ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D)
OF THE SECURITIES EXCHANGE ACT OF 1934

Securities registered pursuant to Section 12(b) of the Act:

Securities registered pursuant to Section 12(g) of the Act:

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months, and (2) has been subject to such filing requirements for the past 90 days. Yes X No_____

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendments to this Form 10-K. ( )

The aggregate market value of the voting common stock held by non-affiliates of the registrant as of March 6, 2001, was $6,123,556. The registrant has assumed that its directors and officers are the only affiliates, for purposes of this calculation. As of March 6, 2001, the registrant had 2,947,918 shares of common stock outstanding.

Eateries, Inc. (the "Company") and its subsidiaries own, operate and franchise restaurants under the names: Garfield's Restaurant & Pub ("Garfield's"), Garcia's Mexican Restaurants ("Garcia's") and Pepperoni Grill. As of December 31, 2000, the Company owned 69 (50 Garfield's, 17 Garcia's and 2 Pepperoni Grills) and franchised or liscensed 8 (7 Garfield's and 1 Garcia's) restaurants in 27 states.

The Company opened its first restaurant, a Garfield's, in 1984 in Oklahoma City, Oklahoma. In 1986, the Company completed an initial public offering of its common stock. Prior to 1997, Garfield's was the Company's primary restaurant concept. Garfield's is a family-oriented concept, providing an upscale alternative to traditional fast food. Garfield's are designed to appeal to a divergent customer base that grew up on fast food, but now prefers a more sophisticated menu, the availability of alcoholic beverages, a comfortable ambiance, speed, value and convenience. The concept features a varied selection of moderately priced, high quality food and beverage items with table service dining.

In January 1995, the Company acquired substantially all the assets of the "Pepperoni Grill" restaurant located in Oklahoma City, Oklahoma, along with all rights to the use of the trademarks associated with the concept. Pepperoni Grill features a variety of Northern Italian entrees with special emphasis on brick-oven baked pizza .

In November 1997, the Company, through its wholly owned subsidiary, Fiesta Restaurants, Inc., acquired 17 Mexican restaurants under the names: Garcia's (10), Casa Lupita (5) and Carlos Murphy's (2), along with the trademarks associated with these concepts. In February 1998, the Company sold three of the Casa Lupita locations to Chevy's, Inc. ("Chevy's"). In connection with this transaction, the Company entered into an agreement to sell another Casa Lupita location to Chevy's. This second transaction closed in May 1998. The decision to sell these restaurants was the result of a plan to consolidate operations and focus on the expansion of Garcia's. During 1998, the Company closed its one remaining Casa Lupita and converted one of its Carlos Murphy's to a Garcia's.

In 1998, the Company constructed and opened two Garfield's in major regional malls and one Garcia's concession operation at the Bank One Ball Park in Phoenix, Arizona. Additionally, the Company acquired three formerly franchised Garfield's in July 1998. The Company's future expansion of its existing concepts will be primarily focused on Garfield's and Garcia's. In 1999 the Company constructed and opened four Garfield's, one Garcia's and acquired two Bellini's and one Tommy's. In 2000 the Company constructed and opened one Garfield's and three Garcia's, converted one Carlos Murphy's to a Garcia's and sold the two Bellini's and one Tommy's it acquired in 1999. The Company expects to add one additional Garfield's and two additional Garcia's restaurants in 2001. Management expects its primary expansion emphasis will begin to change to franchised rather than Company-owned restaurants. The Company may also pursue other acquisitions to further enhance shareholder value.

The Company's principal offices are located at 1220 South Santa Fe Avenue, Edmond, Oklahoma 73003. Its telephone number is (405) 705-5000.

Each Garfield's restaurant offers a diverse menu of freshly prepared traditional and innovative entrees, including steaks, seafood, chicken, hamburgers, Mexican, Italian, and sandwiches along with a variety of appetizers, salads and desserts. The Company revises menu offerings semi-annually to improve sales. The Company's senior management actively participates in the search for new menu items. Garfield's also offers a separate lower-priced children's menu.

Historically the majority of Garfield's restaurants have been constructed in regional malls in accordance with uniform design specifications and are generally similar in appearance and interior decor. Over the last two years the Company has begun to develop freestanding locations as well. Both the freestanding and mall restaurants are furnished and styled in a colorful motif, highlighting the travels of the Company's namesake, "Casey Garfield", including exhibits, photographs, souvenirs and other travel-related furnishings. Tables are covered with paper and customers are encouraged to doodle with crayons provided at each table. During 2000 the Company and a Franchisee each opened one new freestanding Garfield's.

The size and shape of Garfield's restaurants vary depending upon the location but typically average 4,500 to 5,500 square feet, and seat approximately 200 guests.

Depending on location, most restaurants are open from 11:00 a.m. until 11:00 p.m. on weekdays and Sunday, and later on Friday and Saturday.

Historically, the cost of opening a new Garfield's restaurant has varied widely due to the different restaurant configuration and sizes, regional construction cost levels, and certain other factors. The Company currently leases restaurant premises in existing freestanding facilities as well as in major regional malls and builds-out the leased space to meet the Garfield's concept specifications of style and decor. Gross construction costs for a typical Garfield's opened in 2000 and 1999 were approximately $920,000 and $802,000, respectively. However, landlord's typically provide substantial tenant construction allowances (approximately $450,000 in 2000 and $400,000 in 1999). After tenant allowances the Company's net investment was approximately $470,000 and $402,000 per unit for 2000 and 1999, respectively.

All Garfield's restaurants are located in regional shopping malls and freestanding buildings, primarily in the eastern half of the United States. The Company considers the location of a restaurant to be critical to its long-term success and has devoted significant effort to the investigation and evaluation of potential mall sites. The mall site selection process focuses on historical sales per foot by mall tenants and proximity to entertainment centers within and near the mall as well as accessibility to major traffic arteries. The Company also reviews potential competition in the area and utilizes site selection models to evaluate each potential location based upon a multitude of different criteria. Senior management inspects and approves each restaurant site. It takes approximately 18 weeks to complete construction and open a Garfield's.

The following table sets forth the locations of the existing Garfield's as of December 31, 2000.

In November 1997, the Company, through its wholly-owned subsidiary, Fiesta Restaurants, Inc. ("Fiesta"), acquired from Famous Restaurants, Inc. and its subsidiaries ("Famous"), substantially all of the assets comprising 17 Mexican restaurants and the corporate headquarters of Famous (the "Famous Acquisition"). The acquired restaurants operated under the names: Garcia's (ten), Casa Lupita (five) and Carlos Murphy's (two). The purchase price for the assets was approximately $10,859,000, of which $8,631,415 was paid in cash at closing and the balance represented estimated liabilities of Famous assumed by the Company and transaction costs. The cash portion of the purchase price was financed through a five-year term loan with a bank. As of December 31, 2000 the Company has 17 Garcia's and no longer has any restaurants using the Casa Lupita or Carlos Murphy's name. See "Management's Discussion and Analysis of Financial Condition and Results of Operations - Liquidity and Capital Resources" for a complete description of these loans.

Each Garcia's restaurant offers a traditional menu of high quality Mexican food. Alcoholic beverages are also offered in each location. Menus are generally standardized, although there are slight variations to accommodate regional taste preferences.

Garcia's restaurants have a distinctive southwestern design and decor. The existing freestanding restaurants generally measure 5,000 to 10,000 square feet and seat approximately 200 to 250 guests in the main dining area with an additional 75 to 125 seats in the bar area. However in 2000 the Company built two new Garcia's in malls and has one other under construction. These mall-based locations are between 4,800 and 6,200 square feet.

The following table sets forth the locations of the existing Garcia's as of December 31, 2000.

The Company purchased the original Pepperoni Grill restaurant, located in Oklahoma City, Oklahoma, in January 1995. Its menu features a variety of Northern Italian entrees with special emphasis on brick-oven baked pizza. The warm European bistro atmosphere is accented with an exhibition kitchen, light foods and booths covered in tapestry. All menu items are prepared on the premises with the entire entree presentation being performed within view of the guest, making the kitchen part of the restaurant's atmosphere. An in-store bakery makes all the breads and daily desserts. Pepperoni Grill's signature bakery item is a Tuscan Parmesan black pepper bread that is served with all entrees along with traditional olive oil and balsamic vinegar. Over 60 different wine selections are offered along with 25 wines available by the glass. In 1996 management opened a freestanding Pepperoni Grill in Edmond, Oklahoma, to capitalize on its strong reputation in the Oklahoma City market.

In May 1999, the Company through its wholly owned subsidiary, Roma Foods, Inc., acquired substantially all of the assets comprising two Bellini's Restaurants and one Tommy's Italian-American Grill. Both Bellini's and Tommy's feature Italian cuisine prepared fresh daily and were well-known, well-established restaurants in the Oklahoma City area. In December 2000, the founder of Bellini's and Tommy's, Tommy Byrd, purchased the restaurants back from the Company. The sale was primarily due to the Company's new focus on franchising Garfield's and the decision not to currently grow the Bellini's concept.

Responsibility for the Company's restaurant operations is organized geographically with restaurant general managers reporting to area directors of operations who, in turn, report to the respective Regional Directors of Operations for Garfield's, Garcia's and Pepperoni Grill. A typical restaurant has a general manager, two to four assistant managers and average 52 employees, approximately 72% of who are part-time.

Regional Directors of Operations, Area Directors of Operations as well as restaurant general managers and associate managers are eligible for cash and stock bonuses, travel incentives, professional training and attendance at industry conferences. Receipt of these incentives is based on reaching restaurant performance objectives. The Company's hourly employees are eligible for performance-based awards for superior service to the Company and its guests. Employee awards can include travel incentives, gift certificates, plaques and Company memorabilia. Most employees other than restaurant management and corporate management are compensated on an hourly basis.

The Company has uniform operating standards and specifications relating to the quality, preparation and selection of menu items, maintenance and cleanliness of the premises, and employee conduct. Managers are responsible for assuring compliance with Company operating procedures. Executive and supervisory personnel routinely visit each restaurant to evaluate adherence to quality standards and employee performance.

The Company has instituted "The Best in Town" program which places a great deal of emphasis on the proper training of its hourly employees and general and associate managers. To insure our restaurants are "The Best in Town", all training is tailored to ensure our guests receive the best experience we can offer in our restaurants. This commitment to quality food and service demands both traditional and creative training techniques. The Company employs a full time corporate training staff to oversee all areas of employee education. The outline for the training programs is based on the individual expertise of the trainee and typically lasts about two weeks for hourly employees and up to eight weeks for managers. Managers are certified in a number of skills in restaurant management, including technical proficiency and job functions, management techniques and profit and loss responsibilities. The Company sponsors further management training and certification in food safety using the ServeSafe program as developed by the National Restaurant Association Educational Foundation. Skills are taught primarily in the restaurant along with classroom training and assigned projects. Management training is performed in several geographically dispersed restaurants and includes further training at our corporate offices. The Company provides standard manuals regarding training and operations, products and equipment and local marketing programs.

The Company maintains a no tolerance policy on harassment or discrimination of any kind. The managers and employees of the Company are required to acknowledge and obey these policies at all times. The Company maintains the right to terminate any employee for violation of its harassment or discrimination policies as well as any conduct that is inappropriate, at any time.

The Company employs a purchasing director to oversee the relations and negotiations with manufacturers and regional distributors for most food and beverage products and to ensure uniform quality, competitive costs and adequate supplies of proprietary products. The Company and its franchisees purchase substantially all food and beverage products from several national and regional suppliers. The Company has not experienced any significant delays in receiving food and beverage inventories or restaurant supplies.

Marketing at Eateries Inc. is focused on enhancing the guest experience in all of our concepts. We develop marketing plans to improve guest satisfaction in the areas of food, value and service. We offer a broad range of products our guests' desire while striving to deliver the food in a fast, friendly manner. Utilizing multiple mediums such as television, local cable television, radio, outdoor and print advertising, we are able to deliver our messages to the guests in the most efficient way. Our restaurant managers are also encouraged to be involved in the community and to use proven local store marketing programs to drive their individual business. In markets where the Company shares a trade area with a franchisee, advertising cooperatives are utilized to maximize the Company's restaurant's visibility. Franchisees of Garfield's units are generally required to expend up to 4% of sales on restaurant related marketing efforts. In addition, all Company and franchise restaurants contribute 1/2% of their sales to a marketing fund used to produce advertising, menu development and point-of-sale material to promote increased sales. The Company engages in a variety of local market promotional activities such as contributing goods, time and money to charitable, civic and educational programs, in order to increase public awareness of the Company's restaurants.

Financial controls are implemented through the use of computerized point of sales and management information systems. Sales reports and food, beverage and labor cost data are prepared and reviewed weekly for operational control. The Company has implemented new systems to streamline the flow of sales, payroll and accounts payable information and has continued to enhance these systems in 2000 and will continue in 2001.

The Company in a concerted effort to enhance its accounting and information systems hired Jaroslav Lajos as Director of Management Information Systems in 1999. Mr. Lajos has completed his class work at Oklahoma State University related to a PhD. in computer science, and is in the process of writing his thesis. Currently Mr. Lajos is creating designing, writing and implementing several new computer software programs designed to advance the Company with MIS technology in the future. The Company believes that some of the computer programs in development may be marketable.

The Company expects that it's primary expansion emphasis will gradually shift from constructing new Company-owned restaurants to franchise development.

The Company customarily opens Garfield's restaurants in regional malls principally throughout the eastern half of the United States. This expansion strategy is designed to capitalize on the growing trend to include and expand dining and entertainment facilities in regional malls. Management believes this mall-based expansion strategy for Garfield's reduces the risks associated with locating restaurants in new markets because of the availability of historical trends regarding mall sales and customer traffic. Further, restaurant construction within a mall typically requires a lower investment than construction of a freestanding restaurant. The Company expects to develop a new prototype freestanding building and explore the possibility of converting freestanding locations.

Management believes there are sufficient additional mall and freestanding locations for its restaurant concepts, particularly with the large number of existing closed or failing competitor's buildings, along with existing malls expanding and remodeling with a view toward becoming entertainment and dining centers. The Company maintains relationships with several leading mall operators who provide the Company with an ongoing supply of potential mall locations for evaluation.

The Company customarily opens Garcia's in freestanding and regional mall sites primarily in its core operating area in and around Phoenix, Arizona and Oklahoma City, Oklahoma. This strategy capitalizes on the strong reputation of the Garcia's concept in the Phoenix area and will allow the Company to expand closer to its Oklahoma base of operation.

In 2000 the Company opened two new Garcia's in Oklahoma, in addition to converting one Carlos Murhpy's in Tuscon, Arizona to a Garcia's. The Company also opened one new Garfield's in Maryland and relocated one Garfield's in Shawnee, Oklahoma to an existing freestanding building.

Subsequent to December 31, 2000, the Company has opened a third new Garcia's in Oklahoma City, Oklahoma, and is currently developing a new Garfield's in Butler, Pennsylvania and a Garcia's in Joplin, Missouri. The Company doesn't expect to develop or open any other company owned restaurants in 2001. In addition, management is actively seeking possible merger or acquisition candidates that it believes will add value to the Company. The Company also expects approximately 3 franchised Garfield's will be opened in 2001.

As of December 31, 2000, seven franchised Garfield's were operating pursuant to agreements granted by the Company. The typical Garfield's franchise agreement provides for (i) the payment of an initial franchise fee of $30,000 and a monthly continuing royalty fee expressed as a percentage (typically 3.0% or 4%) of gross sales with a minimum fee of $2,500 to $3,000 per month; (ii) the payment of 1/2% of gross sales to the Garfield's Creative Marketing Fund; (iii) quality control and operational standards; (iv) development obligations for the opening of new restaurants under the franchise; and (v) the creation and use of advertising. The franchise term is for ten years with five-year renewals. The grant of a franchise does not ensure that a restaurant will be opened. Under the Company's typical franchise agreement, the failure to open restaurants can cause a termination of the franchise. Although the Company largely relies upon standardized agreements for its franchises, it will continue to adjust its agreements as circumstances warrant.

As of December 31, 2000, there was one licensed Garcia's restaurants. The license agreement provides for the monthly payment of continuing royalties of 1.5% of gross sales.

In 1999, the Company hired Laurence Bader as Vice President of Franchising. Mr. Bader formerly held a similar position at KFC and more recently at Applebee's. The Company finalized a new franchise program and updated franchise and development agreements for Garfield's Restaurant and Pubs. The uniform franchise offering circular (called the UFOC that contains the franchise and development agreement) was registered nationally in 2000, and since registration the Company has aggressively pursued franchise development.

In 2000 the Company began its aggressive marketing of franchises under the UFOC registered during the year. The Company signed commitments for twenty-five franchise restaurants in 2000, and one new freestanding franchise restaurant was opened in October of the year. The twenty-five franchise restaurants committed to during the year include twelve in Florida, ten in Nebraska and three in Indiana.

Subsequent to December 31, 2000, and through the date of this report, the Company signed an additional ten restaurant franchise development agreement related to the Las Vegas, Nevada market.

The following table sets forth fees and royalties earned by the Company from franchisees for the years indicated:

All franchisees are required to operate their restaurants in compliance with the Company's methods, standards and specifications regarding such matters as menu items, ingredients, materials, supplies, services, fixtures, furnishings, decor and signs, although the franchisee has the discretion to determine the menu prices to be charged. However, as a practical matter, all franchisees utilize the Company's standardized menu. In addition, all franchisees are required to purchase all food, ingredients, supplies and materials from suppliers approved by the Company. These standards are addressed in the UFOC agreement and the Company enforces the standards required of franchisees. Such enforcement may result in the closure or non-renewal of certain franchise units, but any such closings or non-renewals are not expected to have a material adverse effect upon the Company's results of operations or financial position.

In January 2001, the Company purchased 67,500 shares of its common stock in a private transaction for an aggregate purchase price of approximately $143,000.

The restaurant industry is intensely competitive with respect to price, service, location, food type and quality. There are many well-established competitors with substantially greater financial and other resources than the Company. Some of the Company's competitors have been in existence for substantially longer periods than the Company and may be better established in the market area than the Company's restaurants. The restaurant business is often affected by changes in consumer taste, national, regional or local economic conditions, demographic trends, traffic patterns and type, number and location of competing restaurants. In addition, factors such as inflation, increased food, labor and benefit costs, and the lack of experienced management and hourly employees may adversely affect the restaurant industry in general and the Company's restaurants in particular.

"GARFIELD'S", "CASEY GARFIELD'S", "PEPPERONI GRILL", "GARCIA'S", "CASA LUPITA" and "CARLOS MURPHY'S", AND "BELLINI'S RISTORANTE" are Company service marks registered with the United States Patent and Trademark Office. The Company pursues any infringement of its marks within the United States and considers its marks to be crucial to the success of its operations. The "Bellini's Ristorante" pertains to the use of the name and mark outside of Texas and Oklahoma. The Company has no locations open at this time using "Casa Lupita", "Carlos Murphy's" or "Bellini's Ristorante" trade names.

As of December 31, 2000, the Company employed 3,786 individuals, of whom 276 were management or administrative personnel (including 222 who were restaurant managers or trainees) and 3,510 were employed in non-management restaurant positions. As of this date, the Company employed 266 persons on a salaried basis and 3,520 persons on an hourly basis. Each restaurant employs an average of 52 people.

Most employees, other than restaurant management and corporate management personnel, are paid on an hourly basis. The Company believes that it provides working conditions and wages that compare favorably with those of its competition. As the Company expands, it will need to hire additional management and its continued success will depend in large part on its ability to attract and retain good management employees. The Company's employees are not covered by a collective bargaining agreement.

With 52 of the 69 Company-owned restaurants located in regional malls as of December 31, 2000, the resulting higher pedestrian traffic during the Thanksgiving to New Year holiday season has caused the Company to experience a substantial increase in food and beverage sales and profits in the Company's fourth and first fiscal quarters. See "Management's Discussion and Analysis of Financial Condition and Results of Operations - Impact of Seasonality."

The Company's restaurants are subject to licensing and regulation by alcoholic beverage control, health, sanitation, safety and fire agencies in each state and/or municipality in which restaurants are located. The Company has not experienced material difficulties in these areas, however, regulatory difficulties or failures in obtaining the required licenses or approvals could delay or prevent the opening of a new restaurant and affect profitability.

Approximately 13% of the Company's food and beverage revenues in 2000 were attributable to the sale of alcoholic beverages. Alcoholic beverage control regulations require each of the Company's restaurants to apply to a state authority and, in certain locations, county or municipal authorities, for a license or permit to sell alcoholic beverages on the premises and to provide service for extended hours and on Sundays. Typically, such licenses or permits must be renewed annually and may be revoked or suspended for cause at any time. Alcoholic beverage control regulations relate to numerous aspects of the daily operations of the Company's restaurants, including minimum age of patron and employees, hours of operation, advertising, wholesale purchasing, inventory control and handling, storage and dispensing of alcoholic beverages.

In certain states the Company may be subject to "dram-shop" statutes, which generally provide a person injured by an intoxicated patron the right to recover damages from an establishment that wrongfully served alcoholic beverages to the intoxicated person. The Company carries liquor liability coverage as part of its existing comprehensive general liability insurance.

The Company's restaurant operations are also subject to federal and state laws governing such matters as minimum wages, working conditions, overtime and tip credits. Significant numbers of the Company's food service and preparation personnel are paid at rates equal to or based upon the federal minimum wage and, accordingly, further increases in the minimum wage could increase the Company's labor costs. The enactment of future legislation increasing employee benefits, such as mandated health insurance, could also significantly adversely affect the industry and the Company, as could future increases in workers' compensation rates.

The Company is subject to Federal Trade Commission ("FTC") regulation and state laws that regulate the offer and sale of franchises. The Company may also become subject to state laws that regulate substantive aspects of the franchisers/franchisee relationship. The FTC requires the Company to furnish prospective franchisees a franchise offering circular containing prescribed information. A number of states in which the Company might consider franchising also regulate the offer and sale of franchises and require registration of the franchise offering with state authorities. The Company believes that it is in material compliance with such laws.

The Americans with Disabilities Act ("ADA") prohibits discrimination in employment and public accommodations on the basis of disability. While the Company believes it is in substantial compliance with the ADA regulations, the Company could be required to expend funds to modify its restaurants to provide service to, or make reasonable accommodations for the employment of disabled persons.

All of the Company's facilities are occupied under leases. The majority of the Company's restaurant leases provide for the payment of base rents plus real estate taxes, insurance and other expenses and for the payment of a percentage of the Company's sales in excess of certain sales levels. These leases typically provide for escalating rentals in future years and have initial terms expiring as follows:

On September 8, 1998, Kelly R. Broussard, a former employee of the Company, filed a charge of discrimination with the Louisiana Human Rights Commission alleging sexual harassment and constructive discharge against the Company. Her position statement and request for information were submitted to the Equal Employment Opportunity Commission on November 12, 1998. Ms. Broussard's attorney made an offer of settlement to the Company in the amount of $575,000, which the Company rejected. Subsequently, Ms. Broussard filed a lawsuit for discrimination against the Company. In February 2001 this matter was settled for $10,000 by the Company.

In 1999 the Company filed suit against one of its food purveyors in federal court. This suit stems from the receipt of contaminated food product that the Company's management believe caused a food borne illness outbreak at the Company's Garcia's Mexican restaurants in the Phoenix, Arizona area in July of 1998. The suit proceeded through 2000 and continues to be litigated. The amount of financial recovery as a result of this litigation is undetermined at this time.

The Company has other lawsuits pending but does not believe the outcome of the lawsuits, individually or collectively will materially impair the Company's financial and operational condition.

No matter was submitted to a vote of the Company's security holders during its fourth fiscal quarter of 2000.

The Company's common stock has been quoted on the NASDAQ National Market System under the symbol "EATS" since May 1994. Prior to that date, the Company's common stock was quoted on the NASDAQ Small-Cap Market. The following table sets forth, for the quarterly periods indicated, the high and low sales price for the common stock, as reported by the NASDAQ Markets.

On March 6, 2001, the Company's stock transfer agent reported that the Company's common stock was held by 187 holders of record. However, management believes there are in excess of 1,000 beneficial owners of the Company's common stock.

The Company has paid no cash dividends on its common stock. The Board of Directors intends to retain earnings of the Company to support operations and to finance expansion and does not intend to pay cash dividends on the common stock for the foreseeable future. The payment of cash dividends in the future will depend upon such factors as earnings levels, capital requirements, level of debt, the Company's financial condition and other factors deemed relevant by the Board of Directors.

The following table sets forth selected financial data of the Company. The selected financial data in the table are derived from the consolidated financial statements of the Company. The following data should be read in conjunction with, and is qualified in its entirety by, the Company's consolidated financial statements and related notes and with "Management's Discussion and Analysis of Financial Condition and Results of Operations" included elsewhere herein. All amounts are reported in thousands except for per share amounts.

From time to time, the Company may publish "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Some examples of forward-looking statements are statements related to anticipated financial performance, business prospects, the future opening of Company-owned and franchised restaurants, anticipated capital expenditures, future liquidity and capital resource needs, and other matters. In addition, forward-looking statements often (though not always) may be identified by the use of such terms as "may", "will", "expect", "intend", "project", "estimate", "anticipate", "believe", "think", "continue" or variations of such terms and similar terminology. All statements other than statements of historical fact contained in this Form 10-K or in any other report of the Company are forward-looking statements. The Private Securities Litigation Reform Act of 1995 provides a safe harbor for forward-looking statements. In order to comply with the terms of that safe harbor, the Company notes that a variety of factors, individually or in the aggregate, could cause the Company's actual results and experience to differ materially from the anticipated results or other expectations expressed in the Company's forward-looking statements including, without limitation, the following: consumer spending trends and habits; competition in the casual dining restaurant segment; weather conditions in the Company's operating regions; laws and government regulations; general business and economic conditions; availability of capital; success of operating initiatives and marketing and promotional efforts; and changes in accounting policies. In addition, the Company disclaims any intent or obligation to update those forward-looking statements. However, the Company may be required to amend its filings if information becomes materially misleading.

As of December 31, 2000, the Company owned and operated 69 (50 Garfield's, 17 Garcia's, 2 Pepperoni Grills) and franchised or licensed 8 (7 Garfield's and 1 Garcia's) restaurants. The Company currently has 1 Garfield's and one Garcia's in development. As of the date of this report, the entire system includes 67 (48 Garfield's, 17 Garcia's, 2 Pepperoni Grills) Company-owned restaurants and 7 (6 Garfield's and 1 Garcia's) franchised or licensed restaurants.

The following table sets forth, for the periods indicated, (i) the percentages that certain items of income and expense bear to total revenues, unless otherwise indicated, and (ii) selected operating data:

The concentration of restaurants in regional malls, where customer traffic increases substantially during the Thanksgiving to New Year holiday season, has resulted in the Company experiencing a substantial increase in restaurant sales and profits during the fourth quarter of each year. However, as a result of the acquisition of 17 freestanding Mexican restaurants from Famous and by the three Italian restaurants, the Company's management believes that its revenues and profits will be less affected by seasonality in the future. The following table presents the Company's revenues, net income (loss) and certain other financial and operational data for each fiscal quarter of 2000, 1999 and 1998.

FISCAL YEARS 2000, 1999, AND 1998

The Company's results of operations for the year ended December 31, 2000 improved substantially over prior year. The Company had record sales, mainly due to a 3% increase in same store sales over prior year and the opening of additional units. Record sales are also due to the Company continuing its aggressive advertising campaign in all markets in 2000. During 2000, the Company expanded its focus on training, continuing to improve the quality of food preparation and customer service in all locations. This focus resulted in greater repeat business in 2000 and management anticipates this trend to continue in 2001. Additionally, the Company is maintaining the focus it began in 1999 to grow its franchise business. As a result, the Company experienced growth through its campaign to recruit additional franchisees, opening one new franchise location in 2000 and signing agreements for additional 25 units. The Company also experienced slightly better food and labor costs, despite increasing wages throughout its territories. This is primarily due to increased same store sales and higher check averages. The Company successfully opened one freestanding Garfield's location in 2000, which experienced higher sales as opposed to its normal mall based volumes. During the third and fourth quarters of 2000, the Company began to experience substantial increases in utility expenses. In some markets the increase was as much as 40% and management believes that continued increases in utility expenses in 2001 could negatively impact the Company's results of operations.

Revenues for the year ended December 31, 2000, increased 10.6% over the revenues reported for the year ended December 26, 1999. Revenues for the year ended December 26, 1999, increased 6% over the revenues reported for the year ended December 27, 1998.

The number of restaurants operating at the end of each year, the number of operating months during that year and average sales per operating week were as follows:

A summary of sales and costs of sales expressed as a percentage of sales are listed below for the fiscal years:

Average weekly sales per unit for Garfield's were $26,650 during 2000 compared to $25,530 during 1999. The 2000 per unit weekly sales increased by $1,120 or 4.4% from 1999 levels. Average weekly sales per unit for Garcia's were $29,910 during 2000 versus $30,640 in 1999. Garcia's 2000 and 1999 average weekly sales per unit continued to be negatively impacted by negative publicity related to a vendor contaminated product problem in the Phoenix, Arizona market during 1998. As a result of a continued aggressive television advertising campaign in 1999 and 2000, average unit volumes in the Phoenix area Garcia's are stabilizing, however the units are not reaching historical profit levels due to food discounting.

Average weekly sales per unit for Garfield's were $25,530 during 1999 compared to $23,010 during 1998. The 1999 per unit weekly sales increased by $2,520 or 11% from 1998 levels. The increase was primarily due to the introduction of a new menu design, a successful television advertising campaign, the success of continued radio and newspaper advertising and the implementation of a mall employee rewards program in selected locations. Average weekly sales per unit for Garcia's were $30,640 during 1999 versus $31,720 in 1998. The Company's Garcia's units were negatively impacted by negative publicity related to a vendor contaminated product problem in the Phoenix, Arizona market during the third quarter of 1998. Aggressive advertising was unable to bring the average unit to volumes to historical levels. In addition, aggressive discounting to assist in attempting to bring back sales resulted in lower unit profitability.

Other income during 2000 was $690,000 compared to $413,000 in 1999 and $638,000 in 1998. The increase in 2000 as compared to 1999 is primarily due to banquet and audio/video rental income in the Tempe, Arizona Garcia's in an Embassy Suites Hotel. Other income in 1999 decreased from 1998 due the Company receiving a fee in the amount of $120,000 to terminate an agreement under which the Company managed a Carlos Murphy's restaurant owned by an independent third party.

During 2000, 1999 and 1998 Other Income consisted of the following:

The following is a comparison of costs of sales and labor costs (excluding payroll taxes and fringe benefits) as a percentage of food and beverage sales at Company-owned restaurants:

Garfield's costs of sales as a percentage of food and beverage sales decreased in 2000 to 27.5% from 27.9% in 1999. Garcia's costs of sales as a percentage of food and beverage sales increased to 26.3% in 2000 from 25.6% in 1999 and 26.2% in 1998. This increase is primarily due to high liquor costs and lower vendor rebates. Pepperoni Grill cost of sales as a percentage of sales December in 2000 to 29.7% from 30.6% in 1999. This decrease was due to efficiencies in purchasing due to the acquisition of Bellini's and Tommy's in May of 1999. Garfield's costs of sales as a percentage of food and beverage sales decreased to 27.9% in 1999 compared to 28.0% in 1998, primarily due to continued menu development, increased vendor rebates, and improved store-level food and beverage cost controls.

Garfield's labor costs as a percentage of food and beverage sales decreased in 2000 to 28.3% from 28.8% in 1999, which increased from 27.9% in 1998. This decrease from 1999 is primarily due to lower turnover in most markets. The increase from 1998 was primarily due to increased kitchen labor and restaurant level management salaries and incentive compensation. Labor costs for Garcia's as a percentage of food and beverage sales increased to 31.5% in 2000 from 29.7% in 1999. Labor costs for Pepperoni Grill increased in 1999 to 30.5% of food and beverage sales compared to 28.5% in 1998.

Operating expenses (which include labor costs) as a percentage of food and beverage sales were 61.3% in 2000, 61.6% in 1999, and 61.0% in 1998. The decrease in operating expenses as a percentage of food and beverage sales in 2000 compared to 1999 due primarily to increased sales. Were it not for the substantial increase in revenues from 1998-2000, and the corresponding necessity to significantly increase advertising and discounting to offset the impact of a vendor related contamination, operating expenses would have declined as a percentage of revenue.

The Company expenses pre-opening costs as incurred. During each of the three years in the period ended December 31, 2000, the Company incurred and recognized as expense the following amounts for restaurant pre-opening costs relative to the corresponding number of restaurants opened:

The decrease in average pre-opening cost between 2000 and 1999 is primarily due to increased emphasis on training for new store openings. The increase in average pre-opening costs between 1999 and 1998 reflect delays experienced relative to two new restaurants opened in 1998 and 1999. Management expects future pre-opening costs to be lower.

General and administrative expenses decreased as a percentage of total revenues to 5.6% in 2000 from 6.3% in 1999 as compared to 6.2% in 1998. The lower absolute levels of general and administrative expenses from 1998 to 2000 are related primarily to the Company's ability to increase revenues without incurring large corresponding addition to personnel costs. The Company anticipates that its costs of supervision and administration of Company and franchise stores will increase at a slower rate than revenue increases during the next few years.

In the regular course of business the Company's restaurants are reviewed on an individual restaurant basis for indicators of impairment, whenever events or circumstances indicate that the carrying value of its restaurants may not be recoverable. The Company's primary test for an indicator of potential impairment is operating losses. In order to determine whether impairment has occurred, the Company estimates the future net cash flows expected to be generated from the use of its restaurants, and compares such estimated future cash flows to the respective carrying amounts. Those restaurants, which have carrying amounts in excess of estimated future cash flows, are deemed impaired. The carrying value of these restaurants is adjusted to an estimated fair value by discounting the estimated future cash flows attributable to such restaurants using a discount rate equivalent to the rate of return the Company expects to achieve from its investment in newly-constructed restaurants. The excess is charged to expense and cannot be reinstated.

Considerable management judgment and certain significant assumptions are necessary to estimate future cash flows. Significant judgments and assumptions used by the Company in evaluating its assets for impairment include, but may not be limited to: estimations of future sales levels, costs of sales, direct and indirect costs of operating the assets, the length of time the assets will be utilized and the Company's ability to utilize equipment, fixtures and other moveable long-lived assets in other existing or future locations. In addition, such estimates and assumptions include anticipated operating results related to certain profit improvement programs implemented by the Company during 1998, 1999 and 2000, as well as the possible rent reductions, deferrals, and other negotiated concessions from landlords. Actual results could vary materially from management's estimates and assumptions and such variance could result in a change in the estimated recoverability of the Company's long-lived assets. Accordingly, the results of the changes in those estimates could have a material impact on the Company's future results of operations and financial position.

During 2000, the Company recorded a $340,000 provision for impairment of long-lived assets related to three locations. During 1999, the Company recorded a $300,000 provision for impairment of long-lived assets related to four locations, and during 1998 the Company recorded a $41,000 provision for impairment of long-lived assets related to one location.

In the normal course of business, management performs a regular review of the strength of its operating assets. It is management's plan to continue to make such decisions to close under-performing restaurants and/or dispose of other assets it considers in the best long-term interest of the Company's shareholders.

Depreciation and amortization expense increased in 2000 to $3,889,000 (3.8% of food and beverage sales) compared to $3,378,000 (3.6% of food and beverage sales) in 1999 and $2,964,000 (3.4% of food and beverage sales) in 1998. The increase in 2000 compared to 1999 is primarily attributable to the increase in net assets subject to depreciation and amortization in 2000 versus 1999 as the result of the opening of additional restaurants in 2000 and 1999. The increase in 1999 versus 1998 also relates principally to the increase in net assets subject to depreciation and amortization because of the opening additional restaurants and the remodeling of existing restaurants.

Interest expense during each of the three years in the period ended December 31, 2000, was $974,000 in 2000, $776,000 in 1999, and $410,000 in 1998. Additionally, the Company has capitalized approximately $71,000, $47,000, and $35,000 of interest costs during 2000, 1999 and 1998, respectively. The increase in interest expense in 1999 compared to 1998 is due principally to the Company's purchase of 1,056,200 shares for a total of $5,413,025 in February 1999. The increase in interest expense in 2000 compared to 1999 is attributable to an increase in the 2000 average borrowing balances under the Company's revolving credit agreements caused by the Company's aggressive program of building new Company owned units

The provision for income tax was $103,000, $419,000, respectively, for 2000 and 1998. The benefit for income taxes was $116,000 in 1999.

At December 31, 2000, the Company has recorded a benefit for its deferred tax assets of approximately $3,473,000. Management believes that $2,311,000 of the assets will be recognized through the reversal of existing taxable temporary differences with the remainder to be recognized through realization of future income. It is management's opinion, based on the historical trend of normal and recurring operating results, present store development and forecasted operating results, that it is more likely than not that the Company will realize the approximately $3,060,000 in the future taxable income necessary to recognize the net deferred tax assets not otherwise offset by reversing taxable temporary differences; net operating loss carry forwards do not begin to expire until 2003 and general business tax credits until 2009. Although management of the Company is not presently aware of any adverse matters, result of loss of market share, increased competition or other adverse general economic conditions, it intends to evaluate the relizability of the net deferred tax asset at least quarterly by assessing the need for a valuation allowance.

Basic Earnings Per Share ("EPS") includes no dilution and is computed by dividing income available to common stockholders by the weighted-average number of common shares outstanding for the period. The weighted-average common shares outstanding for the basic EPS calculation were 3,044,195 and 3,941,728 in 2000 and 1998, respectively. EPS for 1999 was anti-dilutive. Diluted EPS is computed by dividing net income available to common stockholders by the sum of the weighted-average number of common shares outstanding for the period plus dilutive common stock equivalents. The sum of the weighted-average common shares and common share equivalents for the diluted EPS calculation were 3,144,515, 3,162,267 and 4,177,073 in 2000, 1999 and 1998, respectively.

The impact of inflation on the cost of food and beverage products, labor and real estate can affect the Company's operations. Over the past few years, inflation has had a lesser impact on the Company's operations due to the lower rates of inflation in the nation's economy and the economic conditions in the Company's market area.

Management believes the Company has historically been able to pass on increased costs through certain selected menu price increases and increased productivity and purchasing efficiencies, but there can be no assurance that the Company will be able to do so in the future. Management anticipates that the average cost of restaurant real estate leases and construction costs could increase in the future which could affect the Company's ability to expand.

At December 31, 2000, the Company's working capital ratio decreased to .30 to 1 compared to .40 to 1 at December 26, 1999. As is customary in the restaurant industry, the Company has consistently operated with negative working capital and has not historically required large amounts of working capital. Historically, the Company has leased the vast majority of its restaurant locations. For fiscal years 2000, 1999 and 1998, the Company's expenditures for capital improvements were $8,876,000, $7,918,000 and $5,013,000, respectively, which were funded out of cash flows from operating activities of approximately $5,354,000, $7,497,000, and $2,945,000, respectively, landlord finish-out allowances of approximately $2,023,000, $814,000 and $706,000, respectively, and borrowings under the Company's credit agreements.

During 2001, the Company expects to construct and open up one new Garfield's and two Garcia's. The Company believes the cash generated from its operations and borrowing availability under its credit facility (described below), will be sufficient to satisfy the Company's net capital expenditures and working capital requirements through 2001.

In November 1997, the Company entered into an interest rate swap agreement with a bank to hedge its risk exposure to potential increases in LIBOR. This agreement has a term of five years and an initial notional amount of $9,500,000. The notional amount declines quarterly over the life of the agreement on a seven-year amortization schedule assuming a fixed interest rate of 7.68%. Under the terms of the interest rate swap agreement, the Company pays interest quarterly on the notional amount at a fixed rate of 7.68%, and receives interest quarterly on the notional amount at a floating rate of three-month LIBOR plus 1.25%.

In April 1997, the Company's Board of Directors authorized the repurchase of up to 200,000 shares of the Company's common stock. In July 1997, an additional 200,000 shares were authorized for repurchase. As of December 31, 2000, 169,134 shares had been repurchased under this plan for a total purchase price of approximately $770,000. The Company repurchased 67,500 additional shares subsequent to December 31, 2000.

In February 1999, the Company's Board of Directors authorized the repurchase of 1,056,200 shares of its common stock from Astoria Capital Partners, L.P., Montavilla Partners, L.P., and MicroCap Partners L.P. ("Sellers") for a purchase price of $5.125 per share or an aggregate purchase price of $5,413,025. The shares purchased from the Sellers represented 26.7% of the outstanding common stock of the Company, prior to the transaction. In connection with this transaction, the Company entered into a new credit facility with a bank in the aggregate amount of $14,600,000, of which a maximum of $6,000,000 is available to the Company under a revolving line of credit and $8,600,000 was available to the Company under a term loan. Certain proceeds of the term loan (approximately $5.4 million) were used for the stock purchase from the Sellers. The balance of the proceeds under the term loan (approximately $3.2 million) and the proceeds under the revolving line of credit were used to retire indebtedness under the Company's existing loan agreement. The revolving line of credit has a two-year term and initially bears interest at a floating rate of three month LIBOR plus 1.50% (initially 6.5%), which is reset quarterly. The term loan also provides for an initial floating rate of interest equal to three month LIBOR plus 1.50% and requires quarterly installments of principal and interest in the amount necessary to fully amortize the outstanding principal balance over a seven-year period, with a final maturity on the fifth anniversary of the note. The term loan converts to a five-year amortization schedule if the Company's debt coverage ratio, as defined in the loan agreement, exceeds a certain level. Also, the floating interest rate on both facilities is subject to changes in the Company's ratio of total loans and capital leases to net worth. Under the terms of these notes, the Company's minimum floating rate is LIBOR plus 1.25% and the maximum floating rate is LIBOR plus 1.75%. Borrowings under this loan agreement are unsecured. The loan agreement does contain certain financial covenants and restrictions. As of the date of this report, the Company is in compliance with operating covenants and restrictions.

In April 1997, the Company entered into stock put agreements with two of its executive officers (who also serve on the Company's Board of Directors). Under the agreements, in the event of the officer's death while an employee of the Company, their respective estate or legal representative has the right (but not the obligation) to compel the Company to purchase all or part of the common stock owned by or under stock option agreements with the decreased officers or members of their immediate families (i.e. spouse or children) or controlled by any of them through trusts, partnership corporations or other entities on the date of their death. The agreement calls for a calculation of the per share price payable by the company. The purchase price cannot exceed the the proceeds payable to the Company from the key man life insurance policy maintained on the life of the respective officer. The Company expects the source of funding for this commitment to come from the proceeds of the key man life insurance policy for the respective officer.

As of the date of this report, the Company has an available revolving line of credit in the amount of $6,000,000, as well as outstanding borrowings under a term loan of approximately $5,979,000. Both loans bear interest at floating rate of three-month LIBOR plus 1.75% (8.56% as of the date of this report). Thus, the Company is exposed to the risk of earnings losses due to increases in three-month LIBOR. To hedge its risk exposure to potential increases in three-month LIBOR, the Company has entered into an interest rate swap agreement with a bank. See "Management's Discussion and Analysis of Financial Condition and Results of Operations - Liquidity and Capital Resources" for a discussion of the terms of the Company's credit facilities and interest rate swap agreement.

The financial statements of the Company are included in a separate section of this report.

None.

In accordance with General Instruction G(3), a presentation of information required in response to Items 10, 11, 12, and 13 appear in the Company's Proxy Statement to be filed pursuant to Regulation 14A within 120 days of the year end covered hereby, and shall be incorporated herein by reference when filed.

1. The following documents are filed as part of the report:

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

REGISTRANT:

EATERIES, INC.

Date: March 6, 2001 
By: /s/Bradley L. Grow
Bradley L. Grow
Vice President, Chief Financial Officer

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated.

Date: March 6, 2001 
By: /s/James M. Burke
James M. Burke
Assistant Secretary and Director

Date: March 6, 2001 
By: /s/Edward D. Orza
Edward D. Orza,
Director

Date: March 6, 2001 
By: /s/Patricia L. Orza
Patricia L. Orza,
Secretary and Director

Date: March 6, 2001 
By: /s/Thomas F. Golden
Thomas F. Golden,
Director

Date: March 6, 2001 
By: /s/Philip Friedman
Philip Friedman,
Director

Date: March 6, 2001 
By: /s/Larry Kordisch
Larry Kordisch,
Director

The management of Eateries, Inc. has the responsibility for preparing the accompanying consolidated financial statements and for their integrity and objectivity. The statements were prepared in accordance with generally accepted accounting principles and include amounts that are based on management's best estimates and judgment where necessary. Management believes that all representations made to our external auditors during their examination of the financial statements were valid and appropriate.

To meet its responsibility, management has established and maintains a comprehensive system of internal control that provides reasonable assurance as to the integrity and reliability of the consolidated financial statements, that assets are safeguarded, and that transactions are properly executed and reported. This system can provide only reasonable, not absolute, assurance that errors and irregularities can be prevented or detected. The concept of reasonable assurance is based on the recognition that the cost of a system of internal control is subject to close scrutiny by management and is revised as considered necessary.

The Board of Directors of Eateries, Inc. have engaged Arthur Andersen LLP, independent auditors, to conduct an audit of and express an opinion as to the fairness of the presentation of the 2000 consolidated financial statements. Their report is included on the following page.

/s/Vincent F. Orza, Jr.
Vincent F. Orza, Jr.
President and Chairman
Chief Executive Officer

/s/Bradley L. Grow
Bradley L. Grow
Vice President
Chief Financial Officer

March 6, 2001

Board of Directors
Eateries, Inc.
Oklahoma City, Oklahoma

We have audited the accompanying consolidated balance sheets of Eateries, Inc. and subsidiaries (an Oklahoma Corporation) as of December 31, 2000 and December 26, 1999 and the related consolidated statements of income, stockholders' equity and cash flows for each of the three years in the period ended December 31, 2000. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with auditing standards generally accepted in the United States. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the consolidated financial position of Eateries, Inc. and subsidiaries at December 31, 2000 and December 26, 1999, and the consolidated results of its operations and its cash flows for each of the three years in the period ended December 31, 2000, in conformity with accounting principles generally accepted in the United States.

ARTHUR ANDERSEN LLP

Oklahoma City, Oklahoma
March 1, 2001