UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

FORM 10-Q

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

For the quarterly period ended April 6, 2005

Commission file number: 333-116897

BUFFETS HOLDINGS, INC.

(Exact name of registrant as specified in its charter)

Delaware 22-3754018

(State or other jurisdiction of (IRS Employer

incorporation or organization) Identification No.)

                            1460 Buffet Way

                         Eagan, Minnesota                     55121

           (Address of principal executive offices) (Zip Code)

Registrant’s telephone number, including area code: (651) 994-8608

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 (or for such shorter period that the registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days.
YES [X] NO [ ]

Indicate by checkmark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act).
YES [ ] NO [X]

The number of shares of Buffets Holdings, Inc.’s common stock outstanding as of May 5, 2005 was 3,175,135.

BUFFETS HOLDINGS, INC.
TABLE OF CONTENTS


Part I. Financial Information		Page

Item 1.	Financial Statements

	Condensed Consolidated Balance Sheets (Unaudited) as of June 30, 2004 and April 6, 2005	3

	Condensed Consolidated Statements of Operations (Unaudited) -- 16 Weeks and 40 Weeks Ended April 7, 2004 and April 6, 2005	4

	Condensed Consolidated Statements of Cash Flows (Unaudited) -- 40 Weeks Ended April 7, 2004 and April 6, 2005	5

	Notes to the Condensed Consolidated Financial Statements (Unaudited)	6

Item 2.	Management's Discussion and Analysis of Financial Condition and
	Results of Operations	17

Item 3.	Quantitative and Qualitative Disclosures about Market Risk	23

Item 4.	Controls and Procedures	24

Part II. Other Information

Item 1.	Legal Proceedings	24

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	24

Item 6.	Exhibits	24

PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

BUFFETS HOLDINGS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

	June 30,			April 6,
	2004			2005
	(Unaudited)
	(In thousands, except share data)
ASSETS
CURRENT ASSETS:
Cash and cash equivalents	$	26,072		$	11,842
Restricted cash and cash equivalents		16,228			--
Receivables		6,963			7,533
Inventories		18,673			18,963
Prepaid expenses and other current assets		5,244			10,119
Deferred income taxes		15,915			15,263

Total current assets		89,095			63,720
PROPERTY AND EQUIPMENT, net		149,618			144,636
GOODWILL		312,163			312,163
DEFERRED INCOME TAXES		1,033			1,672
OTHER ASSETS, net		15,622			13,460

Total assets	$	567,531		$	535,651

LIABILITIES AND SHAREHOLDERS' DEFICIT
CURRENT LIABILITIES:
Accounts payable	$	43,280		$	43,563
Accrued liabilities		68,663			64,760
Income taxes payable		4,531			2,915
Current maturities of long-term debt		2,300			2,097

Total current liabilities		118,774			113,335
LONG-TERM DEBT, net of current maturities		496,039			469,354
DEFERRED LEASE OBLIGATIONS		21,621			22,942
OTHER LONG-TERM LIABILITIES		7,013			6,830

Total liabilities		643,447			612,461
SHAREHOLDERS' DEFICIT:
Preferred stock; $.01 par value, 1,100,000 shares authorized; none issued and
outstanding as of June 30, 2004 and April 6, 2005		--			--
Common stock; $.01 par value, 3,600,000 shares authorized; 3,185,672 shares
issued and outstanding as of June 30, 2004 and 3,175,135 as of April 6, 2005		32			32
Additional paid in capital		--			14
Accumulated deficit		(75,948	)		(76,856	)

Total shareholders' deficit		(75,916	)		(76,810	)

Total liabilities and shareholders' deficit	$	567,531		$	535,651

The accompanying notes are an integral part of these condensed consolidated financial statements.

BUFFETS HOLDINGS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

	Sixteen Weeks Ended						Forty Weeks Ended
	April 7,			April 6,			April 7,			April 6,
	2004			2005			2004			2005
	(Unaudited)
	(In thousands)

RESTAURANT SALES	$	287,573		$	277,567		$	718,456		$	699,950
RESTAURANT COSTS:
Food		93,235			92,292			233,444			230,532
Labor		87,922			84,842			221,441			211,734
Direct and occupancy		66,257			67,303			166,632			169,384

Total restaurant costs		247,414			244,437			621,517			611,650
ADVERTISING EXPENSES		7,198			6,875			19,090			17,720
GENERAL AND ADMINISTRATIVE EXPENSES		14,515			12,185			33,094			33,035

OPERATING INCOME		18,446			14,070			44,755			37,545
INTEREST EXPENSE		11,919			15,068			29,515			36,999
INTEREST INCOME		(123	)		(137	)		(308	)		(383	)
LOSS RELATED TO REFINANCING		4,798			24			4,798			859
LOSS RELATED TO EARLY
EXTINGUISHMENT OF DEBT		2,727			—			2,727			1,923
OTHER INCOME		(285	)		(297	)		(1,128	)		(717	)

INCOME (LOSS) BEFORE INCOME TAXES		(590	)		(588	)		9,151			(1,136	)
INCOME TAX EXPENSE (BENEFIT)		(520	)		(256	)		2,700			(511	)

Net income (loss)	$	(70	)	$	(332	)	$	6,451		$	(625	)

The accompanying notes are an integral part of these condensed consolidated financial statements.

BUFFETS HOLDINGS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

	Forty Weeks Ended
	April 7,			April 6,
	2004			2005
	(Unaudited)
	(In thousands)
OPERATING ACTIVITIES:
Net income (loss)	$	6,451		$	(625	)
Adjustments to reconcile net income (loss) to net cash provided
by operating activities:
Depreciation and amortization		26,005			24,942
Amortization of debt issuance cost		1,025			1,071
Accretion of original issue discount		618			9,163
Write-off of debt issuance cost related to bank refinancing		4,201			—
Loss related to early extinguishment of debt		2,727			1,923
Deferred income taxes		1,906			13
Loss on disposal of assets		192			1,763
Changes in assets and liabilities:
Receivables		(881	)		(570	)
Inventories		(568	)		(603	)
Prepaid expenses and other current assets		(1,863	)		(4,875	)
Accounts payable		(2,010	)		384
Accrued and other liabilities		(6,708	)		(2,765	)
Income taxes payable		744			(1,616	)

Net cash provided by operating activities		31,839			28,205

INVESTING ACTIVITIES:
Proceeds from sale leaseback		2,710			—
Purchase of fixed assets		(27,805	)		(20,732	)
Acquisition of 20% minority interest in Tahoe Joe's Inc.		(370	)		—
Proceeds from sale (purchase) of other assets		2,023			(89	)

Net cash used in investing activities		(23,442	)		(20,821	)

FINANCING ACTIVITIES:
Repayment of debt		(172,377	)		(21,781	)
Unrestricted cash proceeds from credit facility		195,300			—
Initial restricted cash proceeds from credit facility		34,700			—
Restricted cash proceeds from credit facility available
as of quarter end		(33,528	)		—
Reduction of restricted cash available for early
extinguishment of debt		—			16,228
Use of restricted cash for early extinguishment of debt		(1,172	)		(15,736	)
Use of unrestricted cash for early extinguishment of debt		(15,300	)		—
Redemption of subordinated notes		(18,311	)		—
Issuance of stock		184			15
Repurchase of stock		(323	)		(284	)
Debt issuance costs		(2,693	)		(56	)

Net cash used in financing activities		(13,520	)		(21,614	)

NET CHANGE IN CASH AND CASH EQUIVALENTS		(5,123	)		(14,230	)
CASH AND CASH EQUIVALENTS, beginning of period		15,855			26,072

CASH AND CASH EQUIVALENTS, end of period	$	10,732		$	11,842

SUPPLEMENTAL CASH FLOW INFORMATION:
Cash paid during the period for—
Interest (net of capitalized interest of $207 and $371)	$	33,425		$	32,451

Income taxes	$	46		$	1,088

The accompanying notes are an integral part of these condensed consolidated financial statements.

BUFFETS HOLDINGS, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

1. Nature of Organization

Description of Business

Buffets Holdings, Inc. (Buffets Holdings), a Delaware corporation, was formed to acquire 100 percent of the common stock of Buffets, Inc. and its subsidiaries in a buyout from public shareholders on October 2, 2000. Buffets Holdings, Inc. and Buffets, Inc. are collectively referred to as the Company.

The Company owns and operates a chain of restaurants under the names of Old Country Buffet, Country Buffet, HomeTown Buffet, Granny’s Buffet, Tahoe Joe’s Famous Steakhouse and Soup ‘N Salad Unlimited in the United States. The Company, operating principally in the mid-scale family dining industry segment, owned and operated 354 restaurants (345 family buffet restaurants and nine Tahoe Joe’s Famous Steakhouse Restaurants) and franchised 19 restaurants operating as of April 6, 2005.

Interim Financial Information

In the opinion of management, the accompanying unaudited condensed consolidated financial statements contain all necessary adjustments, which are of a normal recurring nature, to present fairly the Company’s financial position and the results of its operations and cash flows for the periods presented, in conformity with accounting principles generally accepted in the United States of America and with the regulations of the Securities and Exchange Commission (“SEC”). Certain information and footnote disclosures, normally included in accordance with accounting principles generally accepted in the United States of America, have been condensed or omitted pursuant to such SEC rules and regulations. Operating results for the forty weeks ended April 6, 2005 are not necessarily indicative of results that may be expected for the fiscal year ending June 29, 2005.

The balance sheet as of June 30, 2004 has been derived from the audited financial statements at that date but does not include all of the information and footnotes required by accounting principles generally accepted in the United States of America for complete financial statements.

These unaudited condensed consolidated financial statements should be read in conjunction with the financial statements and the related notes contained in the Company’s Form 10-K filed with the Securities and Exchange Commission on September 28, 2004 and with Management’s Discussion and Analysis of Financial Condition and Results of Operations appearing on pages 17 through 23 of this report.

Principles of Consolidation

The consolidated financial statements include the accounts of the Company and its subsidiaries. All significant intercompany transactions have been eliminated in consolidation.

Fiscal Year

The Company’s fiscal year is comprised of fifty-two, or fifty-three, weeks divided into four fiscal quarters of twelve, twelve, sixteen, and twelve or thirteen weeks.

2. Recent Accounting Pronouncements

In December 2004, the Financial Accounting Standards Board (FASB) issued Statement of Financial Accounting Standards (SFAS) No. 123(R), “Share-Based Payment”. This statement requires all entities to recognize compensation expense in an amount equal to the fair value of share-based payments granted to employees. SFAS No. 123(R) is effective as of the beginning of the first annual reporting period after December 15, 2005. The Company does not believe that the adoption of SFAS No. 123(R) will have a material impact on its results of operations or financial position.

3. Stock-Based Compensation

The Company accounts for activity under its stock-based employee compensation plans under the recognition and measurement principles of Accounting Principles Board (APB) Opinion No. 25, “Accounting for Stock Issued to Employees.” Accordingly, the Company does not recognize compensation expense in connection with employee stock option grants because stock options are granted at exercise prices not less than the fair value of the common stock on the date of grant.

The following table shows the effect on net income (loss) had the Company applied the fair value expense recognition provisions of SFAS No. 123, “Accounting for Stock-Based Compensation,” to stock-based employee compensation (in thousands):

	Sixteen Weeks Ended						Forty Weeks Ended
	April 7,			April 6,			April 7,		April 6,
	2004			2005			2004		2005
Net income (loss) as reported	$	(70	)	$	(332	)	$	6,451	$	(625	)
Compensation expense recorded in the financial
statements, net of tax effect		—			—			—		—
Pro forma compensation expense under the
provisions of SFAS No. 123, net of tax effect		2			—			4		—

Pro forma	$	(72	)	$	(332	)	$	6,447	$	(625	)

4. Other Assets

Other assets consist principally of debt issuance costs, notes receivable and other intangibles net of accumulated amortization of $1.1 million as of June 30, 2004 and $2.2 million as of April 6, 2005. Debt issuance costs are the capitalized costs incurred in conjunction with amending Buffets, Inc.‘s senior credit agreement, issuing Buffets, Inc.‘s senior subordinated notes and issuing Buffets Holdings’ senior discount notes. The debt issuance costs are being amortized over the terms of the financing arrangements using the effective interest method. Other intangibles include trademarks, franchise fees and liquor licenses. Trademarks and franchise fees are being amortized on a straight-line basis over 10 years. Liquor licenses are not amortized, as they have indefinite lives. Notes receivable principally arose from the sale of certain restaurant facilities. Long-term and short-term notes receivable collectively totaled $2.7 million as of June 30, 2004 and $1.9 million as of April 6, 2005. The notes receivable have due dates between 2006 and 2008.

The gross carrying amount and accumulated amortization of each major class of other intangible assets were as follows (in thousands):

	Franchise fees					Trademarks					Liquor licenses					Total
	Gross					Gross					Gross					Gross
	carrying		Accumulated			carrying		Accumulated			carrying		Accumulated			carrying		Accumulated
	amount		amortization			amount		amortization			amount		amortization			amount		amortization
BALANCE, June 30, 2004	$	69	$	(56	)	$	34	$	(29	)	$	345	$	(25	)	$	448	$	(110	)
FY 2005 Activity:
Amortization		—		(7	)		—		(5	)		—		—			—		(12	)

BALANCE, April 6, 2005	$	69	$	(63	)	$	34	$	(34	)	$	345	$	(25	)	$	448	$	(122	)

5. Long-Term Debt

As of April 6, 2005, long-term debt outstanding was as follows (in thousands):

Buffets, Inc.
Credit Facility:
Revolving credit facility	$	—
Term loan, interest at LIBOR plus 3.50%, due quarterly
through June 28, 2009 (interest rate at 6.3%)		207,069

Total Credit Facility		207,069
Senior subordinated notes, interest at 11.25%, due
July 15, 2010, net of discount of $5,151		179,514

Total long-term debt at Buffets, Inc.		386,583

Buffets Holdings, Inc.

Senior discount notes, interest at 13.875%, due

December 15, 2010, net of discount of $47,132 84,868

Grand total long-term debt 471,451

Less - Current maturities 2,097

$ 469,354

Credit Facility

On February 20, 2004, Buffets, Inc. amended and restated its senior credit facility (the Credit Facility). The amended and restated Credit Facility provides for total borrowings of up to $310,000,000, including (i) a $230,000,000 term loan, (ii) a $30,000,000 revolving credit facility, (iii) a $20,000,000 letter of credit facility, and (iv) a $30,000,000 synthetic letter of credit facility. The terms of the Credit Facility permit Buffets, Inc. to borrow, subject to availability and certain conditions, incremental term loans or to issue additional notes in an aggregate amount up to $25,000,000. The borrowings under the term loan facility bear interest, at Buffets, Inc.’s option, at either adjusted LIBOR plus 3.50% or at an alternate base rate plus 2.50%, subject to a leverage-based pricing grid. The term loan and the synthetic letter of credit facility mature on June 28, 2009, while the revolving facility and the letter of credit facilities mature on June 28, 2007. The borrowings due under the term loan are payable in equal quarterly installments in an annual amount equal to 1% of the term loan during each of the first four and a half years of the loan, with the remaining balance payable due in equal quarterly installments during the last year of the loan. The Credit Facility is fully and unconditionally guaranteed by Buffets Holdings, which has no independent assets or operations, and is secured by substantially all of the Company’s assets. Availability under the Credit Facility depends upon Buffets, Inc.’s continued compliance with certain covenants and financial ratios including leverage, interest coverage and fixed charge coverage as specifically defined in the Credit Facility. Buffets, Inc. was in compliance with all financial ratio covenants of the Credit Facility as of April 6, 2005. The financial ratio covenant requirements increase over time, however, as set forth in the senior credit agreement.

The proceeds from the amended and restated Credit Facility were used to refinance existing debt and to make a distribution to Buffets Holdings. Buffets, Inc. used $230.0 million in proceeds from term loan borrowings under the amended Credit Facility to refinance $166.8 million in outstanding term loan indebtedness under the predecessor Credit Facility, establish a $34.7 million restricted cash collateral account to repurchase outstanding 11¼% senior subordinated notes, make a $19.7 million distribution to Buffets Holdings, pay $2.7 million in transaction fees related to the refinancing transaction, pay $1.1 million in accrued term loan interest and use $5.0 million for general corporate purposes. The Company recorded a $4.2 million write-off of debt issuance cost associated with the amendment of the Credit Facility and $0.6 million of transaction fees associated with an uncompleted bond offering as a loss related to refinancing.

The amended Credit Facility allowed Buffets, Inc. to use up to $50.0 million in cash, comprised of the restricted cash collateral proceeds and unrestricted cash on hand, toward the repurchase of outstanding 11¼% senior subordinated notes. Buffets, Inc. completed its partial bond repurchase program in August 2004. Buffets, Inc. cumulatively expended $49.5 million to redeem $43.9 million of 11¼% senior subordinated notes due in 2010 at an average price of 109.2%, of which $15.7 million was expended during the first quarter of fiscal 2005 to redeem $14.3 million of the notes at an average price of 106.7%. The remaining $0.5 million in restricted cash was used to pay down the amended Credit Facility in August 2004. In connection with the bond repurchase program, Buffets, Inc. recorded a loss related to early extinguishment of debt of $1.9 million in fiscal 2005.

As of April 6, 2005, Buffets, Inc. had $35.7 million in outstanding letters of credit which expire through March 31, 2006. As of April 6, 2005, the Company had $44.3 million of total borrowing availability comprised of $30.0 million under the revolving credit facility and $14.3 million of collective borrowing capacity under the letter of credit facilities.

11¼% Senior Subordinated Notes

On June 28, 2002, Buffets, Inc. issued 11¼% senior subordinated notes in the principal amount of $230 million due July 15, 2010 in a Rule 144A offering. Such notes were issued at an offering price of 96.181% of principal amount at maturity, resulting in an effective yield of 12% to the initial principal amount. Interest is payable semi-annually on January 15 and July 15 of each year through July 15, 2010. Accretion of the original issue discount was approximately $0.6 million during the first 40 weeks of fiscal 2004 and fiscal 2005, respectively, and is included in interest expense in the accompanying condensed consolidated statements of operations. Except in the event of an initial public offering, Buffets, Inc. is not entitled to redeem the notes at its option prior to July 15, 2006. The redemption price during the first twelve-month period following July 15, 2006 is 105.625%. The redemption price declines by 1.875% per year until July 15, 2009, at which point there is no redemption price premium. In the event of an initial public offering prior to July 15, 2006, Buffets, Inc. may redeem up to 35% of the aggregate principal amount of the notes at a redemption price of 111.25%. Furthermore, in the event of a change in control, as defined in the indenture governing those notes, the holders of the notes may require the Company to repurchase the notes at a purchase price of 101% of the outstanding principal amount plus accrued and unpaid interest.

In December 2002, Buffets, Inc. exchanged all outstanding 11¼% senior subordinated notes which were issued in June 2002 for registered 11¼% senior subordinated notes.

13 7/8% Senior Discount Notes

On May 18, 2004, Buffets Holdings issued 13 7/8% senior discount notes due December 15, 2010 in a Rule 144A offering with a stated aggregate principal amount at maturity (including accreted amounts) of $132.0 million. The 13 7/8% senior discount notes were issued at a discount to their aggregate principal amount at maturity. Prior to July 31, 2008, interest will accrue on the 13 7/8% senior discount notes in the form of an increase in the accreted value of those notes. The accreted value of each note will increase until July 31, 2008 at a rate of 13.875% per annum. After this date, cash interest on the notes will accrue and be payable on January 31 and July 31 of each year at a rate of 13.875% per annum. Accretion of the discount was approximately $8.6 million during the first 40 weeks of fiscal 2005 and is included in interest expense in the accompanying consolidated statements of operations. If Buffets Holdings fails to meet certain leverage ratio tests on or about July 31, 2006 or July 31, 2008, additional interest will accrue on the notes from that date at a rate of 1% per annum, up to a maximum of 2% per annum.

Buffets Holdings used $75.1 million in gross proceeds from the senior discount note offering and $0.1 million of cash on hand to redeem series B junior subordinated notes due 2011 plus accrued and unpaid interest ($9.2 million), make a distribution to stockholders ($60.9 million) and pay transaction fees and expenses related to the offering ($5.1 million). As part of the transaction fees and expenses related to the offering, Buffets Holdings recognized approximately $2.2 million of bonus payments to certain restaurant and corporate employees as financing-related compensation expenses.

In July 2004, Buffets Holdings exchanged all outstanding 13 7/8% senior discount notes that were issued in May 2004 for registered 13 7/8% senior discount notes.

6. Purchase of Minority Interest in Joint Venture

During August 2003, the Company acquired the remaining 20% interest in Tahoe Joe’s Inc. from the minority holder for $370,000. The Company concurrently eliminated its remaining excess minority interest liability recorded in the condensed consolidated balance sheets in other long-term liabilities resulting in approximately $345,000 of income that was recorded in other income in the condensed consolidated income statements during the first quarter of fiscal 2004. As a consequence of the transaction, Tahoe Joe’s, Inc. became a co-guarantor with the other wholly owned subsidiaries of Buffets, Inc. with respect to both the Credit Facility and the 11¼% senior subordinated notes.

7. Significant Events

During the quarter ended December 15, 2004, the Company incurred $1.3 million in severance charges related to the headcount reduction of 25 headquarters associates and the replacement of the Chief Executive Officer, as recognized in general and administrative expenses in the condensed consolidated statement of operations for the 40 weeks ended April 6, 2005.

On November 12, 2004, Buffets Holdings filed an application with the Securities and Exchange Commission to withdraw its registration statement for an initial public offering of Income Deposit Securities that it had filed on August 27, 2004, due to market conditions. The registration statement had not yet been declared effective by the Securities and Exchange Commission and no securities had been offered or sold under the registration statement. In connection with this withdrawal, the Company incurred a charge of $0.8 million as reflected as a loss related to refinancing in the condensed consolidated statement of operations for the 40 weeks ended April 6, 2005.

8. Litigation

On November 12, 2004, two former restaurant managers of our wholly-owned subsidiary, HomeTown Buffet, Inc., individually and on behalf of all others similarly situated, filed a class action lawsuit against HomeTown Buffet in California Superior Court in San Francisco County. On January 4, 2005, we removed the case to the U.S. federal court in San Francisco. The lawsuit alleges that HomeTown Buffet violated California wage and hour laws by failing to pay all of its California managers and assistant managers overtime, and for making deductions from bonus compensation based on the company’s workers’ compensation costs. The plaintiffs seek compensatory damages, penalties, restitution of unpaid overtime and deductions, pre-judgment interest, costs of suit and reasonable attorneys’ fees. The complaint does not make a specific monetary demand. This action is in a preliminary stage, and we are currently not able to predict the outcome of this action or reasonably estimate a range of possible loss. We intend to defend this action vigorously.

9. Condensed Consolidating Financial Statements

Operations are conducted through Buffets Holdings’ subsidiaries and its ability to make payments on the senior discount notes is dependent on the earnings and the distribution of funds from its subsidiaries through loans, dividends or otherwise. However, none of its subsidiaries are obligated to make funds available to it for payment on the senior discount notes. The terms of the Credit Facility place restrictions on its ability to pay dividends and otherwise transfer assets to Buffets Holdings. Further, the terms of the indenture governing Buffets, Inc.’s senior subordinated notes place restrictions on the ability of Buffets, Inc. and Buffets Holdings’ other subsidiaries to pay dividends and otherwise transfer assets to Buffets Holdings.

The following condensed consolidating financial statements are presented pursuant to Rule 3-10 of Regulation S-X. Buffets, Inc. is a subsidiary issuer of 11¼% senior subordinated notes that are fully and unconditionally guaranteed by its parent, Buffets Holdings, as well as each of its subsidiaries including HomeTown Buffets, Inc., OCB Restaurant Co., OCB Purchasing Co., Restaurant Innovations, Inc., Distinctive Dining, Inc., Tahoe Joe’s, Inc., Buffets Leasing Company, LLC, HomeTown Leasing Company, LLC, OCB Leasing Company, LLC, and Tahoe Joe’s Leasing Company, LLC. All guarantees are joint and several and the subsidiary issuer and the subsidiary guarantors are 100% owned by the parent company.

Condensed Consolidating Balance Sheet
As of June 30, 2004

				Subsidiary			Subsidiary
	Parent			Issuer			Guarantors			Eliminations			Consolidated
	(In thousands)
ASSETS
CURRENT ASSETS:
Cash and cash equivalents	$	96		$	19,771		$	6,205		$	—		$	26,072
Restricted cash and cash equivalents		—			16,228			—			—			16,228
Receivables		—			41,056			318,430			(352,523	)		6,963
Inventories		—			789			17,884			—			18,673
Income taxes receivable		1,619			—			—			(1,619	)		—
Prepaid expenses and other current
assets		—			4,711			533			—			5,244
Deferred income taxes		—			14,429			1,486			—			15,915

Total current assets		1,715			96,984			344,538			(354,142	)		89,095
PROPERTY AND EQUIPMENT, net		—			8,206			141,412			—			149,618
GOODWILL, net		—			18,730			293,433			—			312,163
DEFERRED INCOME TAXES		—			1,033			—			—			1,033
OTHER ASSETS, net		2,847			410,013			5,264			(402,502	)		15,622

Total assets	$	4,562		$	534,966		$	784,647		$	(756,644	)	$	567,531

LIABILITIES AND SHAREHOLDERS'
EQUITY (DEFICIT)
CURRENT LIABILITIES:
Accounts payable		180			395,799			2,519			(355,218	)		43,280
Accrued liabilities		—			44,126			24,537			—			68,663
Income taxes payable		—			4,531			1,619			(1,619	)		4,531
Current maturities of long-term debt		—			138			2,162			—			2,300

Total current liabilities		180			444,594			30,837			(356,837	)		118,774
LONG-TERM DEBT, net of current
maturities		76,300			25,184			659,555			(265,000	)		496,039
DEFERRED LEASE OBLIGATIONS		—			1,143			20,478			—			21,621
OTHER LONG-TERM LIABILITIES		—			3,476			3,537			—			7,013

Total liabilities		76,480			474,397			714,407			(621,837	)		643,447

COMMITMENTS AND CONTINGENCIES
SHAREHOLDERS' EQUITY (DEFICIT)
Common stock		32			—			—			—			32
Additional paid in capital		—			82,311			199,494			(281,805	)		—
Retained earnings (accumulated deficit)		(71,950	)		(21,742	)		(129,254	)		146,998			(75,948	)

Total shareholders' equity (deficit)		(71,918	)		60,569			70,240			(134,807	)		(75,916	)

Total liabilities and
shareholders' equity (deficit)	$	4,562		$	534,966		$	784,647		$	(756,644	)	$	567,531

Condensed Consolidating Balance Sheet
As of April 6, 2005

				Subsidiary			Subsidiary
	Parent			Issuer			Guarantors			Eliminations			Consolidated
	(In thousands)
ASSETS
CURRENT ASSETS:
Cash and cash equivalents	$	49		$	7,979		$	3,814		$	—		$	11,842
Receivables		—			552			292,056			(285,075	)		7,533
Inventories		—			838			18,125			—			18,963
Prepaid expenses and other current
assets		5			6,001			4,113			—			10,119
Deferred income taxes		56			13,721			1,486			—			15,263

Total current assets		110			29,091			319,594			(285,075	)		63,720
PROPERTY AND EQUIPMENT, net		—			6,727			137,909			—			144,636
GOODWILL, net		—			18,730			293,433			—			312,163
DEFERRED INCOME TAXES		968			704			—			—			1,672
OTHER ASSETS, net		2,628			407,874			5,260			(402,302	)		13,460

Total assets	$	3,706		$	463,126		$	756,196		$	(687,377	)	$	535,651

LIABILITIES AND SHAREHOLDERS'
EQUITY (DEFICIT)
CURRENT LIABILITIES:
Accounts payable		3			329,036			2,671			(288,147	)		43,563
Accrued liabilities		—			38,808			25,952			—			64,760
Income taxes payable		(3,981	)		6,896			—			—			2,915
Current maturities of long-term debt		—			126			1,971			—			2,097

Total current liabilities		(3,978	)		374,866			30,594			(288,147	)		113,335
LONG-TERM DEBT, net of current
maturities		84,868			23,069			626,417			(265,000	)		469,354
DEFERRED LEASE OBLIGATIONS		—			1,558			21,384			—			22,942
OTHER LONG-TERM LIABILITIES		—			3,277			3,553			—			6,830

Total liabilities		80,890			402,770			681,948			(553,147	)		612,461

COMMITMENTS AND CONTINGENCIES
SHAREHOLDERS' EQUITY (DEFICIT)
Common stock		32			—			—			—			32
Additional paid in capital		14			82,311			199,244			(281,555	)		14
Retained earnings (accumulated deficit)		(77,230	)		(21,955	)		(124,996	)		147,325			(76,856	)

Total shareholders' equity (deficit)		(77,184	)		60,356			74,248			(134,230	)		(76,810	)

Total liabilities and
shareholders' equity (deficit)	$	3,706		$	463,126		$	756,196		$	(687,377	)	$	535,651

Condensed Consolidating Statement of Operations
For the Sixteen Weeks Ended April 7, 2004

				Subsidiary			Subsidiary
	Parent			Issuer			Guarantors		Eliminations		Consolidated
	(In thousands)

RESTAURANT SALES	$	—		$	11,999		$	275,574	$	—	$	287,573
RESTAURANT COSTS:
Food		—			4,161			89,074		—		93,235
Labor		—			3,781			84,141		—		87,922
Direct and occupancy		—			1,730			64,527		—		66,257

Total restaurant costs		—			9,672			237,742		—		247,414
ADVERTISING EXPENSES		—			300			6,898		—		7,198
GENERAL AND ADMINISTRATIVE
EXPENSES		—			606			13,909		—		14,515

OPERATING INCOME (LOSS)		—			1,421			17,025		—		18,446
INTEREST EXPENSE		280			699			10,940		—		11,919
INTEREST INCOME		—			(123	)		—		—		(123	)
LOSS RELATED TO REFINANCING		597			4,201			—		—		4,798
LOSS RELATED TO EARLY
EXTINGUISHMENT OF DEBT		—			2,727			—		—		2,727
OTHER INCOME		—			(285	)		—		—		(285	)

INCOME (LOSS) BEFORE INCOME TAXES		(877	)		(5,798	)		6,085		—		(590	)
INCOME TAX EXPENSE (BENEFIT)		(338	)		(1,843	)		1,661		—		(520	)

Net income (loss)	$	(539	)	$	(3,955	)	$	4,424	$	—	$	(70	)

Condensed Consolidating Statement of Operations
For the Forty Weeks Ended April 7, 2004

				Subsidiary			Subsidiary
	Parent			Issuer			Guarantors		Eliminations		Consolidated
	(In thousands)

RESTAURANT SALES	$	—		$	30,200		$	688,256	$	—	$	718,456
RESTAURANT COSTS:
Food		—			10,636			222,808		—		233,444
Labor		—			9,553			211,888		—		221,441
Direct and occupancy		—			4,102			162,530		—		166,632

Total restaurant costs		—			24,291			597,226		—		621,517
ADVERTISING EXPENSES		—			802			18,288		—		19,090
GENERAL AND ADMINISTRATIVE
EXPENSES		—			1,391			31,703		—		33,094

OPERATING INCOME (LOSS)		—			3,716			41,039		—		44,755
INTEREST EXPENSE		854			1,720			26,941		—		29,515
INTEREST INCOME		—			(308	)		—		—		(308	)
LOSS RELATED TO REFINANCING		597			4,201			—		—		4,798
LOSS RELATED TO EARLY
EXTINGUISHMENT OF DEBT		—			2,727			—		—		2,727
OTHER INCOME		—			(1,128	)		—		—		(1,128	)

INCOME (LOSS) BEFORE INCOME
TAXES		(1,451	)		(3,496	)		14,098		—		9,151
INCOME TAX EXPENSE (BENEFIT)		(559	)		(1,075	)		4,334		—		2,700

Net income (loss)	$	(892	)	$	(2,421	)	$	9,764	$	—	$	6,451

Condensed Consolidating Statement of Operations
For the Sixteen Weeks Ended April 6, 2005

				Subsidiary			Subsidiary
	Parent			Issuer			Guarantors		Eliminations		Consolidated
	(In thousands)

RESTAURANT SALES	$	—		$	11,959		$	265,608	$	—	$	277,567
RESTAURANT COSTS:
Food		—			4,335			87,957		—		92,292
Labor		—			3,803			81,039		—		84,842
Direct and occupancy		—			3,177			64,126		—		67,303

Total restaurant costs		—			11,315			233,122		—		244,437
ADVERTISING EXPENSES		—			296			6,579		—		6,875
GENERAL AND ADMINISTRATIVE
EXPENSES		1			524			11,660		—		12,185

OPERATING INCOME (LOSS)		(1	)		(176	)		14,247		—		14,070
INTEREST EXPENSE		3,518			693			10,857		—		15,068
INTEREST INCOME		—			(137	)		—		—		(137	)
LOSS RELATED TO REFINANCING		24			—			—		—		24
OTHER INCOME		—			(297	)		—		—		(297	)

INCOME (LOSS) BEFORE INCOME
TAXES		(3,543	)		(435	)		3,390		—		(588	)
INCOME TAX EXPENSE (BENEFIT)		(1,171	)		(148	)		1,063		—		(256	)

Net income (loss)	$	(2,372	)	$	(287	)	$	2,327	$	—	$	(332	)

Condensed Consolidating Statement of Operations
For the Forty Weeks Ended April 6, 2005

				Subsidiary			Subsidiary
	Parent			Issuer			Guarantors		Eliminations		Consolidated
	(In thousands)

RESTAURANT SALES	$	—		$	30,498		$	669,452	$	—	$	699,950
RESTAURANT COSTS:
Food		—			10,917			219,615		—		230,532
Labor		—			9,475			202,259		—		211,734
Direct and occupancy		—			5,703			163,681		—		169,384

Total restaurant costs		—			26,095			585,555		—		611,650
ADVERTISING EXPENSES		—			772			16,948		—		17,720
GENERAL AND ADMINISTRATIVE
EXPENSES		4			1,439			31,592		—		33,035

OPERATING INCOME (LOSS)		(4	)		2,192			35,357		—		37,545
INTEREST EXPENSE		8,810			1,691			26,498		—		36,999
INTEREST INCOME		—			(383	)		—		—		(383	)
LOSS RELATED TO REFINANCING		859			—			—		—		859
LOSS RELATED TO EARLY
EXTINGUISHMENT OF DEBT		—			1,923			—		—		1,923
OTHER INCOME		—			(717	)		—		—		(717	)

INCOME (LOSS) BEFORE INCOME
TAXES		(9,673	)		(322	)		8,859		—		(1,136	)
INCOME TAX EXPENSE (BENEFIT)		(3,386	)		(108	)		2,983		—		(511	)

Net income (loss)	$	(6,287	)	$	(214	)	$	5,876	$	—	$	(625	)

Condensed Consolidating Statement of Cash Flows
For the Forty Weeks Ended April 7, 2004

				Subsidiary			Subsidiary
	Parent			Issuer			Guarantors			Eliminations			Consolidated
	(In thousands)
OPERATING ACTIVITIES:
Net income (loss)	$	(892	)	$	(2,421	)	$	9,764		$	—		$	6,451
Adjustments to reconcile net income (loss)
to net cash provided by (used in)
operating activities:
Depreciation and amortization		—			2,806			23,199			—			26,005
Amortization of debt issuance costs		—			61			964			—			1,025
Accretion of original issue discount		—			37			581			—			618
Write-off of debt issuance cost related to
bank refinancing		—			4,201			—			—			4,201
Loss related to early extinguishment of debt:
Write-off of debt issuance costs		—			558			—			—			558
Premium expensed		—			1,687			—			—			1,687
Original issue discount expensed		—			482			—			—			482
Deferred income taxes		—			114			1,792			—			1,906
Gain on disposal of assets		—			—			192			—			192
Changes in assets and liabilities:
Receivables		—			28,477			(27,650	)		(1,708	)		(881	)
Inventories		—			27			(595	)		—			(568	)
Prepaid expenses and other assets		(4	)		(2,966	)		1,107			—			(1,863	)
Accounts payable		50			(1,566	)		(494	)		—			(2,010	)
Accrued and other liabilities		(1,045	)		(4,544	)		(1,119	)		—			(6,708	)
Income taxes payable/refundable		(559	)		2,130			(827	)		—			744

Net cash provided by (used in)
operating activities		(2,450	)		29,083			6,914			(1,708	)		31,839

INVESTING ACTIVITIES:
Proceeds from sale leaseback		—			—			2,710			—			2,710
Purchase of fixed assets		—			(965	)		(26,840	)		—			(27,805	)
Corporate cash advances (payments)		—			(9,640	)		7,932			1,708			—
Acquisition of 20% minority interest in
Tahoe Joe's Inc.		—			—			(370	)		—			(370	)
Proceeds from sale of other assets		(9	)		—			2,032			—			2,023

Net cash provided by (used in)
investing activities		(9	)		(10,605	)		(14,536	)		1,708			(23,442	)

FINANCING ACTIVITIES:
Repayment of debt		—			(10,343	)		(162,034	)		—			(172,377	)
Unrestricted cash proceeds from credit
facility		—			11,718			183,582			—			195,300
Initial restricted cash proceeds from credit
facility		—			2,082			32,618			—			34,700
Restricted cash proceeds from credit facility
available as of quarter end		—			(2,012	)		(31,516	)		—			(33,528	)
Use of restricted cash for early
extinguishment of debt		—			(70	)		(1,102	)		—			(1,172	)
Use of unrestricted cash for early
extinguishment of debt		—			(918	)		(14,382	)		—			(15,300	)
Redemption of subordinated notes		(18,311	)		—			—			—			(18,311	)
Issuance of stock		184			—			—			—			184
Repurchase of stock		(323	)		—			—			—			(323	)
Dividends		20,847			(20,847	)		—			—			—
Debt issuance costs		—			(162	)		(2,531	)		—			(2,693	)

Net cash used in investing activities		2,397			(20,552	)		4,635			—			(13,520	)

NET CHANGE IN CASH AND CASH
EQUIVALENTS		(62	)		(2,074	)		(2,987	)		—			(5,123	)
CASH AND CASH EQUIVALENTS, beginning of
period		108			8,511			7,236			—			15,855

CASH AND CASH EQUIVALENTS, end of period	$	46		$	6,437		$	4,249		$	—		$	10,732

Condensed Consolidating Statement of Cash Flows
For the Forty Weeks Ended April 6, 2005

				Subsidiary			Subsidiary
	Parent			Issuer			Guarantors			Eliminations			Consolidated
	(In thousands)
OPERATING ACTIVITIES:
Net income (loss)	$	(6,287	)	$	(214	)	$	5,876		$	—		$	(625	)
Adjustments to reconcile net income (loss)
to net cash provided by (used in)
operating activities:
Depreciation and amortization		—			2,559			22,383			—			24,942
Amortization of debt issuance costs		242			50			779			—			1,071
Accretion of original issue discount		8,568			36			559			—			9,163
Loss related to early extinguishment of debt:
Write-off of debt issuance costs		—			457			—			—			457
Premium expensed		—			986			—			—			986
Original issue discount expensed		—			480			—			—			480
Deferred income taxes		(1,024	)		62			975			—			13
Loss on disposal of assets		—			—			1,763			—			1,763
Changes in assets and liabilities:
Receivables		—			29,468			(29,553	)		(485	)		(570	)
Inventories		—			(49	)		(554	)		—			(603	)
Prepaid expenses and other assets		(5	)		(1,290	)		(3,580	)		—			(4,875	)
Accounts payable		(177	)		409			152			—			384
Accrued and other liabilities		—			(5,102	)		2,337			—			(2,765	)
Income taxes payable/refundable		(2,362	)		2,365			(1,619	)		—			(1,616	)

Net cash provided by (used in)
operating activities		(1,045	)		30,217			(482	)		(485	)		28,205

INVESTING ACTIVITIES:
Purchase of fixed assets		—			(1,064	)		(19,668	)		—			(20,732	)
Corporate cash advances (payments)		—			(38,378	)		37,893			485			—
Proceeds from sale of other assets		33			—			(122	)		—			(89	)

Net cash provided by (used in)
investing activities		33			(39,442	)		18,103			485			(20,821	)

FINANCING ACTIVITIES:
Repayment of debt		—			(1,307	)		(20,474	)		—			(21,781	)
Reduction of restricted cash available
for early extinguishment of debt		—			974			15,254			—			16,228
Use of restricted cash for early
extinguishment of debt		—			(944	)		(14,792	)		—			(15,736	)
Issuance of stock		15			—			—			—			15
Repurchase of stock		(284	)		—			—			—			(284	)
Dividends		1,290			(1,290	)		—			—			—
Debt issuance costs		(56	)		—			—			—			(56	)

Net cash provided by (used in)
investing activities		965			(2,567	)		(20,012	)		—			(21,614	)

NET CHANGE IN CASH AND CASH
EQUIVALENTS		(47	)		(11,792	)		(2,391	)		—			(14,230	)
CASH AND CASH EQUIVALENTS,
beginning of period		96			19,771			6,205			—			26,072

CASH AND CASH EQUIVALENTS,
end of period	$	49		$	7,979		$	3,814		$	—		$	11,842

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

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS

You should read the following discussion in conjunction with our condensed consolidated financial statements and related notes included elsewhere in this report. Unless the context indicates or requires otherwise, (i) the term “Buffets Holdings” refers to Buffets Holdings, Inc.; (ii) the term “Buffets” refers to Buffets, Inc., our principal operating subsidiary; (iii) the terms “we,” “our,” “ours,” and the “Company” refer to Buffets Holdings, Inc. and its subsidiaries. Some of the statements in the following discussion are forward-looking statements. See “Forward-Looking Statements and Risk Factors.”

Overview

We are the largest operator of company-owned stores in the buffet/grill sector (through Buffets and its subsidiaries), as measured in both sales and number of restaurants. Our restaurants are principally operated under the names Old Country Buffet and HomeTown Buffet. As of April 6, 2005, we had 354 company-owned restaurants and 19 franchised locations in 36 states.

Buffets was founded in 1983 to develop buffet-style restaurants under the name Old Country Buffet. In October 1985, Buffets completed its initial public offering and was listed on The NASDAQ National Market. In September 1996, Buffets merged with HomeTown Buffet, Inc., which was developed by one of Buffets’ co-founders and had 80 company-owned HomeTown Buffet restaurants in 11 states and 19 franchised restaurants in eight states. In October 2000, Buffets was acquired by Buffets Holdings, a company organized by Caxton-Iseman Capital, Inc., in a buyout from public shareholders.

Our financial results are significantly impacted by changes in sales at our company-owned restaurants. Changes in sales are largely driven by changes in average weekly guest counts and average guest check. Average weekly guest counts are affected by changes in consumer confidence levels, competition, economic conditions and unusual weather patterns. We monitor average weekly guest counts very closely, as they directly impact our revenues and profits, and focus substantial efforts on growing these numbers on a same-store basis. Same-store average weekly sales and guest counts are affected by our ability to consistently deliver a high-quality, value-priced selection of home-style cooked meals in a clean and pleasant self-service buffet format, the success of our marketing promotions and other business strategies.

Our business model is characterized by a relatively fixed cost structure, particularly in the short term. Accordingly, changes in marginal average weekly sales volume can have a more significant impact on our profitability than for a business possessing a more variable cost structure. Over a longer time horizon, by virtue of our diversified food offerings, we are able to address the semi-fixed element of food cost by modifying our offerings or by highlighting other foods on the menu in order to reduce consumption on the higher cost items. In addition, we monitor our labor costs and hourly employee productivity, as measured by the number of guests served per labor hour, on a weekly basis to ensure that restaurants are responsive in scheduling and managing our labor to varying levels of guest traffic.

We devote significant resources and attention to our marketing efforts which is evident in the level of our advertising expenditures over the past five years. In the past year, we adopted a more stringent, return on investment based approach to advertising placement which has resulted in more efficient and effective returns on our marketing investments.

Since we acquired Buffets in a buyout from its public shareholders in October 2000, we have focused on improving asset management and optimizing our capital structure. As a result, we have had net closures of 50 restaurants either through early termination, or non-renewal at lease end, since October 2000. We expect the number of closures to abate in the next couple of years, and reach an equilibrium point at which new openings and select relocations will approximate the number of restaurants which we close because they do not meet our profitability goals.

Our fiscal year comprises 52 or 53 weeks divided into four fiscal quarters of 12, 12, 16 and 12 or 13 weeks. Beginning with the transitional period ended July 3, 2002, we changed our fiscal year so that it ends on the Wednesday nearest June 30 of each year. The fiscal year 2002 transition period consisted of 26 weeks and was divided into two periods of 16 and 10 weeks. Prior to that, our fiscal year ended on the Wednesday nearest December 31 of each year and each fiscal year was divided into periods of 16, 12, 12 and 12 or 13 weeks.

The following is a description of the line items from our condensed consolidated statements of operations:

• We recognize as restaurant sales the proceeds from the sale of food and beverages at our company owned restaurants at the time of such sale. We recognize the proceeds from the sale of gift certificates/cards when the gift certificates/cards are redeemed at our restaurants. Until redemption, the unearned revenue from the sale of gift certificates/cards is included in accrued liabilities on our consolidated balance sheets. Our franchise income includes royalty fees and initial franchise fees received from our franchisees. We recognize royalty fees as other income based on the sales reported at the franchise restaurants.

• Restaurant costs reflect only direct restaurant operating costs, including food, labor and direct and occupancy costs. Labor costs include compensation and benefits for both hourly and restaurant management employees. Direct and occupancy costs consist primarily of costs of supplies, maintenance, utilities, rent, real estate taxes, insurance, depreciation and amortization.

• Advertising expenses reflect all advertising and promotional costs.

• General and administrative expenses reflect all costs, other than advertising expenses, not directly related to the operation of restaurants. These expenses consist primarily of corporate administrative compensation and overhead, district and regional management compensation and related management expenses and the costs of recruiting, training and supervising restaurant management personnel.

• Interest expense reflects interest costs associated with our debt, amortization of debt issuance cost and accretion of original issuance discount on our subordinated notes and bonds.

• Interest income reflects interest earned on our short-term investments.

• Loss related to refinancing for 2004 reflects the write-off of debt issuance cost in connection with the amendment and restatement of our senior credit agreement on February 20, 2004 as well as costs associated with an uncompleted senior discount note offering. Loss related to refinancing for 2005 represents costs associated with an initial public offering of Income Deposit Securities that was withdrawn due to unfavorable market conditions.

• Loss related to the early extinguishment of debt reflects the costs associated with redeeming a portion of Buffets' 11 1/4% senior subordinated notes prior to their maturity.

• Other income primarily reflects franchise fees earned, less minority interest associated with our Tahoe Joe's subsidiary. During August 2003, we exercised our call option to acquire the remaining 20% interest in Tahoe Joe's, Inc. from the minority holder.

• Income tax expense reflects the current and deferred tax provision (benefit) determined in accordance with the provisions of Statement of Financial Accounting Standards No. 109, "Accounting for Income Taxes."

Critical Accounting Policies

Our condensed consolidated financial statements have been prepared in accordance with accounting policies generally accepted in the United States of America. The preparation of our financial statements requires management to make estimates and assumptions that affect the reported amount of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. On an ongoing basis, management evaluates its estimates and assumptions, including those related to recoverability of long-lived assets, revenue recognition and goodwill. We base our estimates and assumptions on historical experience and on various other factors that are believed to be reasonable at the time the estimates and assumptions are made. Actual results may differ from these estimates and assumptions under different circumstances or conditions.

We believe the following critical accounting policies affect management’s significant estimates and assumptions used in the preparation of our condensed consolidated financial statements.

Recoverability of Long-Lived Assets

We periodically evaluate long-lived assets and goodwill related to those assets for impairment whenever events or changes in circumstances indicate the carrying value amount of an asset or group of assets may not be recoverable. We consider a history of operating losses and the other factors described to be its primary indicator of potential impairment. Assets are grouped and evaluated for impairment at the lowest level for which there are identifiable cash flows, namely individual restaurants. A restaurant is deemed to be impaired if a forecast of undiscounted future operating cash flows directly related to the restaurant, including disposal value, if any, are less than its carrying amount. If a restaurant is determined to be impaired, the loss is measured as the amount by which the carrying amount of the restaurant exceeds its fair value. Fair value is based on quoted market prices in active markets, if available. If quoted market prices are not available, an estimate of fair value is based on the best information available, including prices for similar assets or the results of valuation techniques such as discounted estimated future cash flows as if the decision to continue to use the impaired restaurant was a new investment decision. We generally measure fair value by discounting estimated future cash flows. Considerable management judgment is necessary to estimate discounted future cash flows. Accordingly, actual results could vary significantly from such estimates. There were no impairment charges during the first forty weeks of fiscal 2005 or fiscal 2004.

Results of Operations

The following discussion reflects our historical results for the 16-week and 40-week periods ended April 6, 2005 and April 7, 2004.

Our future results may not be consistent with our historical results due to factors discussed in “Forward-Looking Statements and Risk Factors” and other factors. The following discussion should be read in conjunction with our condensed consolidated financial statements and related notes included elsewhere in this report.

For the 16 Weeks Ended April 6, 2005 Compared to the 16 Weeks Ended April 7, 2004

The following table sets forth our results of operations based on the percentage relationship of the items listed to our restaurant sales during the periods shown:

	16 Weeks					16 Weeks
	Ended					Ended
	April 7, 2004					April 6, 2005
	(dollars in thousands)

Restaurant sales	$	287,573		100.0	%	$	277,567		100.0	%
Restaurant costs		247,414		86.0			244,437		88.1
Advertising expenses		7,198		2.5			6,875		2.5
General and administrative expenses		14,515		5.0			12,185		4.4

Operating income		18,446		6.4			14,070		5.1
Interest expense		11,919		4.1			15,068		5.4
Interest income		(123	)	—			(137	)	—
Loss related to refinancing		4,798		1.7			24		—
Loss related to early extinguishment of debt		2,727		0.9			—		—
Other income		(285	)	(0.1	)		(297	)	(0.1	)

Loss before income taxes		(590	)	(0.2	)		(588	)	(0.2	)
Income tax benefit		(520	)	(0.2	)		(256	)	(0.1	)

Net loss	$	(70	)	—		$	(332	)	(0.1	)

Certain percentage amounts do not sum to total due to rounding.

Restaurant Sales. Restaurant sales for the 16 weeks ended April 6, 2005 decreased $10.0 million, or 3.5%, compared with the 16 weeks ended April 7, 2004. The decline in sales for the quarter ended April 6, 2005 versus the prior year period was impacted by the closure of 10 buffet restaurants, partially offset by the opening of three units over the past year. Average weekly sales for the third quarter of fiscal 2005 of $49,205 were 0.9% lower than the comparable prior year period’s average weekly sales of $49,659. Same-store sales for the third quarter of fiscal 2005 decreased by 1.9% compared to the comparable prior year period, reflecting a 3.8% decline in guest traffic partially offset by a 1.9% increase in average check. We attribute the weak sales trends during the third quarter of 2005 to softening consumer confidence levels, adverse weather conditions at various times during the period and a shift in the timing of the Christmas and New Year holidays to higher-volume weekend days as opposed to lower-volume days in the comparable prior year period. We believe high energy costs and uncertain economic conditions have affected our customers’ disposable income spending decisions and adversely impacted our guest counts. We currently expect same-store sales for the fourth quarter of fiscal 2005 (the 12-week period ending June 29, 2005) to range between a one and a three percent improvement versus the comparable period in fiscal 2004.

Restaurant Costs. Restaurant costs for the third quarter of fiscal 2005 increased by 2.1% as a percentage of sales compared with the comparable prior year period. Food costs increased 0.9% as a percentage of sales during the third quarter in fiscal 2005 as compared to the prior year period primarily due to increased chicken and dairy commodity costs. Labor costs were flat as a percentage of sales as compared to the comparable quarter in the prior year. Direct and occupancy costs increased by 1.2% measured as a percentage of sales versus the comparable quarter in the prior year due to higher utility costs and leverage issues attributable to reasonably fixed costs on a declining sales base. We currently expect that restaurant costs will range between 86.0% and 86.2% as a percentage of sales during the fourth quarter of fiscal 2005.

Advertising Expenses. Advertising costs were flat as a percentage of sales during the third quarter of fiscal 2005 versus the comparable quarter in the prior year. We expect that advertising costs will range between 2.9% and 3.1% as a percentage of sales during the fourth quarter of this year.

General and Administrative Expenses. General and administrative expenses decreased 0.6% as a percentage of sales during the third quarter of fiscal 2005 as compared to the 16 weeks ended April 7, 2004. This decrease was largely due to reduced bonus expense, 401K expense, litigation expense and severance expense. We currently expect that general and administrative expenses will range between 4.2% and 4.4% as a percentage of sales for the fourth quarter of fiscal 2005.

Interest Expense. Interest expense increased 1.3% as a percentage of sales during the third quarter of fiscal 2005 versus the comparable prior year period primarily due to the issuance of our 13 7/8% senior discount notes issued in May 2004. We currently expect that interest expense will range between 5.0% and 5.2% as a percentage of sales for the fourth quarter of fiscal 2005.

Loss Related to Refinancing. On February 20, 2004, Buffets, Inc. entered into an amended and restated Credit Facility. In connection with this bank refinancing, we wrote off $4.2 million of debt issuance costs related to the predecessor Credit Facility. In addition, we incurred $0.6 million in transaction fees associated with an uncompleted senior discount note offering.

Loss Related to the Early Extinguishment of Debt. During the third quarter of fiscal 2004, we repurchased $14.3 million of 11¼% senior subordinated notes due in 2010 at an average price of 111.4%. The difference between the premium purchase price and the discounted carrying value of the senior subordinated notes, as well as the associated write-off of debt issuance costs, was recognized as a loss related to the early extinguishment of debt.

Income Taxes. Income taxes decreased 0.1% as a percentage of sales for the 16 weeks ended April 6, 2005 compared to the 16 weeks ended April 7, 2004 principally due to an increase in the effective tax rate. The increase in the effective tax rate was largely attributable to the non-deductibility of a portion of our 13 7/8% senior discount notes.

For the 40 Weeks Ended April 6, 2005 Compared to the 40 Weeks Ended April 7, 2004

The following table sets forth our results of operations based on the percentage relationship of the items listed to our restaurant sales during the periods shown:

	40 Weeks					40 Weeks
	Ended					Ended
	April 7, 2004					April 6, 2005
	(dollars in thousands)
Restaurant sales	$	718,456		100.0	%	$	699,950		100.0	%
Restaurant costs		621,517		86.5			611,650		87.4
Advertising expenses		19,090		2.7			17,720		2.5
General and administrative expenses		33,094		4.6			33,035		4.7

Operating income		44,755		6.2			37,545		5.4
Interest expense		29,515		4.1			36,999		5.3
Interest income		(308	)	—			(383	)	(0.1	)
Loss related to refinancing		4,798		0.7			859		0.1
Loss related to early extinguishment of debt		2,727		0.4			1,923		0.3
Other income		(1,128	)	(0.2	)		(717	)	(0.1	)

Income (loss) before income taxes		9,151		1.3			(1,136	)	(0.2	)
Income tax expense (benefit)		2,700		0.4			(511	)	(0.1	)

Net income (loss)	$	6,451		0.9		$	(625	)	(0.1	)

Certain percentage amounts do not sum to total due to rounding.

Restaurant Sales. Restaurant sales for the 40 weeks ended April 6, 2005 decreased $18.5 million, or 2.6%, compared with the 40 weeks ended April 7, 2004. The decline in sales for the first 40 weeks of fiscal 2005 versus the prior year period was impacted by the closure of 10 buffet restaurants, partially offset by the opening of three units over the past year. Average weekly sales for the first 40 weeks of fiscal 2005 of $49,313 were 0.2% lower than the comparable prior year period’s average weekly sales of $49,395. Same-store sales for the first 40 weeks of fiscal 2005 decreased by 1.3% compared to the comparable prior year period, reflecting a 3.4% decline in guest traffic partially offset by a 2.1% increase in average check.

Restaurant Costs. Restaurant costs for the first 40 weeks of fiscal 2005 increased by 0.9% as a percentage of sales compared with the comparable prior year period. Food costs increased 0.4% as a percentage of sales primarily due to commodity pricing pressures principally in our chicken and dairy product categories, partially offset by a more stabilized and standardized menu relative to the comparable prior year period that had included multiple protein-related tests. Labor costs were 0.6% lower as a percentage of sales than those experienced in the comparable 40 weeks in the prior year primarily due to a rationalization of our restaurant management complement and reduced workers compensation costs. Direct and occupancy costs increased by 1.0% measured as a percentage of sales versus the comparable period in the prior year. The increase was largely attributable to approximately $1.8 million in losses on disposal primarily associated with the closure of nine restaurants and the cancellation of two new store openings, as well as higher utility costs.

Advertising Expenses. Advertising costs decreased 0.2% as a percentage of sales during the first 40 weeks of fiscal 2005 versus the comparable period in the prior year as we significantly reduced television advertising during December and January.

General and Administrative Expenses. General and administrative expenses increased 0.1% as a percentage of sales during the first 40 weeks of fiscal 2005 as compared to the 40 weeks ended April 7, 2004. Higher severance expense and professional fees during fiscal 2005 were largely offset by higher bonus expense and 401K expense during fiscal 2004.

Interest Expense. Interest expense increased 1.2% as a percentage of sales during the first 40 weeks of fiscal 2005 versus the comparable prior year period primarily due to the issuance of our 13 7/8% senior discount notes issued in May 2004.

Loss Related to Refinancing. During fiscal 2005, we incurred approximately $0.9 million in costs associated with an initial public offering of Income Deposit Securities that was withdrawn due to unfavorable market conditions. During fiscal 2004, Buffets, Inc. entered into an amended and restated Credit Facility. In connection with this bank refinancing, we wrote off $4.2 million of debt issuance costs related to the predecessor Credit Facility. In addition, we incurred $0.6 million in transaction fees associated with an uncompleted senior discount note offering.

Loss Related to the Early Extinguishment of Debt. During the first quarter of fiscal 2005, we redeemed approximately $14.3 million of Buffets’ 11¼% senior subordinated notes at an average price of 106.7%. During the third quarter of fiscal 2004, we repurchased $14.3 million of 11¼% senior subordinated notes due in 2010 at an average price of 111.4%. The difference between the premium purchase price and the discounted carrying value of the senior subordinated notes, as well as the associated write-off of debt issuance costs, was recognized as a loss related to the early extinguishment of debt.

Other Income. Other income decreased 0.1% as a percentage of sales during the first 40 weeks of fiscal 2005 compared with the comparable prior year period. The prior year total included an adjustment to our excess minority interest liability of approximately $345,000 concurrent with our acquisition of the remaining 20% interest in Tahoe Joe’s Inc. from the minority holder.

Income Taxes. Income taxes decreased 0.5% as a percentage of sales for the 40 weeks ended April 6, 2005 compared to the 40 weeks ended April 7, 2004 principally due to a decrease in income before income taxes. The increase in the effective tax rate was largely attributable to the non-deductibility of a portion of our 13 7/8% senior discount notes.

Liquidity and Capital Resources

We are a holding company with no operations or assets of our own other than the capital stock of our subsidiaries. Operations are conducted through our subsidiaries and our ability to make payments on the senior discount notes is dependent on the earnings and the distribution of funds from our subsidiaries through loans, dividends or otherwise. However, none of our subsidiaries is obligated to make funds available to us for payment on the senior discount notes. The terms of our credit facility place restrictions on Buffets’ ability to pay dividends and otherwise transfer assets to us. Further, the terms of the indenture governing Buffets’ senior subordinated notes place restrictions on the ability of Buffets and our other subsidiaries to pay dividends and otherwise transfer assets to us.

Cash flows generated from Buffets’ operating activities provide us with a significant source of liquidity. Because most of our sales are for cash or credit with settlement within a few days and most vendors are paid on terms ranging from 14 to 35 days, we operate on a significant working capital deficit. In addition to cash flows from operations, revolving credit loans and swingline loans are available to us under our credit facility. Letters of credit issued under the letter of credit facility are also available to us to support payment obligations incurred for our general corporate purposes.

Historically, our capital requirements have been for the development and construction of new restaurants, restaurant refurbishment and the installation of new information systems. We expect these requirements to continue in the foreseeable future.

Operating Activities. Net cash provided by operating activities was $28.2 million for the 40 weeks ended April 6, 2005 and $31.8 million for the 40 weeks ended April 7, 2004. Net cash provided by operating activities exceeded the net loss for the first 40 weeks of fiscal 2005 principally due to the effect of depreciation and amortization, accretion of original issue discount and an increase in the loss related to the early extinguishment of debt, partially offset by an increase in prepaid expenses and a decrease in accrued and other liabilities. Net cash provided by operating activities exceeded net income for the first 40 weeks of fiscal 2004 primarily due to the effect of depreciation and amortization, a write-off of debt issuance cost related to bank refinancing and a loss related to early extinguishment of debt, partially offset by a decrease in accrued and other liabilities.

Investing Activities. Net cash used in investment activities was $20.8 million for the 40 weeks ended April 6, 2005 and $23.4 million for the 40 weeks ended April 7, 2004. Investment activities were largely comprised of capital expenditures for both periods. During fiscal 2005, new restaurant construction accounted for approximately $10.1 million of our capital expenditures. The bulk of the remainder of our capital expenditures during fiscal 2005 were comprised of remodeling and improvement costs on our existing restaurants. During fiscal 2004, our capital expenditures were primarily comprised of $17.8 million in re-image expenditures, with the majority of the remaining expenditures representing remodeling and improvement outlays on our existing restaurants.

Financing Activities. Net cash used in financing activities totaled $21.6 million for the first 40 weeks of fiscal 2005 and $13.5 million for the first 40 weeks of fiscal 2004. Financing activities consisted primarily of accelerated repayments of debt in both fiscal 2005 and 2004. In addition, Buffets, Inc. completed its partial bond repurchase program in August 2004, cumulatively expending $49.5 million to redeem $43.9 million of senior subordinated notes at an average price of 109.2% over a period of approximately six months. Buffets, Inc. spent $15.7 million during the first quarter of fiscal 2005 to redeem $14.3 million of senior subordinated notes at an average price of 106.7%.

Future Capital Expenditures. During the remainder of fiscal 2005, we plan to:

•

Spend approximately $5 million on two more new restaurant openings this fiscal year, followed by two more openings next fiscal year.

•

Spend approximately $5 million on remodeling and improvement costs that will be capitalized. Remodels incorporate design elements to update the decor of our existing facilities including a lighter, more contemporary interior design and expanded dessert displays. Other improvement costs include a variety of outlays such as new carpet, equipment and minor leasehold improvements.

We are not aware of any other event or trend that would potentially affect our capital requirements or liquidity. For the next twelve months, we believe that cash flow from operations, landlord contributions, credits received from trade suppliers and available borrowing capacity will be adequate to finance our development plans, on-going operations and debt service obligations.

Credit Facilities and Other Long Term Debt

On February 20, 2004, Buffets amended and restated its Credit Facility. The amended and restated Credit Facility provides for total borrowings of up to $310,000,000, including (i) a $230,000,000 term loan, (ii) a $30,000,000 revolving credit facility, (iii) a $20,000,000 letter of credit facility, and (iv) a $30,000,000 synthetic letter of credit facility. The terms of the Credit Facility permit Buffets to borrow, subject to availability and certain conditions, incremental term loans or to issue additional notes in an aggregate amount up to $25,000,000. The borrowings under the term loan facility bear interest, at Buffets’ option, at either adjusted LIBOR plus 3.50% or at an alternate base rate plus 2.50%, subject to a leverage-based pricing grid. The term loan and the synthetic letter of credit facility mature on June 28, 2009, while the revolving facility and the letter of credit facilities mature on June 28, 2007. Buffets has the option of tying its borrowings to LIBOR or a base rate when calculating the interest rate for the term loan. The base rate is the greater of Credit Suisse First Boston’s prime rate, or the federal funds effective rate plus one-half of 1 percent. The borrowings due under the term loan are payable in equal quarterly installments in an annual amount equal to 1% of the term loan during each of the first four and a half years of the loan, with the remaining balance payable due in equal quarterly installments during the last year of the loan. The Credit Facility is fully and unconditionally guaranteed by Buffets Holdings, which has no independent assets or operations, and is secured by substantially all of our assets. Availability under the Credit Facility depends upon Buffets’ continued compliance with certain covenants and financial ratios including leverage, interest coverage and fixed charge coverage as specifically defined in the Credit Facility. Buffets was in compliance with all financial ratio covenants of the Credit Facility as of April 6, 2005. The financial ratio covenant requirements increase over time, however, as set forth in the senior credit agreement.

As of April 6, 2005, we had $35.7 million in outstanding letters of credit, which expire through March 31, 2006. As of April 6, 2005, we had $44.3 million of total borrowing availability comprised of $30.0 million under the revolving credit facility and $14.3 million of collective borrowing capacity under the letter of credit facilities.

On June 28, 2002, Buffets’ issued $230.0 million aggregate principal amount of its 11¼% senior subordinated notes due July 15, 2010 at an offering price of 96.181% of principal amount at maturity. Interest is payable semi-annually on January 15 and July 15 of each year. Except in the event of an initial public offering, we are not entitled to redeem Buffets’ 11¼% senior subordinated notes’ prior to July 15, 2006, after which we can choose to redeem some or all of Buffets’ 11¼% senior subordinated notes at specified redemption prices.

On May 18, 2004, we issued $132 million aggregate principal amount at maturity of our 13 7/8% senior discount notes due December 15, 2010. Our 13 7/8% senior discount notes were issued at a discount to their aggregate principal amount at maturity. Prior to July 31, 2008, interest will accrue on our 13 7/8% senior discount notes in the form of an increase in the accreted value of those notes. The accreted value of each 13 7/8% senior discount notes will increase until July 31, 2008 at a rate of 13.875% per annum. After this date, cash interest on the 13 7/8% senior discount notes will accrue and be payable on January 31 and July 31 of each year at a rate of 13.875% per annum. If we fail to meet certain leverage ratio tests on or about July 31, 2006 or July 31, 2008, additional interest will accrue on our 13 7/8% senior discount notes from that date at a rate of 1% per annum, up to a maximum of 2% per annum.

Seasonality and Quarterly Fluctuations

Our sales are seasonal, with a lower percentage of annual sales occurring in most of our current market areas during the winter months. Our restaurant sales may also be affected by unusual weather patterns, particularly during the winter months, major world events or matters of public interest that compete for customers’ attention. Generally, restaurant sales per unit are lower in the winter months, our third fiscal quarter ending in April of each year. The impact of these reduced average weekly sales is mitigated in our quarterly data presentations through the inclusion of 16 weeks in the quarter ending in early April of each year, compared to only 12 or 13 weeks in each of the other fiscal quarters.

Forward-Looking Statements and Risk Factors

The statements contained in this report which are not historical facts are forward-looking statements that are subject to risks and uncertainties that could cause actual results to differ materially from those set forth in, or implied by, forward-looking statements. We have tried, whenever possible, to identify these forward-looking statements using words such as “projects,” “anticipates,” “believes,” “estimates,” “expects,” “plans,” “intends,” and similar expressions. Similarly, statements herein that describe our business strategy, outlook, objectives, plans, intentions or goals are also forward-looking statements. The risks and uncertainties involving forward-looking statements include, but are not limited to, general business and economic conditions, negative publicity, the impact of competition, the seasonality of our business, adverse weather conditions, future commodity prices, fuel and utility costs, labor costs, employment and environmental laws, governmental regulations, and inflation. For a detailed discussion of risks and uncertainties that may cause our future performance to differ from that projected in the forward-looking statements, please refer to the “Risk Factors/Forward-Looking Statements” section contained in our Form 10-K filed with the Securities and Exchange Commission on September 28, 2004. All forward-looking statements speak only as of the date of this report. All subsequent written and oral forward-looking statements attributable to us or any person acting on our behalf are qualified by the cautionary statements in this section. We undertake no obligation to update or publicly release any revisions to forward-looking statements to reflect events, circumstances or changes in expectations after the date of this report.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Interest Rate Risks. We have interest rate exposure relating to the variable portion of our long-term obligations. Our 11¼% senior subordinated notes and our 13 7/8% senior discount notes are fixed rate instruments while the interest rates on the term loans under our credit facility are variable. A 1% change in interest rates on our variable rate debt would have resulted in our interest expense fluctuating by approximately $1.7 million for the 40 weeks ended April 6, 2005.

Food Commodity Risks. Many of the food products purchased by us are affected by commodity pricing and are, therefore, subject to price volatility caused by weather, production problems, delivery difficulties and other factors that are outside our control. To control this risk in part, we have fixed price purchase commitments with terms of one year or less for some key food and supplies from vendors who supply our national food distributor. In addition, we believe that substantially all of our food and supplies are available from several sources, which helps to control food commodity risks. We believe we have the ability to increase menu prices, or vary the menu items offered, if needed, in response to food product price increases within the range that has been experienced historically. To compensate for a hypothetical price increase of 10% for food and beverages, we would need to increase menu prices by an average of approximately 3%. Our average price increases were approximately 2% for the 40 weeks ended April 6, 2005. Accordingly, we believe that a hypothetical 10% increase in food product costs would not have a material effect on our operating results.

ITEM 4. CONTROLS AND PROCEDURES

Disclosure Controls and Procedures. We maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed in our Exchange Act reports is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and regulations, and that the information is accumulated and communicated to our management, including our chief executive officer and chief financial officer, as appropriate, to allow timely decisions regarding required disclosures based closely on the definition of “disclosure controls and procedures” in Rules 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934.

As of April 6, 2005, we carried out an evaluation, under the supervision and with the participation of our management, including our chief executive officer and our chief financial officer, of the effectiveness of the design and operation of our disclosure controls and procedures. Based on this evaluation, we concluded that our disclosure controls and procedures were effective.

Changes in Internal Control. During the 16 weeks ended April 6, 2005, there were no significant changes in our internal control over financial reporting (as defined in Rules 13a-15(f) and 15d-15(f) of the Securities and Exchange Act of 1934) that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

It should be noted that any system of controls, however well designed and operated, can provide only reasonable, and not absolute, assurance that the objectives of the system will be met. In addition, the design of any control system is based in part upon certain assumptions about the likelihood of future events. Because of these and other inherent limitations of control systems, there is only reasonable assurance that our controls will succeed in achieving the stated goals under all potential future conditions.

PART II. OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

On November 12, 2004, Elaine Tiffany and Shannon Whitehead, two former restaurant managers of our wholly-owned subsidiary, HomeTown Buffet, Inc., individually and on behalf of all others similarly situated, filed a class action lawsuit against HomeTown Buffet in California Superior Court in San Francisco County. On January 4, 2005, we removed the case to the U.S. federal court in San Francisco. The lawsuit alleges that HomeTown Buffet violated California wage and hour laws by failing to pay all of its California managers and assistant managers overtime, and for making deductions from bonus compensation based on the company’s workers’ compensation costs. The plaintiffs seek compensatory damages, penalties, restitution of unpaid overtime and deductions, pre-judgment interest, costs of suit and reasonable attorneys’ fees. The complaint does not make a specific monetary demand. This action is in a preliminary stage, and we are currently not able to predict the outcome of this action or reasonably estimate a range of possible loss. We intend to defend this action vigorously.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

On December 17, 2004 we issued an aggregate of 23,000 shares of our common stock to certain of our employees for an aggregate consideration of $2,530.00. The issuances were exempt from registration in reliance upon Section 4(2) of the Securities Act as transactions by an issuer not involving a public offering. All recipients were accredited or sophisticated investors. Appropriate legends were or will be affixed to the share certificates issued in such transactions. All recipients have received adequate information about us or had access, through director or employment relationships, to such information.

ITEM 6. EXHIBITS

31.1

Sarbanes-Oxley Act Section 302 Certification of Chief Executive Officer.

31.2.

Sarbanes-Oxley Act Section 302 Certification of Chief Operating Officer.

32.1.

Sarbanes-Oxley Act Section 906 Certification of Chief Executive Officer.

32.2.

Sarbanes-Oxley Act Section 906 Certification of Chief Operating Officer.

SIGNATURES

Pursuant to the requirements 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.







	BUFFETS HOLDINGS, INC.


Date: May 5, 2005	By:	/s/ Roe H. Hatlen

		Roe H. Hatlen
		Chief Executive Officer (Duly Authorized Officer)

	By:	/s/ R. Michael Andrews, Jr.

		R. Michael Andrews, Jr.
		Chief Operating Officer
		(Principal Financial and Accounting Officer)




Delaware		22-3754018
(State or other jurisdiction of		(IRS Employer
incorporation or organization)		Identification No.)






1460 Buffet Way
Eagan, Minnesota	55121
(Address of principal executive offices)	(Zip Code)

Buffets Holdings, Inc.
Senior discount notes, interest at 13.875%, due
December 15, 2010, net of discount of $47,132		84,868

Grand total long-term debt		471,451
Less - Current maturities		2,097

	$	469,354

UNITED STATES SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549

FORM 10-Q

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

BUFFETS HOLDINGS, INC.

BUFFETS HOLDINGS, INC. TABLE OF CONTENTS

PART I. FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

BUFFETS HOLDINGS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

BUFFETS HOLDINGS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

BUFFETS HOLDINGS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

BUFFETS HOLDINGS, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

1. Nature of Organization

2. Recent Accounting Pronouncements

3. Stock-Based Compensation

4. Other Assets

5. Long-Term Debt

6. Purchase of Minority Interest in Joint Venture

7. Significant Events

8. Litigation

9. Condensed Consolidating Financial Statements

Condensed Consolidating Balance Sheet As of June 30, 2004

Condensed Consolidating Balance Sheet As of April 6, 2005

Condensed Consolidating Statement of Operations For the Sixteen Weeks Ended April 7, 2004

Condensed Consolidating Statement of Operations For the Forty Weeks Ended April 7, 2004

Condensed Consolidating Statement of Operations For the Sixteen Weeks Ended April 6, 2005

Condensed Consolidating Statement of Operations For the Forty Weeks Ended April 6, 2005

Condensed Consolidating Statement of Cash Flows For the Forty Weeks Ended April 7, 2004

Condensed Consolidating Statement of Cash Flows For the Forty Weeks Ended April 6, 2005

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

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Overview

Critical Accounting Policies

Results of Operations

Liquidity and Capital Resources

Credit Facilities and Other Long Term Debt

Seasonality and Quarterly Fluctuations

Forward-Looking Statements and Risk Factors

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

ITEM 4. CONTROLS AND PROCEDURES

PART II. OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

ITEM 6. EXHIBITS

SIGNATURES

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

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

BUFFETS HOLDINGS, INC.
TABLE OF CONTENTS

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)

Condensed Consolidating Balance Sheet
As of June 30, 2004

Condensed Consolidating Balance Sheet
As of April 6, 2005

Condensed Consolidating Statement of Operations
For the Sixteen Weeks Ended April 7, 2004

Condensed Consolidating Statement of Operations
For the Forty Weeks Ended April 7, 2004

Condensed Consolidating Statement of Operations
For the Sixteen Weeks Ended April 6, 2005

Condensed Consolidating Statement of Operations
For the Forty Weeks Ended April 6, 2005

Condensed Consolidating Statement of Cash Flows
For the Forty Weeks Ended April 7, 2004

Condensed Consolidating Statement of Cash Flows
For the Forty Weeks Ended April 6, 2005

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS