SAFE HARBOR STATEMENT under the PRIVATE SECURITIES LITIGATION REFORM ACT of 1995

Forward-looking statements are included in this Management's Discussion and Analysis of Financial Condition and Results of Operations (MD&A). Such statements generally express management's expectations with respect to its plans, or its assumptions and beliefs concerning future developments and their potential effect on the Company. There can be no assurances that such expectations will be met or that future developments will not conflict with management's current beliefs and assumptions, as risks, uncertainties and other factors that may materialize could cause actual results and performance to differ markedly from management's current judgment that is expressed or implied in forward-looking statements. Factors that could cause such differences to occur include, but are not limited to, those discussed in this Form 10-Q under

Words such as "should," "would," "could," "may," "plan(s)," "anticipate(s)," "project(s)," "believe(s)," "will," "expect(s)," "estimate(s)," "intend(s)," "continue(s)," "assumption(s)," "goal(s)," "target" and similar words (or derivatives thereof) are generally used to distinguish forward-looking statements from historical or present facts.

All forward-looking information in this MD&A is provided by the Company pursuant to the safe harbor established under the Private Securities Litigation Reform Act of 1995 and should be evaluated in the context of all risk factors. Except as may be required by law, the Company disclaims any obligation to update any forward-looking statements that may be contained in this MD&A.

CORPORATE OVERVIEW

The operations of Frisch's Restaurants, Inc. and Subsidiaries (Company) consist of two reportable segments within the restaurant industry: full service family style "Big Boy" restaurants and grill buffet style "Golden Corral" restaurants. As of September 23, 2008, 88 Big Boy restaurants and 35 Golden Corral restaurants were owned and operated by the Company, located in various regions of Ohio, Kentucky and Indiana, plus smaller areas in Pennsylvania and West Virginia.

The Company's First Quarter of Fiscal 2009 consists of the sixteen weeks ended September 23, 2008, and compares with the sixteen weeks ended September 18, 2007, which constituted the First Quarter of Fiscal 2008. The first quarter of the Company's fiscal year normally accounts for a disproportionate share of annual revenue and earnings because it contains sixteen weeks, whereas the following three quarters normally contain only twelve weeks each. References to Fiscal 2009 refer to the 52 week year that will end on June 2, 2009. References to Fiscal 2008 refer to the 53 week year that ended June 3, 2008.

Net earnings for the First Quarter of Fiscal 2009 were $2,175,000, or diluted earnings per share (EPS) of $.42, compared with $2,450,000, or diluted EPS of $.47 in the First Quarter of Fiscal 2008.

Sales reached a record $89,882,000 during the First Quarter of Fiscal 2009, as sales modestly increased $355,000 above the First Quarter of Fiscal 2008. Same store sales increased .2 percent in Big Boy restaurants and a 1.2 percent increase was achieved in Golden Corral restaurants. Earnings before income taxes during the First Quarter of Fiscal 2009 were $3,063,000, a decline of $540,000 or 15 percent lower than the First Quarter of Fiscal 2008. Two significant factors primarily account for the change:

• Escalating food costs - as a percentage of sales, food costs increased to 37 percent in the First Quarter of Fiscal 2009, up from 35.3 percent in the First Quarter of Fiscal 2008.

• Gains on the sale of real estate were $1,116,000 in the First Quarter of Fiscal 2009, which were $592,000 more than gains in the First Quarter of Fiscal 2008.

Another significant factor affecting the Company's operations has been the annual increase in the minimum wage as mandated by Ohio voters.

• The minimum wage was increased 33 percent from $5.15 per hour to $6.85 per hour beginning January 1, 2007. It was increased to $7.00 per hour on January 1, 2008 in accordance with the mandate's provision to adjust automatically for the rate of inflation.

• The minimum wage for tipped employees increased 61 percent from $2.13 per hour to $3.43 per hour beginning January 1, 2007. It was increased to $3.50 per hour on January 1, 2008 in accordance with the inflation provision in the mandate.

More than two-thirds of the Company's payroll costs are incurred in Ohio. The effects of paying the required higher hourly rates of pay have effectively been countered with higher menu prices and reductions in the number of hours worked. The next Ohio wage increase goes into effect on January 1, 2009. The new rates have yet to be published, but a $700,000 increase in payroll costs is expected, an amount equal to about one percent of payroll. Additional reductions in hours will likely be implemented, however, it should be noted that this counter measure has its limitations.

Federal and Kentucky minimum wage increases went into effect respectively in July and June 2008, which increased hourly rates for non-tipped employees from $5.85 per hour to $6.55 per hour. The effect of these increases on labor cost has not been significant because 1) Ohio minimum wage already exceeds the federal requirement and 2) conditions in most other markets already dictated wage rates well in excess of $5.85 per hour and 3) the minimum rate for tipped employees remains at $2.13 per hour except in Ohio.

RESULTS of OPERATIONS

Sales

The Company's sales are primarily generated through the operation of Big Boy restaurants and Golden Corral restaurants. Big Boy sales also include wholesale sales from the Company's commissary to restaurants licensed to other Big Boy operators and the sale of Big Boy's signature brand tartar sauce to grocery stores. Same store sales comparisons are a key metric that management uses in the operation of the business. Same store sales are affected by changes in customer counts and menu price increases. Changes in sales also occur as new restaurants are opened and older restaurants are closed. Below is the detail of consolidated restaurant sales:

                                                       1st Quarter
                                                     2009       2008
                                                     (in thousands)
               Big Boy restaurants                 $ 54,418   $ 54,691
               Wholesale sales to licensees           2,850      2,855
               Wholesale sales to grocery stores        293        221

               Total Big Boy sales                   57,561     57,767

               Golden Corral restaurants             32,321     31,759

               Consolidated restaurant sales       $ 89,882   $ 89,526

Big Boy sales decreased $206,000 in the First Quarter of Fiscal 2009 when compared against the First Quarter of Fiscal 2008. The decrease was largely the result of temporarily closing an aging, high volume suburban Cincinnati unit for three months (June 8, 2008 to September 8, 2008) in order to replace it with a new facility. Same store sales increased .2 percent during the First Quarter of Fiscal 2009. However, same store customer counts decreased 3.2 percent.

The Big Boy same store sales comparisons include average menu price increases of 2.4 percent and 1.2 percent implemented respectively in the First Quarter of Fiscal 2009 and the First Quarter of Fiscal 2008. In addition, a 1.6 percent increase was put in place in February 2008 to which a .5 percent increase was added in April 2008. Another increase will likely be implemented in February 2009.

The Company currently operates 89 Big Boy restaurants, including two new ones that opened respectively in August and October 2008. Two low volume Big Boy restaurants ceased operating at the end of Fiscal 2008. No new Big Boy restaurants are currently under construction.

Golden Corral sales increased $562,000 in the First Quarter of Fiscal 2009 when compared against the First Quarter of Fiscal 2008. The Company currently operates 35 Golden Corral restaurants. The First Quarter of Fiscal 2009 contained 560 sales weeks compared with 551 sales weeks in the First Quarter of Fiscal 2008. In addition, same store sales increased 1.2 percent in the First Quarter of Fiscal 2009 when compared with the First Quarter of Fiscal 2008. However, customer counts decreased 2 percent.

The Golden Corral same store sales comparisons include average menu price increases of 2.5 percent and 3.2 percent implemented respectively in September 2008 and October 2007. In addition, a .8 percent increase went into effect in March 2008 along with a .5 percent increase in June 2008.

Management believes a direct correlation continues to exist between the lower customer counts at both Big Boy and Golden Corral and the steep cost of gasoline, as the higher cost to fill up a tank left many consumers with fewer dollars available to spend on a restaurant meal. The recent decline in the cost of gasoline to less than $3.00 per gallon may produce additional customer traffic.

Gross Profit

Gross profit for the Big Boy segment includes wholesale sales and cost of
wholesale sales. Gross profit differs from restaurant level profit disclosed in
Note G (Segment Information) to the consolidated financial statements, as
advertising expense is charged against restaurant level profit. Gross profit for
both operating segments is shown below:



                                                   1st Quarter
                                                  2009      2008
                                                  (in thousands)
                   Big Boy gross profit         $  5,958   $ 7,169
                   Golden Corral gross profit        615       620

                   Total gross profit           $  6,573   $ 7,789

The operating percentages shown in the following table are percentages of total sales, including Big Boy wholesale sales. The table supplements the discussion that follows concerning cost of sales for both the Big Boy and Golden Corral reporting segments, including food cost, payroll and other operating costs.

                                                    1st Quarter 2009        1st Quarter 2008
                                                           Big                     Big
                                                  Total    Boy     GC     Total    Boy     GC
Sales                                             100.0   100.0   100.0   100.0   100.0   100.0
Food and Paper                                     37.0    35.1    40.5    35.3    33.4    38.7
Payroll and Related                                32.9    34.8    29.5    33.3    35.0    30.2
Other Operating Costs (including opening costs)    22.7    19.7    28.1    22.7    19.2    29.1
Gross Profit                                        7.4    10.4     1.9     8.7    12.4     2.0

Volatile commodity markets continue to pose a difficult environment in which to contain food costs. Evidence of sharply rising commodity prices can be clearly identified by the much higher food and paper cost percentages shown in the above table, despite higher menu prices being charged to customers. Recent months have seen rapid cost escalations, especially for protein items such as poultry, pork, beef and fish products. The market for beef in particular remains highly volatile, as import and export restrictions can and do cause wide cost fluctuations. Beef prices are projected to increase significantly over the coming months, the result of elevated

grain and energy costs. Over the last twelve months, currency markets relative to a weakened U.S. dollar greatly increased export levels of the three major grains (corn, soybeans and wheat) that are the principal feed ingredients for cattle, hogs and poultry, which resulted in significant cost increases. Although the U.S. dollar has recently rebounded amid the worsening credit markets, a much greater concern will now be the ability of certain vendors to obtain adequate short-term financing to meet their working capital needs, which could impair their ability to supply the marketplace.

The effect of commodity price increases is actively managed with changes to the Big Boy menu mix and effective selection of items served on the Golden Corral food bar, together with periodic increases in menu prices. The food and paper cost percentages for the Golden Corral segment are much higher than the Big Boy segment because of the all-you-can-eat nature of the Golden Corral concept, as well as its use of steak as a featured item on the buffet.

The favorable trends in payroll and related cost percentages in both operating segments is an indicator that the mandated increases in the minimum wage have been effectively mitigated by higher menu prices and management's resolve to reduce the number of hours worked by hourly paid employees.

Management performs a comprehensive review each quarter of its self-insurance program for Ohio workers' compensation and adjusts its reserves as deemed appropriate based on claims experience. No adjustment to the reserves was necessary during the First Quarter of Fiscal 2009. An $18,000 charge against earnings was recorded during the First Quarter of Fiscal 2008 to increase the reserves.

Net periodic pension cost (computed under Statement of Financial Accounting Standards No. 87, "Employers' Accounting for Pensions) was $485,000 and $381,000 respectively, in the First Quarter of Fiscal 2009 and the First Quarter of 2008. Although no contributions are needed to meet minimum funding requirements for Fiscal 2009, discretionary contributions are anticipated that are currently estimated at $1,000,000, including $100,000 that was contributed during the First Quarter of Fiscal 2009. Future funding of the pension plans largely depends upon the performance of investments held in trusts that have been established for the plans. Equity securities comprise 70 percent of the target allocation of the plans' assets. As a result of recent market volatility, the market values of these securities have declined significantly, which could materially affect future funding requirements and result in the recognition of much higher net periodic pension costs in future years.

Other operating costs include occupancy costs such as maintenance, rent, depreciation, property tax, insurance and utilities; field supervision; accounting and payroll preparation costs; franchise fees for Golden Corral restaurants; opening costs and many other restaurant operating expenses. Opening costs were $329,000 for Big Boy restaurants and zero for Golden Corral restaurants during the First Quarter of Fiscal 2009. During the First Quarter of Fiscal 2008, opening costs were $370,000 for Big Boy and $215,000 for Golden Corral. As most of the expenses charged to other operating costs tend to be more fixed in nature, the percentages shown in the above table are greatly affected by changes in same store levels. The reduction in Golden Corral from 29.1 percent to 28.1 percent is the result of higher same store sales and lower depreciation charges. The lower depreciation is the result of a charge for impairment of assets taken at the end of Fiscal 2008. Other operating costs are a much higher percentage of sales in the Golden Corral segment because sales volumes remain well below original expectation.

Operating Profit

To arrive at the measure of operating profit, administrative and advertising expense is subtracted from gross profit while franchise fees and other revenue is added to it. Gains and losses from sale of real property, if any, are then respectively added or subtracted.

Administrative and advertising expense increased $92,000 during the First Quarter of Fiscal 2009, or 2.1 percent higher than the First Quarter of Fiscal 2008. The increase is primarily attributable to higher legal fees associated with litigation costs. Stock based compensation expense included in administrative and advertising expense was $78,000 during the First Quarter of Fiscal 2009, and was $92,000 in the First Quarter of Fiscal 2008.

Revenue from franchise fees is based on sales of Big Boy restaurants that are licensed to other operators. The fees are based principally on percentages of sales generated by the licensed restaurants and are recorded on the accrual method as earned. As of September 23, 2008, 27 Big Boy restaurants were licensed to other operators and paying franchise fees to the Company, a reduction of one restaurant from a year ago. Other revenue also includes certain other fees from licensed restaurants along with miscellaneous rent and investment income.

Gains from the sale of real property amounted to $1,116,000 during the First Quarter of Fiscal 2009. The gains resulted primarily from the disposition of a Big Boy restaurant that ceased operations in June 2008. Aggregate proceeds amounted to $1,581,000. Gains

from the sale of real property amounted to $524,000 during the First Quarter of Fiscal 2008. The gains resulted from the dispositions of three low volume Big Boy restaurants that ceased operations respectively in January, April and June 2007. Aggregate proceeds amounted to $1,685,000.

No impairment of assets was recorded during either the First Quarter of Fiscal 2009 or the First Quarter of Fiscal 2008.

Interest Expense

Interest expense in the First Quarter of Fiscal 2009 was $154,000 lower that the First Quarter of Fiscal 2008, a reduction of 20.7 percent. The reduction is the result of lower debt levels and lower variable interest rates combined with much lower interest charges associated with capitalized leases. There are no longer any restaurant facilities leased by the Company that are classified as capital leases under the provisions of Statement of Financial Accounting Standards No. 13 (SFAS 13), "Accounting for Leases" as amended.

Income Tax Expense

Income tax expense as a percentage of pretax earnings was estimated at 29 percent in the First Quarter of Fiscal 2009 and was 32 percent in the First Quarter of Fiscal 2008. The effective tax rate for Fiscal 2008 was ultimately lowered to 30.8 percent. These rates have been kept consistently low through the Company's use of tax credits, especially the federal credit allowed for Employer Social Security and Medicare Taxes Paid on Certain Employee Tips. In addition, the reduction to 29 percent in the First Quarter of Fiscal 2009 reflects the statutory elimination of corporate income tax in the State of Ohio.

LIQUIDITY and CAPITAL RESOURCES

Sources of Funds

Food sales to restaurant customers provide the Company's principal source of cash. The funds from sales are immediately available for the Company's use, as substantially all sales to restaurant customers are received in cash or are settled by debit or credit cards. The primary source of cash provided by operating activities is net earnings plus depreciation. Other sources of cash may include borrowing against credit lines, proceeds received when stock options are exercised and occasional sales of real estate. In addition to servicing debt, these cash flows are utilized for discretionary objectives, including capital projects (principally restaurant expansion) and dividends.

Working Capital Practices

The Company has historically maintained a strategic negative working capital position, a common practice in the restaurant industry. As significant cash flows are consistently provided by operations, and existing credit lines are readily available, the use of this practice should not hinder the Company's ability to satisfactorily retire any of its obligations when due, including the aggregated contractual obligations and commercial commitments shown in the following table.

Aggregated Information about Contractual Obligations and Commercial Commitments

September 23, 2008



                                                        Payments due by period (in thousands)
                                                                                                         more
                                                                                                        than 5
                                        Total      year 1     year 2     year 3    year 4    year 5     years
  Long-Term Debt                       $ 35,561   $  8,717   $ 11,644   $  5,573   $ 4,186   $ 2,600   $  2,841
  Rent due under Capital Lease
Obligations                                 927        300        268        252       107        -          -
1 Rent due under Operating Leases        22,278      1,859      1,662      1,562     1,556     1,516     14,123
2 Unconditional Purchase Obligations     18,498      7,924      2,902      2,901     2,902     1,869         -
3 Other Long-Term Obligations             1,509        227        230        233       236       239        344
  Total Contractual Cash Obligations     78,773     19,027     16,706     10,521     8,987     6,224     17,308

1 Not included in the table is a secondary liability for the performance of a ground lease that has been assigned to a third party. The annual obligation of the lease approximates $48 through 2020. Should the third party default, the Company has the right to re-assign the lease. Operating leases include option periods considered to be part of the lease term under the provisions of Statement of Financial Accounting Statement No. 13, "Accounting for Leases," as amended.

2 Primarily consists of commitments for certain food and beverage items, plus capital projects including commitments to purchase real property pursuant to purchase option provisions in leases.

3 Deferred compensation liability.

The working capital deficit was $19,325,000 as of September 23, 2008 and was $20,142,000 as of June 3, 2008. The improvement in the deficit largely reflects a higher level of cash on hand.

Under a Construction Draw Credit Facility, $5,500,000 remains available to be borrowed before the Facility expires on September 1, 2010. Additionally, a $5,000,000 working capital revolving line of credit (currently unused) is in place that is also available through September 1, 2010.

Operating Activities

Operating cash flows were $4,729,000 in the First Quarter of Fiscal 2009, or $1,119,000 higher than the First Quarter of Fiscal 2008. The increase is primarily attributable to normal changes in assets and liabilities such as prepaid expenses, inventories and accounts payable, all of which can and do often widely fluctuate from quarter to quarter. Management measures cash flows from the operation of the business by using the simple method of net earnings plus non cash expenses such as depreciation, losses (net of any gains) on dispositions of assets, charges for impairment of assets (if any) and stock based compensation expense. Under this method, which is shown in the consolidated statement of cash flows as a sub-total, cash flows from the operation of the business in the First Quarter of Fiscal 2009 amounted to $5,300,000, a decrease of $1,013,000 from the First Quarter of Fiscal 2008.

Investing Activities

Capital spending is the principal component of investing activities. Capital spending was $7,595,000 during the First Quarter of Fiscal 2009, an increase of $2,125,000 from the First Quarter of Fiscal 2008. This year's capital spending includes $6,895,000 for Big Boy restaurants and $700,000 for Golden Corral restaurants. These capital expenditures consisted of new restaurant construction, remodeling existing restaurants including kitchen and dining room expansions, routine equipment replacements and other capital outlays.

Proceeds from disposition of property during the First Quarter of Fiscal 2009 amounted to $1,581,000, primarily reflecting the sale of an older Big Boy restaurant that had ceased operations in June 2008. Its sale resulted in a gain of $1,072,000. Proceeds from dispositions of property in the First Quarter of Fiscal 2008 amounted to $1,711,000, primarily reflecting the sale of three low-volume Big Boy restaurants that ceased operations respectively in January, April and June 2007. The sales of the three properties resulted in an aggregate gain of $524,000.

Financing Activities

Borrowing against credit lines amounted to $5,000,000 during the First Quarter of Fiscal 2009. Scheduled and other payments of long-term debt and capital lease obligations amounted to $2,519,000 during the First Quarter of Fiscal 2009. Regular quarterly cash dividends paid to shareholders totaled $613,000. Dividends declared but not paid as of September 23, 2008 totaled $613,000. The Company expects to continue its 48 year practice of paying regular quarterly cash dividends.

During the First Quarter of Fiscal 2009, 1,000 shares of the Company's common stock were acquired pursuant to the exercise of stock options, yielding proceeds to the Company of approximately $8,000. As of September 23, 2008, 425,000 shares granted under the Company's two stock option plans remain outstanding, including 364,000 fully vested shares at a weighted average exercise price per share of $19.90. As of September 23, 2008, approximately 638,000 shares remained available to be granted under the 2003 Stock Option and Incentive Plan, net of 21,750 options granted to employees in June 2008. On October 7, 2008, 21,000 option shares were granted to non-employee members of the Board of Directors. Granting authority under the 1993 Stock Option Plan expired on October 4, 2008.

In January 2008, the Board of Directors authorized a repurchase program under which the Company may repurchase up to 500,000 shares of its common stock in the open market or through block trades over a two-year period that will expire on January 28, 2010. During the First Quarter of Fiscal 2009, 3,800 shares were acquired under the program at a cost of $93,000. Since inception of the current authorization, 29,274 shares had been acquired through September 23, 2008 at a cost of $693,000.

Other Information

One new Big Boy restaurant opened for business during the First Quarter of Fiscal 2009 - in Winchester, Kentucky on August 11, 2008. In addition, a Big Boy restaurant re-opened in suburban Cincinnati on September 8, 2008 in a new building that replaced an older facility, which was taken out of service and razed in June 2008. One new Big Boy was under construction as of September 23, 2008. It opened for business on October 13, 2008 in Dayton, Ohio.

Including land and land improvements, the cash required to build and equip each new Big Boy restaurant currently ranges from $2,500,000 to $3,200,000. The actual cost depends greatly on the price paid for the land and the cost of land improvements, which can vary widely from location to location, and whether the land is purchased or leased. A few promising sites are under contract for . . .