PART I. FINANCIAL INFORMATION

ITEM 1. CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)

FLANIGAN'S ENTERPRISES, INC. AND SUBSIDIARIES

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(in thousands, except per share amounts)

	---------Thirteen Weeks Ended--------
	January 2, 2010	December 27, 2008

REVENUES:
Restaurant food sales	$10,604	$10,169
Restaurant bar sales	2,609	2,404
Package store sales	3,593	3,348
Franchise related revenues	281	262
Ownerπs fee	53	44
Other operating income	24	26
	17,164	16,253

COSTS AND EXPENSES:
Cost of merchandise sold:
Restaurant and lounges	4,582	4,232
Package goods	2,453	2,366
Payroll and related costs	4,919	4,755
Occupancy costs	1,061	1,001
Selling, general and administrative expenses	3,558	3,610
	16,573	15,964
Income from Operations	591	289

OTHER INCOME (EXPENSE):
Interest expense	(105)	(119)
Interest and other income	17	167
	(88)	48

Income before Provision for Income Taxes	503	337

Provision for Income Taxes	(111)	(73)

Net Income before income attributable to noncontrolling interests	392	264

Less: Net income attributable to noncontrolling interests	(104)	(92)

Net Income attributable to stockholders	288	172

See accompanying notes to unaudited condensed consolidated financial statements.

FLANIGAN'S ENTERPRISES, INC. AND SUBSIDIARIES

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(in thousands, except per share amounts)

(Continued)

	---------Thirteen Weeks Ended--------
	January 2, 2010	December 27, 2008

Net Income Per Common Share:
Basic	$0.15	$0.09
Diluted	$0.15	$0.09

Weighted Average Shares and Equivalent Shares Outstanding
Basic	1,862,534	1,876,681
Diluted	1,862,534	1,876,681

See accompanying notes to unaudited condensed consolidated financial statements.

FLANIGAN'S ENTERPRISES, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

JANUARY 2, 2010 (UNAUDITED) AND OCTOBER 3, 2009

(in thousands)

ASSETS

	January 2, 2010	October 3, 2009

CURRENT ASSETS:

Cash and cash equivalents	$5,673	$4,580
Prepaid income taxes	221	332
Due from franchisees	194	270
Other receivables	173	94
Inventories	2,237	1,933
Prepaid expenses	1,317	980
Deferred tax assets	338	338

Total Current Assets	10,153	8,527

Property and Equipment, Net	22,376	21,240

Investment in Limited Partnership	131	140

OTHER ASSETS:

Liquor licenses, net	470	345
Deferred tax assets	830	830
Leasehold interests, net	1,608	1,644
Other	670	753

Total Other Assets	3,578	3,572

Total Assets	$ 36,238	$ 33,479

See accompanying notes to unaudited condensed consolidated financial statements.

FLANIGAN'S ENTERPRISES, INC, AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

JANUARY 2, 2010 (UNAUDITED) AND OCTOBER 3, 2009

(in thousands)

(Continued)

LIABILITIES AND EQUITY

	January 2, 2010	October 3, 2009

CURRENT LIABILITIES:

Accounts payable and accrued expenses	$5,484	$3,756
Due to franchisees	405	372
Current portion of long term debt	820	681
Line of credit	1,586	1,586
Deferred revenues	18	21
Deferred rent	24	24

Total Current Liabilities	8,337	6,440

Long Term Debt, Net of Current Maturities	5,312	4,533

Deferred Rent, Net of Current Portion	200	206

Equity:
Flaniganπs Enterprises, Inc. Stockholdersπ Equity
Common stock, $.10 par value, 5,000,000 shares authorized; 4,197,642 shares issued	420	420
Capital in excess of par value	6,240	6,240
Retained earnings	14,065	13,777
Treasury stock, at cost, 2,335,709 shares at January 2, 2010 and 2,334,709 shares at October 3, 2009	(6,049)	(6,043)
Total Flaniganπs Enterprises, Inc. stockholdersπ equity	14,676	14,394
Noncontrolling interest	7,713	7,906
Total equity	22,389	22,300

Total liabilities and equity	$ 36,238	$ 33,479

See accompanying notes to unaudited condensed consolidated financial statements.

FLANIGAN'S ENTERPRISES, INC. AND SUBSIDIARIES

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE THIRTEEN WEEKS ENDED JANUARY 2, 2010 AND DECEMBER 27, 2008

(in thousands)

	January 2, 2010	December 27, 2008

CASH FLOWS FROM OPERATING ACTIVITIES:

Net income	$392	$264
Adjustments to reconcile net income to net cash and cash equivalents provided by operating activities:
Depreciation and amortization	557	582
Amortization of leasehold interests	54	56
Loss on abandonment of property and equipment	5	19
Deferred rent	(6)	(6)
Loss from unconsolidated limited partnership	6	5
Recognition of deferred revenues	(3)	(3)
Changes in operating assets and liabilities: (increase) decrease in
Due from franchisees	(186)	(73)
Other receivables	(79)	(270)
Prepaid income taxes	111	(47)
Inventories	(285)	(73)
Prepaid expenses	9	31
Other assets	55	(18)
Increase (decrease) in:
Accounts payable and accrued expenses	1,728	468
Due to franchisees	33	(17)
Net cash and cash equivalents provided by operating activities	2,391	918

CASH FLOWS FROM INVESTING ACTIVITIES:

Collection on notes and mortgages receivable	5	4
Purchase of property and equipment	(725)	(307)
Deposit on property and equipment	-	(65)
Proceeds from sale of fixed assets	-	14
Distributions from unconsolidated limited partnership	3	3
Purchase of limited partnership interests	(10)	--
Net cash and cash equivalents used in investing activities	(727)	(351)

See accompanying notes to unaudited condensed consolidated financial statements.

FLANIGAN'S ENTERPRISES, INC. AND SUBSIDIARIES

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE THIRTEEN WEEKS ENDED JANUARY 2, 2010 AND DECEMBER 27, 2008

(in thousands)

(Continued)

	January 2, 2010	December 27, 2008

CASH FLOWS FROM FINANCING ACTIVITIES:

Payment of long term debt	(278)	(45)
Proceeds from line of credit	-	24
Purchase of treasury stock	(6)	(36)
Distributions to limited partnershipπ noncontrolling interests	(287)	(252)

Net cash and cash equivalents used in financing activities	(571)	(309)


Net Increase in Cash and Cash Equivalents	1,093	258

Beginning of Period	4,580	3,244

End of Period	$ 5,673	$ 3,502

Supplemental Disclosure for Cash Flow Information: Cash paid during period for:
Interest	105	119
Income taxes	--	120

Supplemental Disclosure of Non-Cash Investing and Financing Activities:
Financing of insurance contracts	$346	$ --
Purchase deposits transferred to property and equipment	$ 6	$280
Purchase of property in exchange for debt	$850	$ --
Purchase of assets of franchised restaurant	$262	$ --

See accompanying notes to unaudited condensed consolidated financial statements

FLANIGANπS ENTERPRISES, INC. AND SUBSIDIARIES

NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

JANUARY 2, 2010

(1) BASIS OF PRESENTATION:

The accompanying condensed consolidated financial information for the periods ended January 2, 2010 and December 27, 2008 are unaudited. Financial information as of October 3, 2009 has been derived from the audited financial statements of the Company, but does not include all disclosures required by generally accepted accounting principles. In the opinion of management, all adjustments, consisting of normal recurring adjustments, necessary for a fair presentation of the financial information for the periods indicated have been included. For further information regarding the Company's accounting policies, refer to the Consolidated Financial Statements and related notes included in the Company's Annual Report on Form 10-K for the year ended October 3, 2009. Operating results for interim periods are not necessarily indicative of results to be expected for a full year.

These condensed consolidated financial statements include estimates relating to performance based officersπ bonuses. The estimates are reviewed periodically and the effects of any revisions are reflected in the financial statements in the period they are determined to be necessary. Although these estimates are based on managementπs knowledge of current events and actions it may take in the future, they may ultimately differ from actual results.

(2) EARNINGS PER SHARE:

We follow Financial Accounting Standards Board Accounting Standards Codification Section 260 - ≥Earnings per Share≤ (FASB ASC 260). This section provides for the calculation of basic and diluted earnings per share.. The data on Page 3 shows the amounts used in computing earnings per share and the effects on income and the weighted average number of shares of potentially dilutive common stock equivalents. As of January 2, 2010, no stock options were outstanding.

(3) RECLASSIFICATION:

Certain amounts in the fiscal year 2009 financial statements have been reclassified to conform to the fiscal year 2010 presentation. The reclassifications had no effect on consolidated net income.

(4) RECENTLY ADOPTED AND RECENTLY ISSUED ACCOUNTING PRONOUNCEMENTS:

Adopted

In December 2007, the FASB issued changes regarding business combinations. These changes establish principles and requirements for how an acquirer recognizes and measures in its financial statements the identifiable assets acquired, the liabilities assumed, any noncontrolling interest in the acquiree and the goodwill acquired. These changes also establish disclosure requirements to enable the evaluation of the nature and financial effects of the business combination. These changes were adopted by us in the first quarter of our fiscal year 2010 and will have an impact on our accounting for any future business acquisitions.

In December 2007, the FASB issued changes regarding consolidation and non-controlling interests in consolidated financial statements. These changes impacted the accounting and reporting for minority interests, which are now recharacterized as noncontrolling interests (NCI) and classified as a component of equity. This new consolidation method significantly changed the accounting for transactions with minority interest holders. These changes were adopted by us in the first quarter of our fiscal year 2010 and did not have a material impact on our consolidated financial statements.

In March 2008, the FASB issued changes regarding derivatives and hedging to enhance disclosures about an entityπs derivative and hedging activities. These changes were adopted by us in the first quarter of our fiscal year 2010. As we do not currently engage in derivative transactions or hedging activities, these changes do not have a material impact on our consolidated financial statements.

Issued

In June 2009, the FASB issued changes to the accounting for determining whether an entity is a variable interest entity and modifies the methods allowed for determining the primary beneficiary of a variable interest entity. In addition, these changes require ongoing reassessments of whether an enterprise is the primary beneficiary of a variable interest entity and enhanced disclosures related to an enterpriseπs involvement in a variable interest entity. These changes become effective for annual periods beginning after November 15, 2009 and will be adopted by us in our fiscal year 2011. We are currently evaluating the potential impact, if any, of the adoption of these changes on consolidated results of operations and financial condition.

Accounting standards that have been issued or proposed by the FASB or other standards-setting bodies that do not require adoption until a future date are not expected to have a material impact on our unaudited consolidated financial statements upon adoption.

(5) PURCHASE OF FRANCHISED RESTAURANT:

Boca Raton, Florida

During the first quarter of our fiscal year 2010, we purchased from our franchisee, the operating assets of the franchised restaurant located at 45 S. Federal Highway, Boca Raton, Palm Beach County, Florida for an aggregate purchase price of $262,000 and on October 18, 2009 this restaurant began operating as a Company-owned restaurant. The lease at this location expires on April 30, 2011. Our franchisee was unsuccessful in obtaining an extension of the lease term. There can be no assurance that the lease term will be extended or that we will find a suitable replacement location at reasonable rates, if at all. Such uncertainty was factored into the purchase price.

(6) INVESTMENT IN REAL PROPERTY:

Hollywood, Florida

During the first quarter of our fiscal year 2010, we purchased the real property and building where our combination restaurant and package liquor store located at 2505 N. University Drive, Hollywood, Florida, (Store #19), operates. We paid $1,350,000 for this property, $850,000 of which we borrowed from an unaffiliated third party, pursuant to a first mortgage. The mortgage note bears interest at the rate of eight and one-half (8½%) percent per annum, is amortized over fifteen (15) years with equal monthly payments of principal and interest, each in the amount of $8,370, with the entire principal balance and all accrued interest due in eight (8) years.

(7) DEBT

Line of Credit

Under a secured line of credit with a third party financial institution we are able to borrow up to

$2,500,000. The outstanding balance on our line of credit bears interest at BBA LIBOR 1 month rate, plus 2.25%, (2.4834% as January 2, 2010), with monthly payments of interest only and the unpaid principal balance and all accrued interest due in full on January 7, 2010. We granted our lender a security interest in substantially all of our assets and a second mortgage on our corporate offices as collateral to secure our repayment obligations under our credit line. Subsequent to the end of the first quarter of our fiscal year 2010, the maturity date of our line of credit, (January 7, 2010), was extended until April 7, 2010 while we negotiate a modification of our line of credit arrangement with our lender. During the first quarter of our fiscal year 2010, we paid monthly installments of interest payments, with no borrowings or principal payments. As of January 2, 2010, the amount outstanding under the line of credit was $1,586,000, with a remaining availability of $914,000.

Financed Insurance Premiums

(i) For the policy year beginning December 30, 2008, our property insurance is a two (2) year policy with our insurance carrier. The two (2) year property insurance premium is in the amount of $631,000 and is financed in full through an unaffiliated third party lender. The finance agreement earns interest at the rate of 5.15% per annum and is amortized over 20 months, with monthly payments of principal and interest, each in the amount of $30,000. 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, 2009, 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 (1) year general liability insurance premiums, including automobile and excess liability coverage, total in the aggregate $243,000, of which $199,000 is financed through the same unaffiliated third party lender. The finance agreement earns interest at the rate of 2.99% per annum and is amortized over 10 months, with monthly payments of principal and interest, each in the amount of $20,000. The finance agreement is secured by a security interest in all insurance policies, all unearned premium, return premium, dividend payments and loss payments thereof.

(iii) For the policy year beginning December 30, 2009, our general liability insurance for our limited partnerships is a one (1) year policy with our insurance carriers, including excess liability coverage. The one (1) year general liability insurance premiums, including excess liability coverage, total, in the aggregate $205,000, of which $146,000 is financed through the same unaffiliated third party lender. The finance agreement earns interest at the rate of 2.99% per annum and is amortized over 11 months, with monthly payments of principal and interest, each in the amount of $13,000. The finance agreement is secured by a security interest in all insurance policies, all unearned premium, return premium, dividend payments and loss payments thereof.

As of January 2, 2010, the aggregate principal balance from the financing of our property and general liability insurance policies is $346,000.

(8) INCOME TAXES:

We account for our income taxes using FASB ASC 740, ≥Income Taxes≤, which requires among other things, recognition of future tax benefits measured at enacted rates attributable to deductible temporary differences between financial statement and income tax basis of assets and liabilities and to tax net operating loss carryforwards and tax credits to the extent that realization of said tax benefits is more likely than not.

(9) STOCK OPTION PLAN:

We have one stock option plan under which qualified stock options may be granted to our officers and other employees. Under this plan, the exercise price for the qualified stock options must be no less than 100% of the fair market value of the Companyπs Common Stock on the date the options are granted. In general, options granted under our stock option plan expire after a five (5) year period and generally vest no later than one (1) year from the date of grant. As of January 2, 2010, no options to acquire shares were outstanding. Under this plan, options to acquire an aggregate of 45,000 shares are available for grant.

No stock options were granted during the thirteen weeks ended January 2, 2010, nor were stock options granted during the thirteen weeks ended December 27, 2008.

No stock options were exercised during the thirteen weeks ended January 2, 2010, nor were stock options exercised during the thirteen weeks ended December 27, 2008.

There was no stock option activity during the thirteen weeks ended January 2, 2010. During the thirteen weeks ended December 27, 2008, 9,350 options expired unexercised.

(10) ACQUISITIONS:

Purchase of Company Common Stock

Pursuant to a discretionary plan approved by the Board of Directors at its meeting on May 17, 2007, during the thirteen weeks ended January 2, 2010, we purchased 1,000 shares of our common stock from the Joseph G. Flanigan Charitable Trust for an aggregate purchase price of $6,000. During the thirteen weeks ended December 27, 2008, we purchased 9,000 shares of our common stock on the open market for an aggregate purchase price of $36,000.

(11) COMMITMENTS AND CONTINGENCIES:

Guarantees

We guarantee various leases for franchisees and locations sold in prior years. Remaining rental commitments required under these leases are approximately $1,520,000. In the event of a default under any of these agreements, we will have the right to repossess the premises and operate the business to recover amounts paid under the guarantee either by liquidating assets or operating the business.

We account for such lease guarantees in accordance with ASC Topic 460 (formerly FASB Interpretation No. 45, ≥Guarantorπs Accounting and Disclosure Requirements for Guarantees, including Indirect Guarantees of Indebtedness of Others,≤ or FIN 45). Under ASC Topic 460, we would be required to recognize the fair value of guarantees issued or modified after December 31, 2002, for non-contingent guarantee obligations, and also a liability for contingent guarantee obligations based on the probability that the guaranteed party will not perform under the contractual terms of the guaranty agreement.

We do not believe it is probable that we will be required to perform under the remaining lease guarantees and therefore, no liability has been accrued in our condensed consolidated financial statements.

Litigation

From time to time, we are a defendant in litigation arising in the ordinary course of our business, including claims resulting from ≥slip and fall≤ accidents, claims under federal and state laws governing access to public accommodations, employment-related claims and claims from guests alleging illness, injury or other food quality, health or operational concerns. To date, none of this litigation, some of which is covered by insurance, has had a material effect on us.

We own the building where our corporate offices are located. On April 16, 2001, we filed suit against the owner of the adjacent shopping center to determine our right to non-exclusive parking in the shopping center. During fiscal year 2007, the appellate court affirmed and upon re-hearing, again affirmed the granting of a summary judgment in favor of the shopping center. The seller from whom we purchased the building was named as a defendant in the lawsuit by the owner of the adjacent shopping center and we filed and served a cross-complaint against the seller. During the fourth quarter of our fiscal year 2009, the seller was awarded reimbursement of its attorneysπ fees and costs in the amount of $109,000 and we filed our motion for re-consideration of a part of such award. Subsequent to the end of the first quarter of our fiscal year 2010, the trial court denied our motion for re-consideration of a portion of the award. As of January 2, 2010, we have not paid the award of attorneysπ fees and costs, although we have accrued the same. During the second quarter of our fiscal year 2009, the seller filed suit against us for malicious prosecution. We deny the allegations and are vigorously defending against the allegations.

During fiscal year 2007, we and the limited partnership which owns the restaurant in Pinecrest, Florida filed suit against the limited partnershipπs landlord. We are the sole general partner and a 40% limited partner in this limited partnership. We were seeking to recover the cost of structural repairs to the business premises we paid, as we believed that these structural repairs were the landlordπs responsibility under the lease. The lawsuit, in addition to attempting to recover the amounts expended by us for structural repairs also attempted to recover the rent paid by the limited partnership while the repairs were occurring. The claim also included a request by the limited partnership for the court to determine if the limited partnership had the exclusive right to the use of the pylon sign in front of the business premises. The landlord denied liability for structural repairs to the business premises, denied any obligation to reimburse the limited partnership for any rent paid while structural repairs occurred and denied the limited partnershipπs right to use the pylon sign. Subsequent to the end of the first quarter of our fiscal year 2010, we settled the lawsuit without recovering the cost of any structural repairs to the business premises, nor any rent paid while the structural repairs were occurring. The limited partnership was granted the right, for a monthly fee, to occupy the top space on each side of the two pylon signs constructed by the landlord for the shopping center throughout the term of the lease, including renewal options if exercised by the limited partnership. Each party is responsible for its own attorneysπ fees and cost incurred in the lawsuit. While the settlement was announced in court, it has not yet been reduced to writing.

(12) SUBSEQUENT EVENTS:

Subsequent events have been evaluated through February 16, 2010, the date these condensed consolidated financial statements were issued. No events required disclosure.

(13) BUSINESS SEGMENTS:

We operate principally in two reportable segments – package stores and restaurants. The operation of package stores consists of retail liquor sales and related items. Information concerning the revenues and operating income for the thirteen weeks ended January 2, 2010 and December 27, 2008, and identifiable assets for the two reportable segments in which we operate, are shown in the following table. Operating income is total revenue less cost of merchandise sold and operating expenses relative to each segment. In computing operating income, none of the following items have been included: interest expense, other non-operating income and expenses and income taxes. Identifiable assets by segment are those assets that are used in our operations in each segment. Corporate assets are principally cash and real property, improvements, furniture, equipment and vehicles used at our corporate headquarters. We do not have any operations outside of the United States and transactions between restaurants and package liquor stores are not material.

(in thousands)

	Thirteen Weeks Ending January 2, 2010	Thirteen Weeks Ending December 27, 2008
Operating Revenues:
Restaurants	$13,213	$12,573
Package stores	3,593	3,348
Other revenues	358	332
Total operating revenues	$17,164	$16,253

Operating Income Reconciled to Income Before Income Taxes and Net Income Attributable to Noncontrolling Interests
Restaurants	$764	$586
Package stores	257	107
	1,021	693
Corporate expenses, net of other revenues	(430)	(404)
Operating income	591	289
Other income (expense)	(88)	48
Income Before Income Taxes and Net Income Attributable to Noncontrolling Interests	$503	$337

Depreciation and Amortization:
Restaurants	$477	$483
Package stores	52	71
	529	554
Corporate	82	84
Total Depreciation and Amortization	$611	$638

Capital Expenditures:
Restaurants	$1,384	$344
Package stores	285	116
	1,669	460
Corporate	6	127
Total Capital Expenditures	$1,675	$587

	January 2,	October 3,
	2010	2009
Identifiable Assets:
Restaurants	$21,058	$19,587
Package store	3,851	3,396
	24,909	22,983
Corporate	11,329	10,496
Consolidated Totals	$36,238	$33,479

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

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 ≥Managementπs Discussion and Analysis of Financial Condition and Results of Operations,≤ in the Annual Report on Form 10-K for the Companyπs fiscal year ended October 3, 2009 and in this Quarterly Report on Form 10-Q. The Company undertakes 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 January 2, 2010, 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 January 2, 2010 and as compared to December 27, 2008 and October 3, 2009. With the exception of ≥The Whaleπs Rib≤, a restaurant we operate but do not own, all of the restaurants operate under our service mark ≥Flaniganπs Seafood Bar and Grill≤ and all of the package liquor stores operate under our service mark ≥Big Daddyπs Liquors≤.

Types of Units	January 2, 2010	October 3, 2009	December 27, 2008
Company Owned: Combination package and restaurant	4	4	4
Restaurant only	4	3	3	(1)
Package store only	5	5	5

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

Company Owned Club:	1	1	1

Total Company Owned/Operated Units	25	24	24
Franchised Units	5	6	6	(1)(2)

Notes:

(1) During the first quarter of our 2009 fiscal year end, we purchased from a franchisee the operating restaurant assets of the franchised restaurant located in Boca Raton, Florida and accordingly, on October 18, 2009 the restaurant converted from a franchised 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 ≥Flaniganπs Seafood Bar and Grill≤ and ≥Big Daddyπs 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 investorsπ 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 January 2, 2010, 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 ≥Flaniganπs Seafood Bar and Grill≤.

RESULTS OF OPERATIONS

	-----------------------Thirteen Weeks Ended-----------------------
	January 2, 2010		December 27, 2008
	Amount (In thousands)	Percent	Amount (In thousands)	Percent
Restaurant food sales	$ 10,604	63.10	$ 10,169	63.87
Restaurant bar sales	2,609	15.52	2,404	15.10
Package store sales	3,593	21.38	3,348	21.03

Total Sales	$ 16,806	100.00	$ 15,921	100.00

Franchise related revenues	281		262
Ownerπs fee	53		44
Other operating income	24		26

Total Revenue	$ 17,164		$ 16,253

Comparison of Thirteen Weeks Ended January 2, 2010 and December 27, 2008.

Revenues. Total revenue for the thirteen weeks ended January 2, 2010 increased $911,000 or 5.61% to $17,164,000 from $16,253,000 for the thirteen weeks ended December 27, 2008. This increase resulted from sales from our formerly franchised Boca Raton, Florida restaurant ($630,000), which opened for business as a Company owned restaurant on October 18, 2009, offset by the decrease in franchise royalties and bookkeeping fees which otherwise would have been paid by the former franchisee, ($25,000), and the increase in same store package liquor sales ($205,000) primarily due to New Yearπs Eve falling in the first quarter of our fiscal year 2010 as opposed to the second quarter of our fiscal year 2009, without which total revenue for the thirteen weeks ended January 2, 2010 would have increased $101,000 or 0.62% to $16,354,000 from $16,253,000 for the thirteen weeks ended December 27, 2008.

Restaurant Food Sales. Restaurant revenue generated from the sale of food at restaurants totaled $10,604,000 for the thirteen weeks ended January 2, 2010 as compared to $10,169,000 for the thirteen weeks ended December 27, 2008. The increase in restaurant food sales resulted from sales from the Boca Raton, Florida restaurant, which generated $481,000 of revenue from the sale of food during the thirteen weeks ended January 2, 2010. Without giving effect to the revenue generated from the Boca Raton, Florida restaurant ($481,000) from the sale of food for the thirteen weeks ended January 2, 2010, restaurant revenue generated from the sale of food during the thirteen weeks ended January 2, 2010, would have decreased $46,000 or 0.45% to $10,123,000 from $10,169,000 for the thirteen weeks ended December 27, 2008. The decrease in restaurant food sales is primarily a result of the current financial crisis which has reduced customers in some of our restaurants, increased sales of our $4.99 lunch specials and in general, changed menu items purchased by our customers to lesser priced menu items. Comparable weekly restaurant food sales (for restaurants open for all of the first quarter of our fiscal year 2010 and the first quarter of our fiscal year 2009, which consists of seven restaurants owned by us and nine restaurants owned by affiliated limited partnerships) was $779,000 and $782,000 for the thirteen weeks ended January 2, 2010 and December 27, 2008, respectively, a decrease of 0.38%. Comparable weekly restaurant food sales for Company owned restaurants only was $295,000 and $292,000 for the first quarter of our fiscal year 2010 and the first quarter of our fiscal year 2009, respectively, an increase of 1.03%. Comparable weekly restaurant food sales for affiliated limited partnership owned restaurants only was $483,000 and $490,000 for the first quarter of our fiscal year 2010 and the first quarter of our fiscal year 2009, respectively, a decrease of 1.43%. We anticipate that restaurant food sales will continue to increase throughout the balance of our fiscal year 2010 due to, among other things, the operation of our Boca Raton, Florida restaurant, offset by a decline in same store restaurant food sales.

Restaurant Bar Sales. Restaurant revenue generated from the sale of alcoholic beverages at restaurants (bar sales) totaled $2,609,000 for the thirteen weeks ended January 2, 2010 as compared to $2,404,000 for the thirteen weeks ended December 27, 2008. The increase in restaurant bar sales is due to sales from the Boca Raton, Florida restaurant, which generated $149,000 of revenue from bar sales during the thirteen weeks ended January 2, 2010. Without giving effect to the revenue from bar sales generated from the Boca Raton, Florida restaurant ($149,000) for the thirteen weeks ended January 2, 2010, restaurant revenue generated from bar sales during the thirteen weeks ended January 2, 2010, would have increased $56,000 or 2.33% to $2,460,000 from $2,404,000 for the thirteen weeks ended December 27, 2008. Comparable weekly restaurant bar sales (for restaurants open for all of the first quarter of our fiscal year 2010 and the first quarter of our fiscal year 2009, which consists of seven restaurants owned by us and nine restaurants owned by affiliated limited partnerships) was $189,000 for the thirteen weeks ended January 2, 2010 and $185,000 for the thirteen weeks ended December 27, 2008, an increase of 2.16%. Comparable weekly restaurant bar sales for Company owned restaurants only was $73,000 and $70,000 for the first quarter of our fiscal year 2010 and the first quarter of our fiscal year 2009, respectively, an increase of 4.29%. Comparable weekly restaurant bar sales for affiliated limited partnership owned restaurants only was $117,000 and $115,000 for the first quarter of our fiscal year 2010 and the first quarter of our fiscal year 2009, respectively, an increase of 1.74%. We anticipate that restaurant bar sales will continue to increase throughout the balance of our fiscal year 2010 primarily because of the restaurant bar sales from our Boca Raton, Florida restaurant, as well as an increase in same store restaurant bar sales becau


ý		QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934


o		TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934