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 current beliefs and assumptions, which are inherently subject to risks and uncertainties. Factors that could cause actual results and performance to differ materially from anticipated results that may be expressed or implied in forward-looking statements are included in, but not limited to, the discussion in this Form 10-K under Part I, Item 1A. "Risk Factors."

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

All forward-looking information 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 of the forward-looking statements that may be contained in this MD&A.

This MD&A should be read in conjunction with the consolidated financial statements. The Company has no off-balance sheet arrangements or special purpose entities.

CORPORATE OVERVIEW

The operations of Frisch's Restaurants, Inc. and Subsidiaries (the "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 June 2, 2009, 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.

Fiscal Year 2009 ended on Tuesday, June 2, 2009 (a period of 52 weeks comprised of 364 days). It compares with Fiscal Year 2008 that ended on Tuesday, June 3, 2008 (a period of 53 weeks comprised of 371 days), and Fiscal Year 2007 that ended on Tuesday, May 29, 2007 (a period of 52 weeks comprised of 364 days). Fiscal Year 2010 will end on Tuesday, June 1, 2010 (a period of 52 weeks comprised of 364 days).

The Company's equity was reduced by approximately $5 million at the end of Fiscal Year 2009, net of tax, to recognize underfunding in the two defined benefit pension plans that are sponsored by the Company. The underfunding is the direct result of significant declines in the market values of equity securities that comprise 70 percent of the Company's target allocation of the plans' assets.

Revenue was $297,861,000 in Fiscal Year 2009. Revenue in Fiscal Year 2008 was $299,562,000. Without benefit of the 53rd week in Fiscal Year 2008, revenue would have been approximately $293,800,000 or $5,762,000 lower. Comparable revenue was $289,934,000 in Fiscal Year 2007.

Net earnings for Fiscal Year 2009 were $10,721,000, or diluted earnings per share (EPS) of $2.08. Net earnings in Fiscal Year 2008 were $5,946,000 ($1.14 diluted EPS) and $9,268,000 ($1.78 diluted EPS) was posted in Fiscal Year 2007.

Fiscal Year 2008 included a non-cash pretax impairment of assets charge of $4,660,000 ($.62 diluted EPS) to lower the carrying values of three Golden Corral restaurants that management concluded were impaired.

Other Highlights:

• Big Boy same store sales increased 1.5 percent in Fiscal Year 2009

• Golden Corral same store sales increased 1.0 percent in Fiscal Year 2009

• As a percentage of sales, food costs decreased to 35.5 percent in Fiscal Year 2009 from 35.7 percent in Fiscal Year 2008

• Golden Corral produced a pretax profit in Fiscal Year 2009, the first time in three years

• Gains on the sale of real estate were $1,163,000 in Fiscal Year 2009, $639,000 more than Fiscal Year 2008

• Long-standing litigation was concluded in Fiscal Year 2009, resulting in an $890,000 increase to pretax earnings

• The 53rd week in Fiscal Year 2008 contributed an estimated $945,000 to pretax earnings

Another significant factor affecting the Company's operations has been the annual increase in the minimum wage as mandated by Ohio voters in the November 2006 election.

• The minimum wage for non-tipped employees 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 effective January 1, 2008 and to $7.30 per hour on January 1, 2009 in accordance with the mandate's provision to annually adjust 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 and to $3.65 per hour on January 1, 2009 in accordance with the inflation provision of 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 through the combination of higher menu prices charged to customers and reductions in the number of hours that employees are permitted to work. Further reductions in employee hours have been implemented to offset the effect of what would otherwise have been a $500,000 increase in annual payroll costs attributable to the January 1, 2009 increase.

The federal minimum wage for non-tipped employees increased from $5.15 per hour to $5.85 per hour in July 2007. It was increased to $6.55 per hour in July 2008 and to $7.25 per hour in July 2009. The rate for tipped employees was not changed by the federal legislation, remaining at $2.13 per hour. Additional reductions in scheduled labor hours will likely be implemented to combat the effects of the federal increase in July 2009. Without the further reductions in labor hours, annual payroll costs would increase by approximately $400,000.

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:

                                                       (53 weeks)
                                       Fiscal Year     Fiscal Year     Fiscal Year
                                          2009            2008            2007
                                                     (in thousands)

      Big Boy restaurants             $     183,443   $     183,933   $     178,617
      Wholesale sales to licensees            9,038           9,284           9,004
      Wholesale sales to groceries            1,142             939             942

      Total Big Boy sales                   193,623         194,156         188,563
      Golden Corral sales                   104,238         105,406         101,371

      Consolidated restaurant sales   $     297,861   $     299,562   $     289,934

A breakdown of changes in Big Boy same store sales by quarter follows (adjusted to remove the effect of the extra week of sales in Fiscal Year 2008):

     Big Boy            1st Qtr.      2nd Qtr.      3rd Qtr.       4th Qtr.       Year

     Fiscal Year 2009        0.2 %         0.6 %         0.7 %          4.6 %      1.5 %
     Fiscal Year 2008        1.2 %         0.4 %        (0.5 )%        (1.6 )%     0.1 %

Fiscal Year 2009 marked the twelfth consecutive year that Big Boy same store sales increases have been achieved. The same store sales improvement was driven by higher average guest checks, primarily the result of menu price increases. The higher menu prices likely contributed to the continuing trend in lower customer traffic. Customer counts in same stores were 1.8 percent lower in Fiscal Year 2009 compared with Fiscal Year 2008, which was 3.0 percent lower than Fiscal Year 2007. However, the fourth quarter of Fiscal Year 2009 experienced a 1.6 percent increase in customer counts, driven by mild winter weather and a new marketing campaign that focused on customers' dining experiences while continuing to emphasize "Favorite Things."

The Big Boy same store sales comparisons include average menu price increases of 1.4 percent, 1.6 percent, and 2.4 percent, implemented respectively during the third quarters of Fiscal Years 2009, 2008 and 2007. The 2.4 percent increase in the third quarter of Fiscal Year 2007 included a specific provision targeted to offset costs associated with minimum wage increases. The first quarters of Fiscal Years 2009, 2008 and 2007 included average menu price increases of 2.4 percent, 1.2 percent, and 1.1 percent, respectively. In addition, the fourth quarter of Fiscal Year 2008 included a price increase of .5 percent that went into effect in April 2008. Another increase is currently being planned for implementation in September 2009.

The Company operated 88 Big Boy restaurants as of June 2, 2009, a net reduction of two since the beginning of the three year period that began May 31, 2006. The count of 88 includes two that opened respectively in August and October 2008, and the effect of one that closed in May 2009. The count includes a Big Boy restaurant that was taken out of service and razed in June 2008 to make room for a new building on the same site, which re-opened in a brand new facility in September 2008. Construction began in June 2009 to replace an older suburban Big Boy restaurant with a new building on a superior nearby site. It is scheduled to open for business in September 2009 with no interruption of sales. Three other new Big Boy restaurants are planned for Fiscal Year 2010, currently scheduled to open respectively in November 2009, February 2010 and April 2010.

A breakdown of Golden Corral same store sales by quarter follows (adjusted to remove the effect of the extra week of sales in Fiscal Year 2008):

      Golden Corral   1st Qtr.       2nd Qtr.       3rd Qtr.      4th Qtr.       Year

      Fiscal 2009          1.2 %         (2.2 )%         2.3 %         2.3 %      1.0 %
      Fiscal 2008         (2.8 )%        (1.8 )%         0.2 %        (0.8 )%    (1.4 )%

The same store sales increase that was achieved in Fiscal Year 2009 ended a streak of four consecutive years of same store sales declines. The same store sales improvement in Fiscal Year 2009 was driven by 1) higher average guest checks, the result of menu price increases, 2) favorable winter weather and 3) a national media buying program launched by the Company's franchisor in January 2009 that allowed cable television spots to run in all of the Company's markets. Previously, the Company could only place television spots in markets where sales volumes could justify the cost. As with Big Boy, higher menu prices have likely contributed to the continuation of lower customer counts that have been experienced. Same store customer counts were 2.5 percent lower in Fiscal Year 2009 compared with Fiscal Year 2008, which was 5.4 percent lower than Fiscal Year 2007.

The Golden Corral same store sales comparisons include average menu price increases of .3 percent in May 2009, 2.5 percent in September 2008, .5 percent in June 2008, .8 percent in March 2008, 3.2 percent in October 2007, 4.2 percent in June 2007, 2.1 percent in January 2007 and 3.2 percent in September 2006. The 2.1 percent increase in January 2007 was put in place specifically to help offset the effects of higher costs associated with minimum wage increases.

The Company operated 35 Golden Corral restaurants as of June 2, 2009, a net increase of one since the beginning of the three year period that began May 31, 2006. The last restaurant to be opened by the Company occurred in July 2007. No Golden Corral restaurants are currently planned to open over the next twelve months.

Gross Profit

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

                                                     (53 weeks)
                                     Fiscal Year     Fiscal Year     Fiscal Year
                                        2009            2008            2007
                                                   (in thousands)

       Big Boy gross profit         $      23,725   $      25,749   $      26,928
       Golden Corral gross profit           4,515           2,188           2,061


       Total gross profit           $      28,240   $      27,937   $      28,989

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, which addresses cost of sales for both the Big Boy and Golden Corral reporting segments, including food cost, payroll and other operating costs.

                                         Fiscal Year 2009        Fiscal Year 2008        Fiscal Year 2007
                                       Total    BB      GC     Total    BB      GC     Total    BB      GC

Sales                                  100.0   100.0   100.0   100.0   100.0   100.0   100.0   100.0   100.0

Food and paper                          35.5    33.8    38.8    35.7    33.6    39.5    35.0    32.7    39.2

Payroll and related                     32.8    34.7    29.2    32.8    34.6    29.6    32.9    34.6    29.8

Other operating costs (including
opening costs)                          22.2    19.2    27.7    22.2    18.6    28.8    22.1    18.4    29.0

Gross profit                             9.5    12.3     4.3     9.3    13.2     2.1    10.0    14.3     2.0

Unfavorable commodity prices finally began to retreat during the second half of Fiscal Year 2009. The welcome decline in wholesale prices followed a 7.9 percent increase in 2008 and a 7.6 percent increase in 2007, according to the U.S. Bureau of Labor Statistics. The Company actively manages the effect of changing commodity prices with changes to the Big Boy menu mix and effective selection and rotation of items served on the Golden Corral buffet, together with periodic increases in menu prices. Rapid escalations in costs, especially for proteins such as pork, beef, poultry and fish that were experienced in 2007 and 2008, can be problematic to effective menu management, as food cost percentages rise despite higher prices being charged to customers. Food cost percentages in the Golden Corral segment are much higher than Big Boy because of the all-you-can-eat nature of the Golden Corral segment, as well as its use of steak as an item featured daily on the buffet.

Mandated increases in the minimum wage have been effectively mitigated by the higher menu prices being charged and management's resolve to reduce the number of hours worked by hourly paid employees, as can be seen in the above table as payroll and related costs as a percentage of sales have either been holding steady or improving in both Big Boy and Golden Corral. Although there is no seasonal fluctuation in employment levels, hours worked have always been managed closely according to individual restaurant sales patterns. Payroll related costs include statutory provisions for Social Security and Medicare, unemployment and workers' compensation, along with voluntary benefits provided by the Company such as medical insurance and defined benefit pension plans.

The Company self-insures a significant portion of expected losses from its workers' compensation program in the State of Ohio. Management performs a comprehensive review each fiscal quarter and adjusts the self-insurance reserves as deemed appropriate based on claims experience. Favorable adjustments were $68,000, $353,000 and $828,000 respectively, in Fiscal Years 2009, 2008 and 2007. The trend in smaller adjustments has been effected by vast improvements in claims experience, the result of active claims management and post accident drug testing, which have allowed lower rates (as a percentage of payroll) to be used to accrue initial reserves.

After steady medical insurance premiums in calendar years 2007 and 2008, costs escalated by almost 15 percent for the plan year that runs January 1, 2009 through December 31, 2009. The Company will absorb 75 to 80 percent of the estimated $9.5 million cost in 2009, with employees being asked to contribute the other 20 to 25 percent.

Net periodic pension cost was $1,814,000, $1,237,000 and $1,710,000 respectively, in Fiscal Years 2009, 2008 and 2007. The higher cost in Fiscal Year 2009 is due to the combination of unfavorable asset returns plus the recognition of a $238,000 settlement loss, which was triggered when lump sum payments from the Hourly Pension Plan exceeded the sum of service cost and interest cost for the year. Pension cost for Fiscal Year 2010 is currently estimated at over $2,300,000. The expected long-term rate of return on plan assets used to compute pension cost was 8.0 percent in Fiscal Years 2009, 2008 and 2007. The assumption will remain at 8.0 percent for the determination of pension costs for Fiscal Year 2010. The discount rate used in the actuarial assumptions to compute pension costs was 6.5 percent in Fiscal Year 2009, 6.0 percent in Fiscal Year 2008 and was 6.25 percent in Fiscal Year 2007. The rate for Fiscal Year 2010 will be 6.50 percent. The rate of compensation increase for pension costs was 4.5 percent in each of Fiscal Years 2009, 2008 and 2007. It will be lowered to 4.0 percent for Fiscal Year 2010.

Although no contributions have been needed to satisfy minimum legal funding requirements during the last three years, discretionary contributions made by the Company to these plans were $1,000,000 in each of Fiscal Years 2009, 2008 and 2007. Discretionary contributions for Fiscal Year 2010 are currently being planned at a level of $1,300,000. Future funding of the pension plans largely depends upon the performance of investments that are held in trusts that have been established for the plans. Equity securities comprise 70 percent of the target allocation of the plans' assets. The recent market volatility that caused significant declines in the market values of these securities is likely to have a material adverse effect upon future funding requirements and result in the recognition of much higher net periodic pension costs in future years.

Pension accounting standards require the overfunded or underfunded status of defined benefit pension plans to be recognized as an asset or liability in the Company's consolidated balance sheet. Funded status is measured as the difference between plan assets at fair value and projected benefit obligations, which includes a projection of future salary increases. The Company's pension plans were underfunded as of June 2, 2009, the direct result of significant declines in the market values of equity securities that are held in the pension trust. A $4,979,000 reduction in the Company's equity, net of tax, was required to establish the necessary $7,507,000 liability in the Company's balance sheet, effected through a charge to accumulated other comprehensive income.

The Hourly Pension Plan was amended on July 1, 2009 to freeze all future accruals for credited service under the Plan after August 31, 2009. The Plan had previously been closed to all hourly paid restaurant employees hired after December 31, 1998. The Salaried Pension Plan was amended on July 1, 2009 to close entry into the Plan to salaried employees hired after June 30, 2009. Salaried employees hired before June 30, 2009 will continue to participate in the Plan and be credited with normal benefits for years of service.

Other operating costs include occupancy costs such as maintenance, rent, depreciation, property tax, insurance and utilities, plus costs relating to field supervision; accounting and payroll preparation costs, franchise fees for Golden Corral restaurants; new restaurant opening costs and many other restaurant operating costs. Since most of these expenses tend to be fixed costs, the percentages shown in the above table are greatly affected by changes in same store sales levels. Opening costs can have a significant impact on the percentages. Opening cost charges for Big Boy restaurants for Fiscal Years 2009, 2008 and 2007 were $585,000, $408,000, and $443,000 respectively. Golden Corral opening costs for Fiscal Years 2009, 2008 and 2007 were zero, $229,000, and $95,000 respectively. There should be no opening costs for Golden Corral in fiscal Year 2010. Other operating costs in Fiscal Year 2009 included a charge of $334,000 to write down the carrying value of a Big Boy restaurant that permanently ceased operations on May 31, 2009.

The percentage reductions in Golden Corral's other operating costs in Fiscal Year 2009 are largely from lower depreciation charges, the result of a $4.6 million impairment of assets charge that was taken at the end of Fiscal

Year 2008 to lower carrying costs of three restaurants. Although the Fiscal Year 2009 improvement in percentages was also aided by higher sales, it should be noted that other operating costs for the Golden Corral segment are a much higher percentage of sales than Big Boy because sales volumes generally remain below expectations.

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 are added to it. Gains and losses from the sale of real property, if any, are then respectively added or subtracted. Litigation settlements and charges for impairment of assets (if any) are also included in the measure of operating profit.

Administrative and advertising expense was $14,638,000, $14,131,000 and $14,301,000 respectively in Fiscal Years 2009, 2008 and 2007. Advertising expense represents the largest component of these costs. Spending for advertising and marketing programs is proportionate to sales levels, reflecting the Company's long standing policy to spend a constant percentage of Big Boy and Golden Corral sales on advertising and marketing. Advertising expense was $6,984,000, $7,045,000, and $6,817,000 respectively in Fiscal Years 2009, 2008 and 2007. All other administrative costs were $7,654,000, $7,086,000 and $7,484,000 respectively in Fiscal Years 2009, 2008 and 2007. The Chief Executive Officer's incentive compensation was included in other administrative costs as follows: $497,000, zero and $259,000 respectively was accrued in Fiscal Years 2009, 2008 and 2007. Stock based compensation costs included in other administrative costs were $249,000, $339,000 and $314,000 respectively in Fiscal Years 2009, 2008 and 2007. Fiscal Year 2008 included a charge in other administrative costs of $160,000 to write-off deposits for Golden Corral development rights.

Revenue from franchise fees is based upon sales volumes generated by Big Boy restaurants that are licensed to other operators. The fees are based principally on percentages of sales and are recorded on the accrual method as earned. As of June 2, 2009, 26 Big Boy restaurants were licensed to other operators and paying fees to the Company. No new licensed Big Boy restaurants have opened during any of the periods presented in this MD&A; two closed during Fiscal Year 2009. Other revenue also includes certain other fees earned from licensed restaurants along with minor amounts of rent and investment income.

Gains and losses from the sale of assets consist of transactions involving real property and sometimes may include restaurant equipment that is sold together with real property as a package when closed restaurants are sold. Gains and losses reported on this line do not include abandonment losses that routinely arise when certain equipment is replaced before it reaches the end of its expected life. Abandonment losses are instead reported in other operating costs. Total gains from the sale of real property in Fiscal Year 2009 amounted to $1,163,000 on aggregate proceeds of $1,750,000. The totals are primarily attributable to the disposition of a Big Boy restaurant in the first quarter of Fiscal Year 2009 that had ceased operations in June 2008, the gain from which was $1,072,000 on proceeds of $1,487,000. Gains from the sale of real property amounted to $524,000 during Fiscal Year 2008, resulting from the dispositions of three low volume Big Boy restaurants that had ceased operations respectively in January, April and June 2007. During Fiscal Year 2007, a gain of $250,000 was recorded from the sale of an older Big Boy restaurant that had closed in October 2006.

On March 4, 2009, the company received a check for $640,000 representing full and final settlement of the arbitration award in the long-standing case against the general contractor that had constructed a Golden Corral restaurant for the Company in Canton, Ohio in 2001, which the Company had to subsequently demolish due to defective construction by the contractor. In addition to the cash received, the Company recorded an additional credit to earnings of $250,000 to reverse a liability that had represented the general contractor's claim against the Company for the outstanding contract balance, which was eliminated when the award was made final. The combined sum resulted in $890,000 being credited to pretax earnings in the third quarter of Fiscal Year 2009.

The test for impairment of assets completed at the end of Fiscal Year 2008 determined that the carrying values of three Golden Corral restaurant locations exceeded expected future cash flows to be generated by the underlying assets. As a result, a non-cash pretax charge of $4,565,000 was recorded to lower the carrying values to fair values. The total charge reflected in the consolidated statement of earnings includes impairment losses of $95,000 for intangible assets associated with unamortized initial franchise fees relating to the three impaired restaurants. The three impaired restaurants continue to operate. No significant charges for impairment of assets were recorded during either Fiscal Year 2009 or Fiscal Year 2007.

. . .