty nine weeks ended June 29, 2013 and 3.22% of revenue in the thirty nine weeks ended June 30, 2012.

Interest Expense, Net.Interest expense, net, for the thirty nine weeks ended June 29, 2013 increased $20,000 to $622,000 from $602,000 for the thirty nine weeks ended June 30, 2012. Interest expense decreasedincreased moderately ($20,000) during the thirteenthirty nine weeks ended March 30,June 29, 2013 primarily due (i) to the lower monthly installments of interest as a result of the re-financing ofthe mortgage loan ($1,405,000) and the term loan ($1,595,000) used to re-finance the property where ourcombination package liquor store and restaurantlocated at 4 N. Federal Highway, Hallandale, Florida, (Store #31) operates and (ii) the repayment of our term loan from July, 2010,offset by the interest paid on the $1.95 million purchase money mortgage used to purchase the two parcels of real property, one of which is contiguous to the real property we own where our combination package liquor store and restaurantlocated at 13205 Biscayne Boulevard, North Miami, Florida, (Store #20) operates.

Net Income.Net income for the thirteenthirty nine weeks ended March 30,June 29, 2013 increased$241,000 $675,000 or 47.35%62.44% to $750,000$1,756,000 from $509,000$1,081,000for the thirteenthirty nine weeks ended March 31,June 30, 2012. As a percentage of sales, net income for the second quarter of our fiscal yearthirty nine weeks ended June 29, 2013 is 3.37%2.79%, as compared to 2.47% in the second quarter of our fiscal year 2012.

Comparison of Twenty Six Weeks Ended March 30, 2013 and March 31, 2012.

Revenues.Total revenue1.83% for the twenty sixthirty nine weeks ended MarchJune 30, 2013 increased $2,298,000 or 5.81% to $41,868,000 from $39,570,000 for the twenty six weeks ended March 31, 2012. This increase resulted from sales at the New Restaurant ($960,000) andincreased menu prices offset by a decrease in package store sales. Without giving effect to the revenue generated at the New Restaurant, total revenue for the twenty six weeks ended March 30, 2013 would have increased $1,338,000 or 3.38% to $40,908,000 from $39,570,000 for the twenty six weeks ended March 31, 2012.

Restaurant Food Sales.Restaurant revenue generated from the sale of food at restaurants (food sales) totaled $26,036,000 for the twenty six weeks ended March 30, 2013 as compared to $24,698,000 for the twenty six weeks ended March 31, 2012. The increase in restaurant food sales resulted primarily from sales at the New Restaurant($685,000 of revenue from the sale of food during the twenty six weeks ended March 30, 2013) and increased menu prices. Without giving effect to the revenue generated from food sales at the New Restaurant for the twenty six weeks ended March 30, 2013, restaurant revenue generated from the sale of food during the twenty six weeks ended March 30, 2013, would have increased $653,000 or 2.64% to $25,351,000 from $24,698,000 for the twenty six weeks ended March 31, 2012.Comparable weekly food sales(for restaurants open for all of the first and second quarters of our fiscal years 2013 and 2012, which consists of eight restaurants owned by us and eight restaurants owned by affiliated limited partnerships) was $975,000 and $950,000 for the twenty six weeks ended March 30, 2013 and March 31, 2012, respectively, an increase of 2.63%.Comparable weekly food sales for Company owned restaurants was $460,000 and $444,000 for the twenty six weeks ended March 30, 2013 and March 31, 2012, respectively, an increase of 3.60%. Comparable weekly food sales for affiliated limited partnership owned restaurants was $515,000 and $506,000 for the twenty six weeks ended March 30, 2013 and March 31, 2012, respectively, an increase of 1.78%.We anticipate that restaurant food sales will continue to increase throughout the balance of our fiscal year 2013 due to, primarily, the operation of the New Restaurant.

Restaurant Bar Sales. Restaurant revenue generated from the sale of alcoholic beverages at restaurants (bar sales) totaled $7,484,000 for the twenty six weeks ended March 30, 2013 as compared to $6,615,000 for the twenty six weeks ended March 31, 2012.The increase in bar sales is due to sales at the New Restaurant($276,000 of revenue from bar sales during the twenty six weeks ended March 30, 2013). Without giving effect to the revenue from bar sales at the New Restaurant, for the twenty six weeks ended March 30, 2013, restaurant revenue generated from bar sales during the twenty six weeks ended March 30, 2013, would have increased $593,000 or 8.96% to $7,208,000 from $6,615,000 for the twenty six weeks ended March 31, 2012.Comparable weekly bar sales (for restaurants open for all of the first and second quarters of our fiscal years 2013 and 2012, which consists of eight restaurants owned by us and eight restaurants owned by affiliated limited partnerships) was $278,000 for the twenty six weeks ended March 30, 2013 and $255,000 for the twenty six weeks ended March 31, 2012, an increase of 9.02%. Comparable weekly bar sales for Company owned restaurants was $125,000 and $115,000 for the twenty six weeks ended March 30, 2013 and March 31, 2012, respectively, an increase of 8.70%. Comparable weekly bar sales for affiliated limited partnership owned restaurants was $153,000 and $140,000 for the twenty six weeks ended March 30, 2013 and March 31, 2012, respectively, an increase of 9.29%.We anticipate that restaurant bar sales will continue to increase throughout the balance of our fiscal year 2013 due to, primarily,the operation of the New Restaurant.

Package Store Sales. Revenue generated from sales of liquor and related items at package stores (package store sales) totaled $7,266,000 for the twenty six weeks ended March 30, 2013 as compared to $7,357,000 for the twenty six weeks ended March 31, 2012, a decrease of $91,000. The weekly average of same store package store sales, (which includes all nine (9) Company owned package liquor stores open for all of the first and second quarters of our fiscal years 2013 and 2012) was $279,000 and $283,000 for the twenty six weeks ended March 30, 2013 and March 31, 2012, respectively, a decrease of 1.41%. Package liquor store sales are expected to remain stable throughout the balance of our fiscal year 2013.

Operating Costs and Expenses. Operating costs and expenses, (consisting of cost of merchandise sold, payroll and related costs, occupancy costs and selling, general and administrative expenses), for the twenty six weeks ended March 30, 2013 increased$2,030,000 or 5.37% to $39,827,000 from $37,797,000 for the twenty six weeks ended March 31, 2012.The increase was primarily due to the costs related to the New Restaurant and to an expected general increase in food costs, including an increase in the cost of poultry, offset by a decrease in the cost of ribs and actions taken by management to reduce and/or control costs and expenses. We anticipate that our operating costs and expenses will continue to increase through our fiscal year 2013 for the same reasons.Operating costs and expenses decreased as a percentage of total sales to approximately 95.13% for the twenty six weeks ended March 30, 2013 from 95.52% for the twenty six weeks ended March 31, 2012.

Gross Profit. Gross profit is calculated by subtracting the cost of merchandise sold from sales.

Restaurant Food Sales and Bar Sales. Gross profit for food and bar sales for the twenty six weeks ended March 30, 2013 increased to $21,633,000 from $20,364,000 for the twenty six weeks ended March 31, 2012. Our gross profit margin for food sales and bar sales (calculated as gross profit reflected as a percentage of food sales and bar sales), was 64.54% for the twenty six weeks ended March 30, 2013 and 65.03% for the twenty six weeks ended March 31, 2012.We anticipate that our gross profit for restaurant food and bar sales will decrease during the balance of our fiscal year 2013 due to higher food costs, offset by a decrease in our cost of ribs during calendar year 2013.

Package Store Sales. Gross profit for package store sales for the twenty six weeks ended March 30, 2013 decreased to $2,133,000 from $2,172,000 for the twenty six weeks ended March 31, 2012. Our gross profit margin, (calculated as gross profit reflected as a percentage of package store sales), was 29.36% for the twenty six weeks ended March 30, 2013 compared to 29.52% for the twenty six weeks ended March 31, 2012. We anticipate that the gross profit margin for package store sales will remain stable throughout the balance of our fiscal year 2013.

Payroll and Related Costs.Payroll and related costs for the twenty six weeks ended March 30, 2013, increased $858,000 or 7.23% to $12,731,000 from $11,873,000 for the twenty six weeks ended March 31, 2012 due primarilyto payroll and related costs associated with the New Restaurant.Payroll and related costs as a percentage of total sales was 30.41% for the twenty six weeks ended March 30, 2013 and 30.01% of total sales for the twenty six weeks ended March 31, 2012.

Occupancy Costs.Occupancy costs (consisting of rent, common area maintenance, repairs, real property taxes and amortization of leasehold purchases)for the twenty six weeks ended March 30, 2013 increased $7,000 or 0.32% to $2,176,000 from $2,169,000 for the twenty six weeks ended March 31, 2012. Our occupancy costs increased primarily due to increasing percentage rents at various locations and due to our rental payments for the New Restaurant made for the entire second quarter of our fiscal year 2013 (as opposed to only paying the rent for the New Restaurant for part of the second quarter of our fiscal year 2012), offset in part bythe elimination of rent from a limited partnership owned restaurant located in the shopping center in Miami, Florida which we purchased during the first quarter of our fiscal year 2012. We anticipate that our occupancy costs will remain stable throughout the balance of our fiscal year 2013 asrental payments for the New Restaurant will be offset by the elimination of rent as a result of our purchase of the building on November 30, 2011 where Store #70 is located and the termination of rent for thetwo parcels of real property contiguous to the real property we own where our combination package liquor store and restaurantlocated at 13205 Biscayne Boulevard, North Miami, Florida, (Store #20) operates and which we leased for non-exclusive parking.

Selling, General and Administrative Expenses.Selling, general and administrative expenses (consisting of general corporate expenses, including but not limited to advertising, insurance, professional costs, clerical and administrative overhead)for the twenty six weeks ended March 30, 2013 increased $279,000 or 3.66% to $7,900,000 from $7,621,000 for the twenty six weeks ended March 31, 2012. Selling, general and administrative expenses decreased as a percentage of total sales for the twenty six weeks ended March 30, 2013 to 18.87% as compared to 19.26% for the twenty six weeks ended March 31, 2012. We anticipate that our selling, general and administrative expenses will increase throughout the balance of our fiscal year 2013 due primarily to the New Restaurant, as well as increases across all categories.

Depreciation and Amortization.Depreciation and amortization expense for the twenty six weeks ended March 30 2013 increased $24,000 or 1.89% to $1,293,000 from $1,269,000 from the twenty six weeks ended March 31, 2012. As a percentage of total revenue, depreciation and amortization expense was 3.09% of revenue in the twenty six weeks ended March 30, 2013 and 3.21% of revenue in the twenty six weeks ended March 31, 2012.

Interest Expense, Net. Interest expense, net, for the twenty six weeks ended March 30, 2013 increased $18,000 to $412,000 from $394,000 for the twenty six weeks ended March 31, 2012. Interest expense increased during the twenty six weeks ended March 30, 2013 primarily due (i) to the interest paid on a $4.5 million mortgage loan, and a $1.6 million term loan, the proceeds of both of which loans were used to purchase a shopping center located in Miami, Florida, for the entire twenty six weeks of our fiscal year 2013 as opposed to a part of the twenty six weeks of our fiscal year 2012; and (ii) to the interest paid on a $1.95 million purchase money mortgage used to purchase two parcels of real property, one of which is contiguous to the real property we own where our combination package liquor store and restaurant located at 13205 Biscayne Boulevard, North Miami, Florida, (Store #20) operates and the other of which is contiguous thereto for part of the twenty six weeks of our fiscal year 2013 and which was not paid at all during the twenty six weeks of our fiscal year 2012, offset by (i) lower monthly installments of interest as a result of the re-financing of the mortgage loan ($1,405,000) and the term loan ($1,595,000) used to re-finance the property where our combination package liquor store and restaurant located at 4 N. Federal Highway, Hallandale, Florida, (Store #31) operates and (ii) the repayment of our term loan from July, 2010.

Net Income.Net income for the twenty six weeks ended March 30, 2013 increased$251,000 or 29.70% to $1,096,000 from $845,000for the twenty six weeks ended March 31, 2012. As a percentage of sales, net income for the twenty six weeks ended March 30, 2013 is 2.62%, as compared to 2.14% for the twenty six weeks ended March 31, 2012.

New Limited Partnership Restaurants

As new restaurants open, our income from operations will be adversely affected due to our obligation to fund pre-opening costs, including but not limited to pre-opening rent for the new locations. During the secondthird quarter of our fiscal year 2013, we did not have a new restaurant location in the development stage and did not recognize any pre-opening costs.

During the twenty sixthirty nine weeks ended March 30,June 29, 2013 and March 31,June 30, 2012, respectively, we recognized pre-opening rent expense in the approximate amount of $62,000$32,000 and $22,000, respectively for the New Restaurant. We recognize rent expense on a straight line basis over the term of the lease.

During the twenty sixthirty nine weeks ended March 30,June 29, 2013 and March 31,June 30, 2012, respectively, the New Restaurant operated at a net loss of $276,000$239,000 and $30,000,$68,000, respectively, primarily due to pre-opening costs, thus contributing to a reduction in the operating income for those periods.

We believe that our current cash on hand, together with our expected cash generated from operations will be sufficient to fund our operations and capital expenditures for at least the next twelve months.

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