Reported financial results may not be indicative of the financial results of future periods. All non-historical information contained in the following discussion constitutes forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Words such as "anticipates, appears, expects, trends, intends, hopes, plans, believes, seeks, estimates, may, will," and variations of these words or similar expressions are intended to identify forward-looking statements. These statements are not guarantees of future performance and involve a number of risks and uncertainties, including but not limited to customer demand and competitive conditions. Factors that could cause actual results to differ materially are included in, but not limited to, those identified in the "Management's Discussion and Analysis of Financial Condition and Results of Operations," in the Annual Report on our Form 10-K for the fiscal year ended September 29, 2012 and in this Quarterly Report on Form 10-Q. We undertake no obligation to publicly release the results of any revisions to these forward-looking statements that may reflect events or circumstances after the date of this report.

OVERVIEW

At December 29, 2012, we (i) operated 25 units, (excluding the adult entertainment club referenced in (ii) below), consisting of restaurants, package stores and combination restaurants/package stores that we either own or have operational control over and partial ownership in; (ii) own but do not operate one adult entertainment club; and (iii) franchise an additional five units, consisting of two restaurants, (one restaurant of which we operate), and three combination restaurants/package stores. The table below provides information concerning the type (i.e. restaurant, package store or combination restaurant/package liquor store) and ownership of the units (i.e. whether (i) we own 100% of the unit; (ii) the unit is owned by a limited partnership of which we are the sole general partner and/or have invested in; or (iii) the unit is franchised by us), as of December 29, 2012 and as compared to December 31, 2011 and September 29, 2012. With the exception of "The Whale's Rib", a restaurant we operate but do not own, all of the restaurants operate under our service mark "Flanigan's Seafood Bar and Grill" and all of the package liquor stores operate under our service mark "Big Daddy's Liquors".

                                     December 29,       September 29,      December 31,
Types of Units                           2012               2012               2011
Company Owned:
Combination package and restaurant           4                   4                 4
Restaurant only                              5                   5                 5
Package store only                           5                   5                 5

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

Company Owned Club:                          1                   1                 1

Total Company Owned/Operated Units           26                 25                 25
Franchised Units                             5                   5                 5     (2)

Notes:

(1) During the first quarter of our fiscal year 2013, the limited partnership which owns the new restaurant in Miami, Florida completed its renovations and the restaurant opened for business on December 27, 2012 as a limited partnership 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 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 cash available to the limited partnership, with the other one half (½) of available cash distributed to the investors (including us and our affiliates). As of December 29, 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 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-----------------------
                                       December 29, 2012                           December 31, 2011
                                 Amount                                      Amount
                             (In thousands)            Percent           (In thousands)            Percent
Restaurant food sales        $        12,042                 63.15       $        11,691                 62.97
Restaurant bar sales                   3,477                 18.23                 3,093                 16.66
Package store sales                    3,550                 18.62                 3,782                 20.37

Total Sales                  $        19,069                100.00       $        18,566                100.00

Franchise related revenues               312                                         263
Owner's fee                               38                                          39
Rental income                            152                                          51
Other operating income                    42                                          33

Total Revenue                $        19,613                             $        18,952

Comparison of Thirteen Weeks Ended December 29, 2012 and December 31, 2011.

Revenues. Total revenue for the thirteen weeks ended December 29, 2012 increased $661,000 or 3.49% to $19,613,000 from $18,952,000 for the thirteen weeks ended December 31, 2011. The increase in total revenue during the first quarter of our fiscal year 2013 was primarily due to increased revenue generated from the sale of food and alcoholic beverages at our restaurants primarily caused by our increasing our menu prices during the third quarter of our fiscal year 2012 offset by a small decrease in package store sales. Additionally, our rental income increased during the thirteen weeks ended December 29, 2012 as compared to the thirteen weeks ended December 31, 2011 due to the fact that we owned the shopping center in Miami, Florida for the entire first quarter of our fiscal year 2013 as opposed to a part of the first quarter of our fiscal year 2012.

Restaurant Food Sales. Restaurant revenue generated from the sale of food at restaurants totaled $12,042,000 for the thirteen weeks ended December 29, 2012 as compared to $11,691,000 for the thirteen weeks ended December 31, 2011, due primarily to our menu price increases during the third quarter of our fiscal year 2012. Comparable weekly restaurant food sales (for restaurants open for all of the first quarter of our fiscal year 2013 and all of the first quarter of our fiscal year 2012, which consists of eight restaurants owned by us and eight restaurants owned by affiliated limited partnerships) was $924,000 and $899,000 for the thirteen weeks ended December 29, 2012 and December 31, 2011, respectively, an increase of 2.78%. Comparable weekly restaurant food sales for Company owned restaurants only was $426,000 and $412,000 for the first quarter of our fiscal year 2013 and the first quarter of our fiscal year 2012, respectively, an increase of 3.40%. Comparable weekly restaurant food sales for affiliated limited partnership owned restaurants only was $498,000 and $487,000 for the first quarter of our fiscal year 2013 and the first quarter of our fiscal year 2012, respectively, an increase of 2.26%.

Restaurant Bar Sales. Restaurant revenue generated from the sale of alcoholic beverages at restaurants (bar sales) totaled $3,477,000 for the thirteen weeks ended December 29, 2012 as compared to $3,093,000 for the thirteen weeks ended December 31, 2011 primarily due to an increase in prices. Comparable weekly restaurant bar sales (for restaurants open for all of the first quarter of our fiscal year 2013 and all of the first quarter of our fiscal year 2012, which consists of eight restaurants owned by us and eight restaurants owned by affiliated limited partnerships) was $267,000 for the thirteen weeks ended December 29, 2012 and $238,000 for the thirteen weeks ended December 31, 2011, an increase of 12.18%. Comparable weekly restaurant bar sales for Company owned restaurants only was $118,000 and $107,000 for the first quarter of our fiscal year 2013 and the first quarter of our fiscal year 2012, respectively, an increase of 10.28%. Comparable weekly restaurant bar sales for affiliated limited partnership owned restaurants only was $149,000 and $131,000 for the first quarter of our fiscal year 2013 and the first quarter of our fiscal year 2012, respectively, an increase of 13.74%.

Package Store Sales. Revenue generated from sales of liquor and related items at package liquor stores totaled $3,550,000 for the thirteen weeks ended December 29, 2012 as compared to $3,782,000 for the thirteen weeks ended December 31, 2011, a decrease of $232,000. The weekly average of same store package liquor store sales, which includes all nine (9) Company owned package liquor stores, was $273,000 for the thirteen weeks ended December 29, 2012 as compared to $291,000 for the thirteen weeks ended December 31, 2011, a decrease of 6.19%. Package liquor store sales decreased primarily due to the fact that the first quarter of our fiscal year 2013 ended two (2) days prior to New Year's Eve, while the first quarter of our fiscal year 2012 ended on New Year's Eve and increased competition. We expect package liquor store sales to remain stable throughout the balance of our fiscal year 2013.

Operating Costs and Expenses.Operating costs and expenses, (consisting of cost of merchandise sold, payroll and related costs, occupancy costs and selling, general and administrative expenses), for the thirteen weeks ended December 29, 2012 increased $685,000 or 3.74% to $18,977,000 from $18,292,000 for the thirteen weeks ended December 31, 2011. The increase was primarily due to the costs related to our new limited partnership-owned restaurant in Miami, Florida which opened for business on December 27, 2012, costs related to the ownership and operation of a shopping center in Miami, Florida we 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 poultry, offset by a decrease in the cost of ribs and actions taken by management to reduce and/or control costs and expenses. We anticipate that our operating costs and expenses will continue to increase through our fiscal year 2013 for the same reasons. Operating costs and expenses increased as a percentage of total sales to approximately 96.76% in the first quarter of our fiscal year 2013 from 96.52% in the first quarter of our fiscal year 2012.

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

Restaurant Food and Bar Sales. Gross profit for food and bar sales for the thirteen weeks ended December 29, 2012 increased to $9,967,000 from $9,680,000 for the thirteen weeks ended December 31, 2011. Our gross profit margin for restaurant food and bar sales (calculated as gross profit reflected as a percentage of restaurant food and bar sales), was 64.22% for the thirteen weeks ended December 29, 2012 and 65.48% for the thirteen weeks ended December 31, 2011.We anticipate that our gross profit for restaurant food and bar sales will decrease throughout the balance of our fiscal year 2013 due to higher food costs, including our cost of poultry, offset by a decrease in our cost of ribs during calendar year 2013.

Package Store Sales. Gross profit for package store sales for the thirteen weeks ended December 29, 2012 decreased to $1,047,000 from $1,108,000 for the thirteen weeks ended December 31, 2011. Our gross profit margin, (calculated as gross profit reflected as a percentage of package liquor store sales), for package liquor store sales was 29.49% for the thirteen weeks ended December 29, 2012 and 29.30% for the thirteen weeks ended December 31, 2011. We anticipate that the gross profit margin for package store sales will remain stable throughout the balance of our fiscal year 2013.

Payroll and Related Costs.Payroll and related costs for the thirteen weeks ended December 29, 2012 increased $305,000 or 5.46% to $5,889,000 from $5,584,000 for the thirteen weeks ended December 31, 2011. We anticipate that our payroll and related costs will increase throughout the balance of our fiscal year 2013 due primarily to payroll associated with the new limited partnership-owned restaurant location in Miami, Florida which opened for business on December 27, 2012. Payroll and related costs as a percentage of total sales was 30.03% in the first quarter of our fiscal year 2013 and 29.46% of total sales in the first quarter of our fiscal year 2012.

Occupancy Costs. Occupancy costs (consisting of rent, common area maintenance, repairs, real property taxes and amortization of leasehold purchases) for the thirteen weeks ended December 29, 2012 increased $14,000 or 1.31% to $1,083,000 from $1,069,000 for the thirteen weeks ended December 31, 2011. Our occupancy costs increased primarily due to increasing percentage rents at various locations and due to rental payments for the new limited partnership owned restaurant located in Miami, Florida which commenced January 27, 2012, and 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 remain stable throughout the balance of our fiscal year 2013 as rental payments for the new limited partnership owned restaurant located in Miami, Florida, will be offset by the reduction in rental payments as a result of our purchase of the building on November 30, 2011 where Store #70 is located.

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 December 29, 2012 increased $89,000 or 2.31% to $3,950,000 from $3,861,000 for the thirteen weeks ended December 31, 2011. Selling, general and administrative expenses decreased as a percentage of total sales in the first quarter of our fiscal year 2013 to approximately 20.14% as compared to 20.37% in the first quarter of our fiscal year 2012. We anticipate that our selling, general and administrative expenses will increase throughout the balance of our fiscal year 2013 due primarily to the new limited partnership owned restaurant located in Miami, Florida which opened for business on December 27, 2012 and increases across all categories.

Depreciation and Amortization. Depreciation and amortization for the thirteen weeks ended December 29, 2012 decreased $7,000 or 1.10% to $628,000 from $635,000 for the thirteen weeks ended December 31, 2011. As a percentage of total revenue, depreciation expense was 3.20% of revenue for the thirteen weeks ended December 29, 2012 and 3.35% of revenue in the thirteen weeks ended December 31, 2011.

Interest Expense, Net. Interest expense, net, for the thirteen weeks ended December 29, 2012 increased $37,000 to $214,000 from $177,000 for the thirteen weeks ended December 31, 2011. Interest expense increased during the thirteen weeks ended December 29, 2012 primarily due to the interest paid on the $4.5 million mortgage loan, the proceeds of which we used to purchase ashopping center in Miami, Florida and a $1.6 million term loan the proceeds of which were also ultimately used to purchase the shopping center for the entire thirteen weeks ended December 29, 2012, as compared to only a part of the thirteen weeks ended December 31, 2011.

Net Income Attributable to Stockholders. Net income for the thirteen weeks ended December 29, 2012 increased $9,000 or 2.68% to $345,000 from $336,000 for the thirteen weeks ended December 31, 2011. As a percentage of sales, net income for the first quarter of our fiscal year 2013 is 1.76%, as compared to 1.77% in the first quarter of our fiscal year 2012.

New Limited Partnership Restaurants

As new restaurants open, our income from operations will be adversely affected due to our obligation to fund pre-opening costs, including but not limited to pre-opening rent for the new locations. During the first quarter of our fiscal year 2013, we recognized pre-opening rent expense in the approximate amount of $31,000 for the limited partnership owned restaurant located in Miami, Florida which opened for business on December 27, 2012. As of the end of the first quarter of our fiscal year 2013, we no longer have a new restaurant location in the development stage and will not recognize any additional pre-opening costs. During the first quarter of our fiscal year 2012, we did not have a new restaurant location in the development stage and did not recognize any pre-opening rent. We are recognizing rent expense on a straight line basis over the term of the lease.

During the first quarter of our fiscal year 2013, the limited partnership owned restaurant located in Miami, Florida which opened for business on December 27, 2012, reported losses of $208,000 primarily due to pre-opening costs, thus contributing to a reduction in the operating income for the first quarter of our fiscal year 2013. During the first quarter of our fiscal year 2012, we did not have a new restaurant location in the development stage and did not recognize any pre-opening costs.

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

Trends

During the next twelve months, we expect that our restaurant food and bar sales will increase, but gross profit for restaurant food and bar sales will decrease due to higher food costs, including our cost of poultry, offset by a decrease in our cost of ribs during calendar year 2013. We anticipate that our package liquor store sales and gross profit margin for package liquor store sales will stabilize during our fiscal year 2013. We expect higher food costs and higher overall expenses to adversely affect our net income. We also plan to continue our increased advertising to attract and retain our customers against increased competition. With our recent menu price increases, we plan to limit further menu price increases as long as possible, but continue to face increased competition and expect higher food costs and higher overall expenses, which will adversely affect our net income. We may be required to raise menu prices wherever competitively possible.

We do not have a new restaurant in the development stage, but continue to search for new locations to open restaurants and thereby expand our business. Any new locations will likely be opened using our limited partnership ownership model.

We are not actively searching for locations for the operation of new package liquor stores, but if an appropriate location for a package liquor store becomes available, we will consider it.

Liquidity and Capital Resources

We fund our operations through cash from operations. As of December 29, 2012, we had cash of approximately $5,992,000, a decrease of $1,229,000 from our cash balance of $7,221,000 as of September 29, 2012. The decrease in cash as of December 29, 2012 was primarily due to the payment for renovations to the limited partnership owned restaurant in Miami, Florida which opened for business on December 27, 2012. Management believes that the Company's current cash availability from its cash on hand and the expected cash from operations will be sufficient to fund operations and capital expenditures for at least the next twelve months.

Cash Flows



The following table is a summary of our cash flows for the thirteen weeks of
fiscal years 2013 and 2012.



                                                           ---------Thirteen Weeks Ended--------
                                                        December 29, 2012          December 31, 2011
                                                                       (in Thousands)

Net cash provided by operating activities              $             1,642         $            2,461
Net cash used in investing activities                               (2,047 )                     (481 )
Net cash used in financing activities                                 (824 )                     (641 )

Net Increase (Decrease) in Cash and Cash Equivalents                (1,229 )                    1,339

Cash and Cash Equivalents, Beginning                                 7,221                      4,264

Cash and Cash Equivalents, Ending                      $             5,992         $            5,603

We did not declare or pay a cash dividend on our capital stock in the first quarters of our fiscal years 2013 or 2012. Any future determination to pay cash dividends will be at our Board's discretion and will depend upon our financial condition, operating results, capital requirements and such other factors as our Board deems relevant.

Capital Expenditures

In addition to using cash for our operating expenses, we use cash to fund the development and construction of new restaurants and to fund capitalized property improvements for our existing restaurants. We acquired property and equipment of $4,230,000, (including $1,950,000 of which was financed and $273,000 of deposits recorded in other assets as of September 29, 2012), during the thirteen weeks ended December 29, 2012, including $1,136,000 for renovations to the new limited partnership owned restaurant in Miami, Florida. We acquired property and equipment of $6,603,000, (including $6,100,000 of which was financed and $15,000 of deposits recorded in other assets as of October 1, 2011), during the thirteen weeks ended December 31, 2011, including $36,000 for renovations to one (1) existing Company owned restaurant and one (1) limited partnership owned restaurant.

All of our owned units require periodic refurbishing in order to remain competitive. We anticipate the cost of this refurbishment in our fiscal year 2013 to be approximately $850,000, none of which has been spent through December 29, 2012.

Long Term Debt

As of December 29, 2012, we had long term debt of $15,327,000, as compared to $14,965,000 as of December 31, 2011, and $13,418,000 as of September 29, 2012. As of December 29, 2012, we are in compliance with the covenants of all loans with our lender.

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

To ensure that we have adequate working capital and cash reserves after the purchase of the Two Mortgaged Parcels, subsequent to the end of the first quarter of our fiscal year 2013, we acquired a $500,000 line of credit from a non affiliated third party lender, (the "Line of Credit"). The Line of Credit bears interest at the floating rate of prime plus 1.5%. The entire principal balance and all accrued but unpaid interest under the Line of Credit is due April 30, 2013. We granted the lender a security interest in substantially all of our assets as collateral to secure our repayment obligations under the Line of Credit. There are no amounts outstanding under the Line of Credit.

Financed Insurance Premiums

(i) For the policy year beginning December 30, 2010, our property insurance is a three (3) year policy with our insurance carrier. The three (3) year property insurance premium is $894,000, of which $727,000 is financed through an unaffiliated third party lender. The finance agreement provides that we are obligated to repay the amounts financed, together with interest at the rate of 4.89% per annum, over 30 months, with monthly payments of principal and interest, each in the amount of approximately $25,000. The finance agreement is secured by a security interest in all insurance policies, all unearned premium, return premium, dividend payments and loss payments thereof.

(ii) For the policy year beginning December 30, 2012, our general liability insurance, excluding limited partnerships, is a one (1) year policy with our insurance carriers, including automobile and excess liability coverage. The one . . .