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 October 1, 2011 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 June 30, 2012, we (i) operated 24 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 one restaurant and four combination restaurants/package stores, (one restaurant of which we operate). 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 June 30, 2012 and as compared to July 2, 2011 and October 1, 2011. 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". For the thirteen and thirty nine weeks ended June 30, 2012, we generated revenue of $140,000 and $333,000 from our leasing to unaffiliated third parties of retail space.

Types of Units                       June 30, 2012   October 1, 2011   July 2, 2011
Company Owned:
Combination package and restaurant         4                4               4
Restaurant only                            5                5               4         (1)
Package store only                         5                5               5

Company Operated Restaurants Only:
Limited Partnerships                       8                8               9         (1)
Franchise                                  1                1               1
Unrelated Third Party                      1                1               1

Company Owned Club:                        1                1               1

Total Company Owned/Operated Units        25               25               25
Franchised Units                           5                5               5         (2)

Notes:

(1) During the fourth quarter of our fiscal year 2011, we purchased from a limited partnership the operating assets of the restaurant located in Stuart, Florida and accordingly, on July 31, 2011, the restaurant converted from a limited partnership unit to a Company owned 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 June 30, 2012, 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



                                    -----------------------Thirteen Weeks Ended-----------------------
                                         June 30, 2012                               July 2, 2011
                                 Amount                                      Amount
                             (In thousands)            Percent           (In thousands)            Percent
Restaurant food sales        $        12,443                 65.76       $        11,712                 65.85
Restaurant bar sales                   3,428                 18.12                 2,958                 16.63
Package store sales                    3,050                 16.12                 3,117                 17.52

Total Sales                  $        18,921                100.00       $        17,787                100.00

Franchise related revenues               245                                         233
Rental income                            140                                           -
Owner's fee                               38                                          39
Other operating income                    38                                          61

Total Revenue                $        19,382                             $        18,120

                                   ----------------------Thirty-Nine Weeks Ended-----------------------
                                         June 30, 2012                               July 2, 2011
                                 Amount                                      Amount
                             (In thousands)            Percent           (In thousands)            Percent
Restaurant food sales        $        37,141                 64.49       $        34,795                 64.37
Restaurant bar sales                  10,043                 17.44                 8,937                 16.53
Package store sales                   10,407                 18.07                10,321                 19.10

Total Sales                  $        57,591                100.00       $        54,053                100.00

Franchise related revenues               756                                         736
Rental income                            333                                           -
Owner's fee                              120                                         123
Other operating income                   115                                         160

Total Revenue                $        58,915                             $        55,072

Comparison of Thirteen Weeks Ended June 30, 2012 and July 2, 2011.

Revenues. Total revenue for the thirteen weeks ended June 30, 2012 increased $1,262,000 or 6.96% to $19,382,000 from $18,120,000 for the thirteen weeks ended July 2, 2011.

Restaurant Food Sales. Restaurant revenue generated from the sale of food at restaurants (food sales) totaled $12,443,000 for the thirteen weeks ended June 30, 2012 as compared to $11,712,000 for the thirteen weeks ended July 2, 2011. Comparable weekly food sales (for restaurants open for all of the third quarter of our fiscal years 2012 and 2011, which consists of eight restaurants owned by us and eight restaurants owned by affiliated limited partnerships) was $927,000 and $869,000 for the thirteen weeks ended June 30, 2012 and July 2, 2011, respectively, an increase of 6.67%. Comparable weekly food sales for Company owned restaurants was $409,000 and $375,000 for the third quarter of our fiscal year 2012 and the third quarter of our fiscal year 2011, respectively, an increase of 9.07%. Comparable weekly food sales for affiliated limited partnership owned restaurants was $518,000 and $494,000 for the third quarter of our fiscal year 2012 and the third quarter of our fiscal year 2011, respectively, an increase of 4.86%. Restaurant food sales increased for the thirteen weeks ended June 30, 2012 due in part to the increase in menu prices instituted during the fourth quarter of our fiscal year 2011 and the third quarter of our fiscal year 2012.

Restaurant Bar Sales. Restaurant revenue generated from the sale of alcoholic beverages at restaurants (bar sales) totaled $3,428,000 for the thirteen weeks ended June 30, 2012 as compared to $2,958,000 for the thirteen weeks ended July 2, 2011. Comparable weekly bar sales (for restaurants open for all of the third quarter of our fiscal years 2012 and 2011, which consists of eight restaurants owned by us and eight restaurants owned by affiliated limited partnerships) was $257,000 for the thirteen weeks ended June 30, 2012 and $221,000 for the thirteen weeks ended July 2, 2011, an increase of 16.29%. Comparable weekly bar sales for Company owned restaurants was $107,000 and $93,000 for the third quarter of our fiscal year 2012 and the third quarter of our fiscal year 2011, respectively, an increase of 15.05%. Comparable weekly bar sales for affiliated limited partnership owned restaurants was $150,000 and $128,000 for the third quarter of our fiscal year 2012 and the third quarter of our fiscal year 2011, respectively, an increase of 17.19%. Restaurant bar sales increased for the thirteen weeks ended June 30, 2012 due in part to our increase in restaurant bar prices during the second quarter of our fiscal year 2012.

Package Store Sales. Revenue generated from sales of liquor and related items at package liquor stores (package store sales) totaled $3,050,000 for the thirteen weeks ended June 30, 2012 as compared to $3,117,000 for the thirteen weeks ended July 2, 2011, a decrease of $67,000. The weekly average of same store package store sales, (which includes all nine (9) Company owned package liquor stores open for all of the third quarter of our fiscal years 2012 and 2011), was $235,000 for the thirteen weeks ended June 30, 2012 as compared to $240,000 for the thirteen weeks ended July 2, 2011, a decrease of 2.08%. Package store sales are expected to remain stable throughout the balance of our fiscal year 2012.

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 June 30, 2012 increased $1,115,000 or 6.45% to $18,413,000 from $17,298,000 for the thirteen weeks ended July 2, 2011. The increase was primarily due to the new restaurant location in Miami, Florida acquired by a limited partnership during the second quarter of our fiscal year 2012, the shopping center in Miami, Florida acquired during the first quarter of our fiscal year 2012 and to an expected general increase in food costs, including an increase in the cost of ribs and poultry, offset by a decrease in repairs and maintenance to our units 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 2012 for the same reasons. Operating costs and expenses decreased as a percentage of total sales to approximately 95.00% in the third quarter of our fiscal year 2012 from 95.46% in the third quarter of our fiscal year 2011.

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

Restaurant Food and Bar Sales. Gross profit for food sales and bar sales for the thirteen weeks ended June 30, 2012 increased to $10,093,000 from $9,589,000 for the thirteen weeks ended July 2, 2011. 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 63.59% for the thirteen weeks ended June 30, 2012 and 65.36% for the thirteen weeks ended July 2, 2011. The decrease in our gross profit margin, (-1.77%), was primarily due to increases in our food costs, including our cost of ribs and poultry, which was only partially offset by menu price and liquor price increases. We anticipate that our gross profit for restaurant food and bar sales will remain stable during the balance of our fiscal year 2012 due to our menu price increases during the fourth quarter of our fiscal year 2011 and third quarter of our fiscal year 2012 and liquor price increases during the second quarter of our fiscal year 2012, offset by higher food costs, including our cost of ribs and poultry.

Package Store Sales. Gross profit for package store sales for the thirteen weeks ended June 30, 2012 decreased to $980,000 from $1,024,000 for the thirteen weeks ended July 2, 2011. Our gross profit margin, (calculated as gross profit reflected as a percentage of package store sales), for package store sales was 32.13% for the thirteen weeks ended June 30, 2012 and 32.85% for the thirteen weeks ended July 2, 2011. The decrease in our gross profit margin, (-0.72%), was primarily due toour inability to purchase "close out" and inventory reduction merchandise from wholesalers. We anticipate that the gross profit margin for package store sales will be stable throughout the balance of our fiscal year 2012.

Payroll and Related Costs. Payroll and related costs for the thirteen weeks ended June 30, 2012 increased $337,000 or 6.14% to $5,828,000 from $5,491,000 for the thirteen weeks ended July 2, 2011 due primarily to an increase in the Florida minimum wage (4.92%), which was effective January 1, 2012, and to increases in payroll taxes, including unemployment taxes. We anticipate that our payroll and related costs will increase throughout the balance of our fiscal year 2012 due primarily to payroll associated with the new restaurant location in Miami, Florida expected to open for business during the first quarter of our fiscal 2013. Payroll and related costs as a percentage of total sales was 30.07% in the third quarter of our fiscal year 2012 and 30.30% of total sales in the third quarter of our fiscal year 2011.

Occupancy Costs. Occupancy costs (consisting of rent, common area maintenance, repairs, real property taxes and amortization of leasehold purchases) for the thirteen weeks ended June 30, 2012 increased $36,000 or 3.34% to $1,115,000 from $1,079,000 for the thirteen weeks ended July 2, 2011. Our occupancy costs increased primarily due to escalating rents at various locations and rental payments for the new restaurant location in Miami, Florida acquired by a limited partnership, which rental payments commenced January 27, 2012, partially offset by the 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 increase throughout the balance of our fiscal year 2012 due to escalating rents at several locations and rental payments for the new restaurant location in Miami, Florida, offset by the elimination of rent from a limited partnership owned restaurant .

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 June 30, 2012 increased $68,000 or 1.91% to $3,622,000 from $3,554,000 for the thirteen weeks ended July 2, 2011. Selling, general and administrative expenses decreased as a percentage of total sales in the third quarter of our fiscal year 2012 to approximately 18.69% as compared to 19.61% in the third quarter of our fiscal year 2011. We anticipate that our selling, general and administrative expenses will increase throughout the balance of our fiscal year 2012 due primarily to the new restaurant location in Miami, Florida acquired by a limited partnership during the second quarter of our fiscal year 2012 and expected to open for business during the first quarter of our fiscal year 2013, the shopping center acquired during the first quarter of our fiscal year 2012 and increases across all categories.

Depreciation and Amortization. Depreciation and amortization expense for the thirteen weeks ended June 30, 2012 and July 2, 2011 were unchanged at $626,000. As a percentage of revenue, depreciation and amortization expense was 3.23% of revenue in the thirteen weeks ended June 30, 2012 and 3.45% of revenue in the thirteen weeks ended July 2, 2011.

Interest Expense, Net. Interest expense, net, for the thirteen weeks ended June 30, 2012 increased $48,000 to $208,000 from $160,000 for the thirteen weeks ended July 2, 2011. Interest expense increased during the thirteen weeks ended June 30, 2012 primarily due to the interest paid on the $4.5 million mortgage loan, the proceeds of which we used to purchase a shopping center in Miami, Florida and a $1.6 million term loan the proceeds of which were also ultimately used to purchase the shopping center, while permitting us to retain our working capital and cash reserves.

Net Income.Net income for the thirteen weeks ended June 30, 2012 decreased $109,000 or 31.59% to $236,000 from $345,000 for the thirteen weeks ended July 2, 2011. As a percentage of sales, net income for the third quarter of our fiscal year 2012 is 1.22%, as compared to 1.90% in the third quarter of our fiscal year 2011.

Comparison of Thirty-Nine Weeks Ended June 30, 2012 and July 2, 2011.

Revenues. Total revenue for the thirty nine weeks ended June 30, 2012 increased $3,843,000 or 6.98% to $58,915,000 from $55,072,000 for the thirty nine weeks ended July 2, 2011

Restaurant Food Sales. Restaurant revenue generated from the sale of food at restaurants (food sales) totaled $37,141,000 for the thirty nine weeks ended June 30, 2012 as compared to $34,795,000 for the thirty nine weeks ended July 2, 2011. Comparable weekly food sales (for restaurants open for all of the thirty nine weeks of our fiscal years 2012 and 2011, which consists of eight restaurants owned by us and eight restaurants owned by affiliated limited partnerships) was $921,000 and $860,000 for the thirty nine weeks ended June 30, 2012 and July 2, 2011, respectively, an increase of 7.09%. Comparable weekly food sales for Company owned restaurants was $411,000 and $373,000 for the thirty nine weeks ended June 30, 2012 and July 2, 2011, respectively, an increase of 10.19%. Comparable weekly food sales for affiliated limited partnership owned restaurants was $510,000 and $487,000 for the thirty nine weeks ended June 30, 2012 and July 2, 2011, respectively, an increase of 4.72%. Restaurant food sales increased for the thirty nine weeks ended June 30, 2012 due in part to the increase in menu prices instituted during the fourth quarter of our fiscal year 2011 and the third quarter of our fiscal year 2012.

Restaurant Bar Sales. Restaurant revenue generated from the sale of alcoholic beverages at restaurants (bar sales) totaled $10,043,000 for the thirty nine weeks ended June 30, 2012 as compared to $8,937,000 for the thirty nine weeks ended July 2, 2011. Comparable weekly bar sales (for restaurants open for all of the thirty nine weeks of our fiscal years 2012 and 2011, which consists of eight restaurants owned by us and eight restaurants owned by affiliated limited partnerships) was $250,000 for the thirty nine weeks ended June 30, 2012 and $223,000 for the thirty nine weeks ended July 2, 2011, an increase of 12.11%. Comparable weekly bar sales for Company owned restaurants was $107,000 and $95,000 for the thirty nine weeks ended June 30, 2012 and July 2, 2011, respectively, an increase of 12.63%. Comparable weekly bar sales for affiliated limited partnership owned restaurants was $143,000 and $128,000 for the thirty nine weeks ended June 30, 2012 and July 2, 2011, respectively, an increase of 11.72%. Restaurant bar sales increased for the thirty nine weeks ended June 30, 2012 due in part to our increase in restaurant bar prices during the second quarter of our fiscal year 2012.

Package Store Sales. Revenue generated from sales of liquor and related items at package stores (package store sales) totaled $10,407,000 for the thirty nine weeks ended June 30, 2012 as compared to $10,321,000 for the thirty nine weeks ended July 2, 2011, an increase of $86,000. 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 2012 and 2011) was $267,000 and $265,000 for the thirty nine weeks ended June 30, 2012 and July 2, 2011, respectively, an increase of 0.75%. Package liquor store sales are expected to remain stable throughout the balance of our fiscal year 2012.

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 30, 2012 increased $3,798,000 or 7.25% to $56,173,000 from $52,375,000 for the thirty nine weeks ended July 2, 2011. The increase was primarily due to the new restaurant location in Miami, Florida acquired by a limited partnership during the second quarter of our fiscal year 2012 and expected to open for business during the first quarter of our fiscal 2013, the shopping center in Miami, Florida acquired during the first quarter of our fiscal year 2012 and to an expected general increase in food costs, including an increase in the cost of ribs and poultry, offset by a decrease in repairs and maintenance to our units 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 2012 for the same reasons. Operating costs and expenses increased as a percentage of total sales to approximately 95.35% for the thirty nine weeks ended June 30, 2012 from 95.10% for the thirty nine weeks ended July 2, 2011.

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 30, 2012 increased to $30,457,000 from $28,758,000 for the thirty nine weeks ended July 2, 2011. 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 64.55% for the thirty nine weeks ended June 30, 2012 and 65.76% for the thirty nine weeks ended July 2, 2011. We anticipate that our gross profit for restaurant food and bar sales will decrease during the balance of our fiscal year 2012 due to higher food costs, including our cost of ribs and poultry.

Package Store Sales. Gross profit for package store sales for the thirty nine weeks ended June 30, 2012 decreased to $3,152,000 from $3,500,000 for the thirty nine weeks ended July 2, 2011. Our gross profit margin, (calculated as gross profit reflected as a percentage of package store sales), was 30.29% for the thirty nine weeks ended June 30, 2012 compared to 33.91% for the thirty nine weeks ended July 2, 2011. The decrease in our gross profit margin, (-3.62%), was primarily due toour inability to purchase "close out" and inventory reduction merchandise from wholesalers. We anticipate that the gross profit margin for package store sales will remain stable throughout the balance of our fiscal year 2012.

Payroll and Related Costs.Payroll and related costs for the thirty nine weeks ended June 30, 2012 increased $1,209,000 or 7.33% to $17,701,000 from $16,492,000 for the thirty nine weeks ended July 2, 2011, due primarily to an increase in the Florida minimum wage (4.92%), which was effective January 1, 2012, and to increases in payroll taxes, including unemployment taxes. We anticipate that our payroll and related costs will increase throughout the balance of our fiscal year 2012 due primarily to payroll associated with the new restaurant location in Miami, Florida acquired by a limited partnership during the second quarter of our fiscal year 2012 and expected to open for business during the first quarter of our fiscal 2013. Payroll and related costs as a percentage of total sales was 30.04% for the thirty nine weeks ended June 30, 2012 and 29.95% of total sales for the thirty nine weeks ended July 2, 2011.

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 30, 2012 increased $57,000 or 1.79% to $3,247,000 from $3,190,000 for the thirty nine weeks ended July 2, 2011. Our occupancy costs increased primarily due to escalating rents at various locations and with rental payments for the new restaurant location in Miami, Florida acquired by a limited partnership, which commenced January 27, 2012, partially offset by the 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 and the elimination of rent paid for our combination restaurant and package liquor store located at 13205 Biscayne Boulevard, North Miami, Florida, the real property and building of which we purchased during the first quarter of our fiscal year 2011. We anticipate that our occupancy costs will remain stable throughout the balance of our fiscal year 2012 as escalating rents at several locations and rental payments for the new restaurant location in Miami, Florida, will be partially offset by the elimination of rent from a limited partnership owned restaurant upon consolidation.

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 30, 2012 increased . . .