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 may 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, which are inherently subject to risks and other 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-Q under Part II, Item 1A. "Risk Factors."

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.

This MD&A should be read in conjunction with the consolidated financial statements. The Company has no off-balance sheet arrangements and does not use special purpose entities.

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 22, 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.

The Company's First Quarter of Fiscal 2010 consists of the sixteen weeks ended September 22, 2009. It compares with the sixteen weeks ended September 23, 2008, which constituted the First Quarter of Fiscal 2009. 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 2010 refer to the 52 week year that will end on June 1, 2010. References to Fiscal 2009 refer to the 52 week year that ended June 2, 2009.

Net earnings for the First Quarter of Fiscal 2010 were $2,988,000, or diluted earnings per share (EPS) of $.57, compared with $2,175,000, or diluted EPS of $.42 in the First Quarter of Fiscal 2009.

Significant factors accounting for the change:

• Food cost is much lower - as a percentage of sales, food costs decreased to 34.0 percent in the First Quarter of Fiscal 2010, from 37.0 percent in the First Quarter of Fiscal 2009.

• Gains on the sale of real estate were $1,116,000 in the First Quarter of Fiscal 2009. There were no gains in the First Quarter of Fiscal 2010.

• The effective tax rate was 32 percent in the First Quarter of Fiscal 2010, up from 29 percent in the First Quarter of Fiscal 2009.

Another significant factor that continues to place pressure on the Company's operating margins has been the automatic annual increase in the minimum wage to adjust for inflation, 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 and to $7.30 per hour on January 1, 2009.

• 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.

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. The next Ohio wage increase goes into effect on January 1, 2010. Although no increase is currently expected, additional reductions in hours will be implemented if necessary.

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 affected by the federal legislation, remaining at $2.13 per hour. Without benefit of further reductions in labor hours, the July 2009 increase to $7.25 per hour would increase annual payroll costs by an estimated $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:

                                                       1st Quarter
                                                     2010       2009
                                                     (in thousands)
               Big Boy restaurants                 $ 54,517   $ 54,418
               Wholesale sales to licensees           2,672      2,850
               Wholesale sales to grocery stores        264        293

               Total Big Boy sales                   57,453     57,561

               Golden Corral restaurants             31,529     32,321


               Consolidated restaurant sales       $ 88,982   $ 89,882

Big Boy sales decreased in the First Quarter of Fiscal 2010 because a) of lower wholesale sales to licensees and grocery stores, and b) same store sales decreased .1 percent on a decrease in customer counts of 2.3 percent. The Big Boy same store sales comparisons include average menu price increases of 1.0 percent and 2.4 percent implemented respectively in the First Quarter of Fiscal 2010 and the First Quarter of Fiscal 2009. In addition, a 1.4 percent increase was put into place in February 2009. Another increase will likely be implemented in February 2010. It should also be noted that sales for the First Quarter of Fiscal 2009 were adversely affected by a Big Boy restaurant that was taken out of service for three months while a replacement building was being constructed.

The Company operated 88 Big Boy restaurants as of September 22, 2009. The count of 88 includes two new restaurants that opened respectively in August and October 2008, minus one low volume Big Boy restaurant that ceased operating at the end of Fiscal 2009. No Big Boy restaurants were opened or closed during the First Quarter of Fiscal 2010. Two Big Boy restaurant buildings were under construction as of September 22, 2009. The first one opened for business on September 30, 2009. It replaced an older facility with a new building on a superior nearby site. The second new restaurant is scheduled to open in November 2009 in a new market area. In addition, two more Big Boys are being planned to open before the end of Fiscal 2010.

Golden Corral sales decreased in the First Quarter of Fiscal 2010 because of a same store sales decrease of 2.4 percent, which came on a 5.1 percent reduction in customer counts. The Company currently operates 35 Golden Corral restaurants, all of which are included in the same store sales comparison. The Golden Corral same store sales comparisons include average menu price increases of .3 percent, 2.5 percent and .5 percent implemented respectively in May 2009, September 2008 and June 2008.

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
                                                  2010      2009
                                                  (in thousands)
                   Big Boy gross profit         $  6,912   $ 5,958
                   Golden Corral gross profit      2,074       615

                   Total gross profit           $  8,986   $ 6,573

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.

                                                      1st Quarter 2010        1st Quarter 2009
                                                             Big                     Big
                                                    Total    Boy     GC     Total    Boy     GC
Sales                                               100.0   100.0   100.0   100.0   100.0   100.0

Food and Paper                                       34.0    32.3    37.2    37.0    35.1    40.5

Payroll and Related                                  33.4    35.8    28.9    32.9    34.8    29.5

Other Operating Costs (including opening costs)      22.5    19.8    27.3    22.7    19.7    28.1

Gross Profit                                         10.1    12.1     6.6     7.4    10.4     1.9

Food cost deflation continued through the summer of 2009. The reductions have been driven primarily by lower costs for major grains that are the principal feed ingredients for cattle, hogs and poultry. Corn prices in particular have experienced a precipitous decline from a year ago. Evidence of the relief can be clearly identified by the much lower food and paper cost percentages shown in the above table. Notwithstanding the improvements, the market for beef remains highly volatile, as import and export restrictions can and do cause wide cost fluctuations. 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.

Although the Company has effectively mitigated the effects of mandated increases in the minimum wage through higher menu prices and a reduction in the number of hours worked by hourly paid employees, several other factors drove the payroll and related percentage higher during the First Quarter of Fiscal 2010. In addition to higher payments of incentive compensation to restaurant management commensurate with improved earnings, higher costs were also incurred for medical insurance premiums and pension costs, along with a charge to increase the Company's reserves for its self-insured workers' compensation program.

Medical insurance premiums escalated by almost fifteen percent for the plan year that runs January 1, 2009 through December 31, 2009. The Company is absorbing 75 to 80 percent of the estimated $9.5 million cost for the 2009 plan year, with employees contributing the remaining 20 to 25 percent.

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. A $209,000 charge against earnings was recorded during the First Quarter of Fiscal 2010 to increase the reserves. No adjustment to the reserves was necessary during the First Quarter of Fiscal 2009.

Net periodic pension cost was $811,000 and $485,000 respectively, in the First Quarter of Fiscal 2010 and the First Quarter of 2009. Net periodic pension cost for Fiscal 2010 is currently expected to be in the range of $2,500,000 to $2,600,000. The final total in Fiscal 2009 was $1,814,000. The higher cost is primarily the result of Fiscal 2009's significant market losses in equity securities, which are the primary funding source for the pension trusts. The market losses in Fiscal 2009 required underfunded status of the pension plans to be recognized at June 2, 2009, which resulted in a reduction in the Company's equity of approximately $5,000,000, net of tax. In addition, absent a material restoration in the values of the securities, future funding requirements will be adversely affected, and much higher levels of net periodic pension costs will need to be recognized for years to come. Although no contributions are needed to meet minimum funding requirements for Fiscal 2010, discretionary contributions are currently anticipated at a level of $1,625,000, including $125,000 that was contributed during the First Quarter of Fiscal 2010.

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 expenses. Opening costs were $14,000 for Big Boy restaurants and zero for Golden Corral restaurants during the First Quarter of Fiscal 2010. During the First Quarter of Fiscal 2009, opening costs were $329,000 for Big Boy and zero 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 can be greatly affected by changes in same store levels. The reduction in Golden Corral from 28.1 percent to 27.3 percent is the result of lower costs for utilities and maintenance. Other operating costs are a much higher percentage of sales in the Golden Corral segment (compared with the Big Boy segment) because sales volumes generally remain well below original 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 is added to it. Gains and losses from the sale of real property, if any, are then respectively added or subtracted.

Administrative and advertising expense did not appreciably change during the First Quarter of Fiscal 2010, as compared with the First Quarter of Fiscal 2009. Stock based compensation expense included in administrative and advertising expense was $81,000 during the First Quarter of Fiscal 2010, and was $78,000 in the First Quarter of Fiscal 2009.

Revenue from franchise fees is based on 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 September 22, 2009, 26 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 restaurants licensed to others along with minor amounts of rent and investment income.

There were no sales of real property during the First Quarter of Fiscal 2010. Gains from the sale of real property amounted to $1,116,000 during the First Quarter of Fiscal 2009. These gains resulted primarily from the disposition of a Big Boy restaurant that ceased operations in June 2008. Aggregate proceeds amounted to $1,581,000.

No impairment of assets was recorded during either the First Quarter of Fiscal 2010 or the First Quarter of Fiscal 2009.

Interest Expense

Interest expense in the First Quarter of Fiscal 2010 was $57,000 lower than the First Quarter of Fiscal 2009, a reduction of 9.7 percent. The reduction is the result of lower debt levels than a year ago, lower variable interest rates and lower interest charges associated with capitalized leases.

Income Tax Expense

Income tax expense as a percentage of pretax earnings was estimated at 32 percent in the First Quarter of Fiscal 2010 and was 29 percent in the First Quarter of Fiscal 2009. 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. These tax credits are generally less favorable to the effective tax rate when pretax income increases.

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 currency or are settled by debit or credit cards. The primary source of cash provided by operating activities is net earnings plus depreciation and impairment of assets, if any. 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 credit lines remain 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 22, 2009



                                                                Payments due by period (in thousands)
                                                                                                                 More
                                                                                                                than 5
                                                Total      year 1     year 2     year 3    year 4    year 5     years
    Long-Term Debt                             $ 31,539   $  8,229   $  7,323   $  6,030   $ 4,545   $ 2,915   $  2,497
    Rent due under Capital Lease Obligations        627        268        251        108         -         -          -
    Rent due under Operating Leases              18,874      1,583      1,502      1,434     1,371     1,385     11,599
1   Unconditional Purchase Obligations           17,016      7,860      3,278      3,308     2,514        56          -
2   Other Long-Term Obligations                   1,262        227        230        232       235       238        100
    Total Contractual Cash Obligations           69,318     18,167     12,584     11,112     8,665     4,594     14,196

1 Primarily consists of commitments for certain food and beverage items, plus capital projects including commitments to purchase real property, if any.

2 Deferred compensation liability.

The working capital deficit was $16,560,000 as of September 22, 2009, about the same as it was as of June 2, 2009.

In September 2009, the maximum amount that may be borrowed under the terms of the Company's Construction Draw Facility was increased by $3,500,000, which brought to $8,000,000 the amount available to be drawn upon. These funds are readily available. In addition, a $5,000,000 revolving loan (currently unused) is also readily available if needed to fund temporary working capital. The Company is in compliance with the covenants contained in both of these credit facilities. Unless extended, both of the credit facilities are scheduled to expire in October 2010.

Operating Activities

Operating cash flows were $7,517,000 in the First Quarter of Fiscal 2010, or $2,788,000 higher than the First Quarter of Fiscal 2009. The increase is primarily attributable to higher net earnings plus 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. Net earnings in the First Quarter of Fiscal 2009 included gains from the sale of real estate that amounted to $1,116,000. Management measures cash flows from the operation of the business by simply adding to net earnings certain 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 cost. The result of this approach is reflected as a sub-total in the consolidated statement of cash flows: $7,629,000 in the First Quarter of Fiscal 2010 and $5,384,000 in the First Quarter of Fiscal 2009.

Investing Activities

Capital spending is the principal component of investing activities. Capital spending was $7,509,000 during the First Quarter of Fiscal 2010, a decrease of $86,000 from the First Quarter of Fiscal 2009. This year's capital spending includes $6,884,000 for Big Boy restaurants and $625,000 for Golden Corral restaurants. These capital expenditures consisted of new restaurant construction, acquisitions of existing restaurants, remodeling existing restaurants including kitchen and dining room expansions, routine equipment replacements and other capital outlays.

There were no proceeds from disposition of property during the First Quarter of Fiscal 2010. Proceeds in 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.

Financing Activities

Borrowing against credit lines amounted to $4,000,000 during the First Quarter of Fiscal 2010. Scheduled and other payments of long-term debt and capital lease obligations amounted to $2,229,000 during the First Quarter of Fiscal 2010. Regular quarterly cash dividends paid to shareholders during the First Quarter of Fiscal 2010 totaled $612,000. In addition, the Board of Directors declared a $.13 per share dividend (one cent per share or 8 percent higher than the previous $.12 per share dividend) on September 2, 2009 that totaled $664,000 when it was paid on October 9, 2009. The Company expects to continue its 49 year practice of paying regular quarterly cash dividends.

During the First Quarter of Fiscal 2010, 4,400 shares of the Company's common stock were acquired pursuant to the exercise of stock options, yielding proceeds to the Company of approximately $94,000. As of September 22, 2009, 490,000 shares granted under the Company's two stock option plans remain outstanding, including 400,000 fully vested shares at a weighted average exercise price per share of $20.72. As of September 22, 2009, approximately 566,000 shares remained available to be granted under the 2003 Stock Option and Incentive Plan, net of 52,000 options that were granted to employees in June 2009. On October 6, 2009, 18,000 option shares were granted to non-employee members of the Board of Directors and 3,000 option shares were granted to the President and Chief Executive Officer pursuant to the terms of his employment agreement.

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. No shares were acquired under the program during the First Quarter of Fiscal 2010. Since inception of the current authorization, 38,681 shares had been acquired at a cost of $857,000.

Other Information

No new Big Boy restaurants opened for business during the First Quarter of Fiscal 2010. Two Big Boy restaurant buildings were under construction as of September 22, 2009. The first one opened for business on September 30, 2009, which replaced an older suburban Cincinnati Big Boy with a new building on a superior nearby site. The second one is currently on schedule to open in November 2009 in new market area of suburban Cincinnati. Two other new Big Boy restaurants are currently scheduled to open respectively in March and April 2010 on land acquired by the Company in fiscal year 2009. Construction has been scheduled to begin in December 2009.

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. Future costs will also depend on whether the present building prototype (used since 2001) is constructed or whether the prototype of a second design having a smaller footprint is used, which is being developed for use in smaller

markets. The smaller prototype is designed to maintain the overall appearance and theme of the larger prototype. The two new Big Boy restaurants scheduled to open respectively in March and April 2010 will be built using plans for the smaller prototype. Several sites are currently being evaluated for potential acquisition and development. As of September 22, 2009, any contracts that existed to acquire sites for future development were cancellable at the Company's sole discretion while due diligence is being pursued under the inspection period provisions of the contracts.

Approximately one-fifth of the Big Boy restaurants are routinely renovated or decoratively updated each year. The renovations not only refresh and upgrade interior finishes, but are also designed to synchronize the interiors and exteriors of older restaurants with the newer prototype that has been used since 2001. The current average cost to renovate a typical older restaurant ranges from $150,000 to $175,000. Restaurants opened since 2001 also receive updates when they reach five years of age, which on average currently range from $80,000 to $90,000. In addition, certain high-volume Big Boy restaurants are regularly evaluated to determine whether their kitchens should be redesigned for increased . . .