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. ( )

Indicate by check mark whether the registrant is an accelerated filer (as definted in Rule 12b-2 of the Act). Yes ___ No _X__

The aggregate market value of the voting common stock held by non-affiliates of the registrant as of June 30, 2002, was $4,852,685. The registrant has assumed that its directors and officers are the only affiliates, for purposes of this calculation. As of June 30, 2002, the registrant had 2,987,417 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 29, 2002, the Company owned 53 (47 Garfield’s, 4 Garcia’s and 2 Pepperoni Grills) and franchised or licensed 11 Garfield’s restaurants in 20 states. The Company also provides management services for 12 Garcia’s.

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. The remaining Carlos Murphy’s was converted to a Garcia’s in 1999. Currently, the Company has no locations open utilizing the names "Casa Lupita" or "Carlos Murphy’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 Italian Ristorante’s and one Tommy's Italian American Grill it acquired in 1999. Additionally, the Company opened two Garfield’s and two Garcia’s, all in major regional malls in 2001.

In 2002, the Company sold thirteen Garcia’s located in Arizona, California, Colorado, Idaho and Utah, leaving the Company with four Garcia’s located in Oklahoma (3) and Missouri (1). In conjunction with this sale, the Company also sold the franchise and trademark rights and retained a license agreement under which it operates the remaining Garcia’s.

The Company’s future expansion of its existing concepts will be primarily focused on the construction and franchising of Garfield’s. 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 and website is www.eats-inc.com .

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 2002, five franchisees each opened one new freestanding Garfield’s. During 2000 the Company and a Franchisee each opened one new freestanding Garfield’s. There were no freestanding units opened in 2001 or 1999.

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 2001 and 2000 were approximately $1,005,000 and $920,000, respectively. However, landlord's typically provide substantial tenant construction allowances (approximately $459,000 in 2001 and $450,000 in 2000). After tenant allowances the Company’s net investment was approximately $546,000 and $470,000 per unit for 2001 and 2000, 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 criteria. Senior management inspects and approves each restaurant site. It takes approximately 18 weeks to complete construction and open a Garfield’s.

Each Garcia’s restaurant offers a traditional menu of high quality fresh 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. In 2001 and 2000, the Company built four new Garcia's in malls. These mall-based locations are between 4,800 and 6,200 square feet and seat 175 to 200 people.

The following table sets forth the locations of the existing Garcia’s as of December 29, 2002.

Each Pepperoni Grill offers a menu that features a variety of Italian and Mediterranean 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 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.

Both Pepperoni Grill locations are in Oklahoma.

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 Vice-Presidents of Operations for Garfield’s, Garcia’s and Pepperoni Grill. A typical restaurant has a general manager, two to four assistant managers and average 54 employees, approximately 72% of who are part-time.

Regional VP’s of Operations, Area Directors of Operations as well as restaurant general managers and associate managers are eligible for cash and stock bonuses, professional training and attendance at industry conferences. Receipt of these incentives is based on reaching restaurant performance objectives. As of December 29, 2002 approximately 50% of the general managers are a part of the Company’s Owner/Operator Program, which allows approved managers to purchase up to 10% of their locations net profits. 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 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. The Company develops 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 2002 and will continue in 2003.

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 designing, writing and implementing several new computer software programs designed to advance the Company with MIS technology in the future. In 2001, Mr. Lajos was promoted to Vice President of Management Information Systems.

The Company’s primary expansion emphasis is gradually shifting from constructing new Company-owned restaurants to franchise development.

The Company has customarily opened Garfield’s restaurants in regional malls principally throughout the eastern half of the United States. This mall-based expansion strategy for Garfield’s reduced the risks associated with locating restaurants in new markets because of the availability of historical trends regarding mall sales and customer traffic. Restaurant construction within a mall typically required a lower investment than construction of a freestanding restaurant.

The Company has developed a freestanding building and also has utilized existing buildings as conversion vehicles for Garfield’s expansion. It is Management’s intention to continue the expansion of Garfield’s through the development and construction of higher volumed freestanding locations as well as in regional malls. The Company maintains relationships with several leading real estate developers who provide the Company with an ongoing supply of potential locations for evaluation.

In 2001 Company also opened two new Garfield's in Pennsylvania and Alabama and two new Garcia's in Oklahoma and Missouri. In 2000, the Company opened one new Garfield’s in Maryland and converted one Oklahoma mall-based Garfield’s to a freestanding location. The Company also opened two mall-based Garcia’s in Oklahoma. Additionally, five franchised locations opened in 2002 in Indiana, Nevada and Florida and one franchised location opened in Indiana in 2000.

Because of its commitment to supporting franchise openings, the Company did not develop or open any company owned restaurants in 2002. However, the Company expects to open up to 3 Garfield’s locations in 2003. Additionally, the Company expects approximately 5 franchised Garfield's will be opened in 2003.

As of December 29, 2002, 11 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 of 4.0% of gross sales with a minimum fee of $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.

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 International, Inc. 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.

During 2001, the Company developed plans for two prototypes for Garfield’s freestanding units.

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.

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", "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 Company has no locations open at this time using "Casa Lupita", "Carlos Murphy's" or "Bellini's Ristorante" trade names.

As of December 29, 2002, the Company employed 2,889 individuals, of whom 211 were management or administrative personnel (including 159 who were restaurant managers or trainees) and 2,678 of whom were employed in non-management restaurant positions. As of this date, the Company employed 201 persons on a salaried basis and 2,688 persons on an hourly basis. Each restaurant employs an average of 54 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 51 of the 53 Company-owned restaurants located in regional malls as of December 29, 2002, 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 2002 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:

In 1999 the Company filed suit against one of its food purveyors, J.R. Simplot Co. in federal court. This suit stems from the receipt of contaminated food product that caused a food borne illness outbreak at the Company's Garcia's Mexican restaurants in the Phoenix, Arizona area in July 1998. In 2001, Simplot admitted that it did in fact ship contaminated product to Company-owned Garcia’s in July 1998. The suit was litigated in August 2001 in order to determine the amount of damages to be awarded the Company. Initially, the Company was awarded approximately $6,551,000 in damages plus attorney’s fees and costs. The Company filed a motion to reconsider, based on a technical error in the calculation of damages and was awarded an additional amount, bringing the total to approximately $8,405,000 plus attorney’s fees and costs. In 2002, the Company was awarded an additional $516,000 for attorney’s fees and costs, bringing the total to approximately $8,921,000. As of December 30, 2001, approximately $516,000 was included in accounts receivable for reimbursement of legal fees and was subsequently paid to the Company related to the suit. Both the Company and Simplot have appealed the award. Oral arguments were heard in the Federal Court of Appeals in November 2002. No amounts related to actual damages have been included in Consolidated Stataments of Income. As of the date of this report, the case is on appeal by both parties.

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 2002.

The Company’s common stock was quoted on the NASDAQ National Market System under the symbol "EATS" from May 1994 to January 2003 when the Company’s common stock was transferred and is now quoted on NASDAQ Small-Cap Market. The transfer in 2003 was a result of increased requirements for inclusion on NASDAQ National Market System. Prior to May 1994, 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 4, 2003, the Company’s stock transfer agent reported that the Company’s common stock was held by 181 holders of record. However, management believes there are in excess of 500 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.

As of December 29, 2002, the Company owned and operated 53 (47 Garfield’s, 4 Garcia’s, 2 Pepperoni Grills), franchised or licensed 11 Garfield’s restaurants and provided management and administrative services for 12 Garcia’s. The Company currently has three Garfield’s in development. As of the date of this report, the entire system includes 52 (46 Garfield’s, 4 Garcia’s, 2 Pepperoni Grills) Company-owned restaurants and 11 Garfield’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 Garfield’s restaurants in regional malls, where customer traffic increases substantially during the Thanksgiving to New Year holiday season, has historically resulted in the Company experiencing a substantial increase in restaurant sales and profits during the fourth quarter of each year. However, since the Company’s acquisition of 17 freestanding Mexican restaurants from Famous in 1997, Company revenues and profits have been less affected by seasonality. The disposition of most of these Mexican restaurants in 2002 will likely result in a greater concentration of 2003 revenues into the fourth quarter of the year.The following table presents the Company’s revenues, net income (loss) and certain other financial and operational data for each fiscal quarter of 2002, 2001 and 2000.

The Company’s fiscal year 2002 was affected by the sale of 14 Garcia’s, the write down of the assets of the remaining Garcia’s and the provision to fully reserve all of the deferred tax assets. These non-cash charges totaled approximately $7,908,000. The Company decided to dispose of these Garcia’s based on the lack of recovery in the Arizona market after the food borne contamination in 1998 caused by J.R. Simplot Co. The total loss on the sale of all Garcia’s in 2002 totaled approximately $1,900,000 and included a writedown of goodwill of approximately $1,811,000. In conjunction with this sale and accordance with SFAS 144, management determined that an impairment existed relating to the remaining Garcia’s in the amount of approximately $2,135,000. The provision to fully reserve the deferred tax assets totaled approximately $3,873,000. The Company plans to aggressively pursue the continued expansion and success of Garfield’s in the coming years through the construction of corporate and franchise locations.

The Company’s fiscal year 2001 was highlighted by the judgment received against J.R. Simplot Co., which awarded $6,551,000 in damages plus legal fees and expenses. In 2002, the Company’s motion to reconsider the calculation of the judgment was granted and the Company was awarded an additional $1,854,000, bringing the total award to $8,405,000. Additionally, in 2002, the Company was awarded and received $516,000 for legal fees and costs. The Company’s diligent and aggressive handling of this matter resulted in a favorable result and outlook for the Company’s future. Although, the matter is currently on appeal by both parties, the Company intends to aggressively pursue its legal options until a judgment award is collected.

The Company's results of operations for the year ended December 29, 2002 decreased over prior year. The Company had increases in same store sales over prior year (0.5% increase for Garfield’s), however the sales, closing and disposition of fourteen restaurants in 2002 and ten restaurants in 2001, has resulted in an overall decrease in food and beverage sales. During 2002, the Company sold all of its Garcia’s locations in the western half of the United States as a result of the lack of recovery from the 1998 contamination and for the purpose of being able to fully concentrate on growing its Company-owned and franchise-owned Garfield’s base. This resulted in a net loss on disposal of assets of approximately $1,900,000 (which included a write off of goodwill in the amount of approximately $1,800,000) and a one-time SFAS 144 impairment of its remaining Garcia’s of approximately $2,135,000. During 2001, the Company focused on improving its inventory of restaurants, by selling, closing or disposing of locations that were either not profitable, not in favorably concentrated market locations or did not provide enough cash flow to substantiate the renewal of the lease term. The Company continued 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 2001 and 2002. 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 46 units in 2001 and 25 units in 2000. Five new franchise locations opened in 2002. The Company also experienced slightly better food and labor costs, despite increasing wages and liquor costs 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 than its mall based locations. The Company has experienced occassional spikes in utility costs as reflected in 2000, which can significantly impact unit level profits. The increase in 2000 was approximately $300,000 over 1999. Increasing property and health insurance costs as well as legal fees, also negatively impacted operational results. However, management believes that its current restaurant inventory as of December 29, 2002 is stronger than in prior years and will provide a base for overall financial improvement.

Company revenues for the year ended December 29, 2002, decreased 3.2% over the revenues reported for the year ended December 30, 2001. Revenues for the year ended December 30, 2001, decreased 4.9% over the revenues reported for the year ended December 31, 2000. These decreases are mainly due to restaurant dispositions throughout the three fiscal years. Systemwide revenues (including all franchisees) in 2002 increased 0.7% over systemwide revenues in 2001.

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 $28,402 during 2002 compared to $27,917 during 2001. The 2002 per unit weekly sales increased by $485 or 1.7% from 2001 levels. Garfield’s units continue to have strong performance and increased same store sales over prior years due to concentrated marketing strategies and new menu items. Average weekly sales per unit for Garcia’s were $27,507 during 2002 versus $28,988 in 2001. Garcia’s 2002 average weekly sales per unit decreased $1,481 or 5.1%. This decrease is mainly attributable to the sale of higher volumed restaurants in 2002.

Average weekly sales per unit for Garfield’s were $27,917 during 2001 compared to $26,649 during 2000. The 2001 per unit weekly sales increased by $1,268 or 4.8% from 2000 levels. The increase was primarily due to the introduction of a new menu design, a successful television advertising campaign and the success of continued radio and newspaper advertising. Average weekly sales per unit for Garcia's were $28,988 during 2001 versus $29,910 in 2000. This decrease is primarily related to four mall-based locations constructed in 2000 and 2001 which have lower volumes.

Other revenues during 2002 were $465,000 compared to $618,000 in 2001 and $690,000 in 2000. The decrease in 2002 as compared to 2001 is primarily due to a decrease in vending and other miscellaneous income.

During 2002, 2001 and 2000 other revenues 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 in 2002 and 2001 were 27.6% and increased from 27.5% in 2000. Garcia’s costs of sales as a percentage of food and beverage sales decreased to 25.6% in 2002 from 26.6% in 2001 and 26.3% in 2000. This decrease is primarily due to previous high liquor costs resulting from a rise in tequila prices. Additionally, some of the locations disposed of had higher costs of sales than those not disposed of. Pepperoni Grill cost of sales as a percentage of sales decreased in 2002 to 25.8% from 26.7% in 2001. This decrease was due to the sale of Bellini's and Tommy's in December 2000 which had higher cost of sales due to its product mix.

Operating expenses (which include labor costs) as a percentage of food and beverage sales were 62.8% in 2002 and 2001, and 61.3% in 2000. The increase in operating expenses as a percentage of food and beverage sales in 2001 compared to 2000 was due primarily to increased utility and health and property insurance costs.

The Company expenses pre-opening costs as incurred. During each of the three years in the period ended December 29, 2002, the Company incurred and recognized as expense the following amounts for restaurant pre-opening costs relative to the corresponding number of restaurants opened:

The increase in average pre-opening costs between 2001 and 2000 is due to a delay in the opening of one Garcia’s unit in the first quarter of 2000. The Company did not open any restaurants in 2002.

General and administrative expenses increased as a percentage of total revenues to 6.0% in 2002 from 5.9% in 2001 as compared to 5.6% in 2000. The lower absolute levels of general and administrative expenses from 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. The slight increase in 2002 and 2001 is due to revenue reductions from store sales and closures.

The Company’s restaurants are reviewed on an individual restaurant basis for indicators of impairment whenever events or circumstance 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 an impairment has occurred, the Company estimates the future net cash flows expected to be generated from the use of its restaurants and the eventual disposition, as of the date of determination, 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, cost 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 2002, 2001 and 2000 as well as the continuation of certain rent reductions, deferrals, and other negotiated concessions from certain landlords. Actual results could vary significantly 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 2002, 2001 and 2000, the Company recorded a $2,135,000, $339,000 and $340,000, respectively as a provision for impairment of long-lived assets. As a result of their negative cash flow and of the sales of all of the Garcia’s in all states except Oklahoma and Missouri during 2002, the Company determined that the remaining locations would not be able to realize the full net book value of the related assets. As such, the Company determined the salvage value of the assets at $100,000 per location and recorded a charge to SFAS 144 write-offs on the consolidated statement of income for the difference of approximately $2,135,000. The remaining value of $400,000 is classified as furniture and equipment and is included on the consolidated balance sheet as of December 29, 2002.

Depreciation and amortization expense decreased in 2002 to $4,183,000 (4.4% of food and beverage sales) compared to $4,245,000 (4.3% of food and beverage sales) in 2001 and $3,889,000 (3.8% of food and beverage sales) in 2000. The increase in 2001 compared to 2000 is primarily attributable to the increase in net assets subject to depreciation and amortization in 2001 versus 2000 as the result of the opening of additional restaurants in 2001 and 2000. Additionally, unit economics of recent store developments are higher than those of many of the aging locations whose leases were not renewed.

Interest expense during each of the three years in the period ended December 29, 2002, was $706,000 in 2002, $986,000 in 2001, and $974,000 in 2000. Additionally, the Company has capitalized approximately $44,000 and $71,000 of interest costs during 2001 and 2000, respectively. The decrease in interest expense in 2002 compared to 2001 and 2000 is attributable to lower interest rates on the Company’s lines of credit and the expiration of the interest rate swap in November 2002.

The provision for income tax was $2,070,000 and $103,000 in 2002 and 2000, respectively. The benefit for income taxes was $407,000 in 2001.

At December 29, 2002, the Company has recorded a valuation allowance against its deferred tax assets resulting in zero net deferred tax assets. Net operating loss carryforwards do not begin to expire until 2008 and general business tax credits until 2009. It is possible that the Company’s ability to realize the deferred income tax assets could be impaired if there are significant future exercises of non-qualified stock options or the Company were to experience declines in sales and/or profit margins as a result of loss of market share, increased competition or other adverse general economic conditions.

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 2,977,994, 2,960,999 and 3,044,195 in 2002, 2001 and 2000, respectively. EPS for 2002 and 2001 were 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 to the extent such common stock equivalents are not anti-dilutive. The sum of the weighted-average common shares and common share equivalents for the diluted EPS calculation were 2,977,994, 2,960,999 and 3,144,515 in 2002, 2001 and 2000, 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, with the exception of spikes in utility costs and surcharges by food distributors.

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 29, 2002, the Company’s working capital ratio was .71 to 1 compared to .34 to 1 at December 30, 2001. 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 2002, 2001 and 2000, the Company’s expenditures for capital improvements were $2,315,000, $3,509,000 and $8,876,000, respectively, which were funded out of cash flows from operating activities of approximately $1,709,000, $1,368,000 and $5,354,000, respectively, landlord finish-out allowances of approximately $130,000, $1,302,000 and $2,023,000 respectively, and borrowings under the Company’s credit agreements.

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%. This agreement expired in November, 2002.

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. In 2001, an additional 67,500 shares were purchased for an aggregate purchase price of approximately $139,000. In 2002, an additional 32,900 shares were purchased for an aggregate purchase price of approximately $99,000. As of December 29, 2002 a total of 230,662 shares had been repurchased for an aggregate purchase price of approximately $794,000. Subsequent to year end, the Company’s Board of Directors authorized an additional 330,000 shares for repurchase. Remaining shares authorized to be repurchased total 499,338.

Subsequent to year end, the Company entered into a new credit facility with GE Capital Franchise Finance in the aggregate amount of $15,000,000. $10,000,000 was drawn initially for the purposes of retiring its current credit facility. Another $5,000,000 is restricted and is available under this facility for use upon notice by GE Capital for certain specified purposes. Borrowings are at a rate of 30-day LIBOR plus 3.50%, which is reset monthly. The Company is required to make debt payments annually to reduce the amount outstanding to certain maximum balances. The debt under this agreement is secured by the Company’s furniture, fixtures and equipment. The loan agreement does contain certain financial covenants and restrictions and retirement of the loan is subject to certain prepayment penalties. The Company is in compliance with these covenants as of the date of this report.

The Company leases the majority of its restaurant facilities and its corporate office under operating leases with initial terms expiring at various dates through the year 2015. Certain leases contain renewal options ranging from five to ten years. Most, but not all, leases require the Company to be responsible for the payment of taxes, insurance and/or maintenance and include percentage rent and fixed rent escalation clauses. In the normal course of business, the Company may grant a landlord lien on certain personal property upon an event of default by the Company.

The future maturities of long-term obligations and remaining minimum rental commitments under long-term noncancellable leases, excluding amounts related to taxes, insurance, maintenance and percentage rent, are as follows:

In the ordinary course of business, the Company is subject to legal actions and complaints. In the opinion of management, based in part on the advice of legal counsel, and based on available facts and proceedings to date, the ultimate liability, if any, arising from such legal actions currently pending will not have a material adverse effect on the Company’s financial position or future results of operations.

In the course of disposing of eleven Garcia’s restaurants in 2002, the Company was required by the landlord to remain as guarantor of the tenant lease in order the complete the assignments to the purchasors. The Company was released from its liabilities and commitments, however is contingently liable in the event of default of the Assignees. However, the Company has retained the right to control the operations of the locations if the party should default and recover any amounts paid under the guaranty. The Company’s guarantees will expire at the expiration of the assigned lease terms. At December 29, 2002, the remaining minimum rental commitments under these noncancellable lease commitments by the assignees, excluding amounts related to taxes, insurance, maintenance and percentage rent, are $9,927,351.

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 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.

The Company’s restaurants are reviewed on an individual restaurant basis for indicators of impairment whenever events or circumstance 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 an impairment has occurred, the Company estimates the future net cash flows expected to be generated from the use of its restaurants and the eventual disposition, as of the date of determination, 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, cost 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 2002, 2001 and 2000 as well as the continuation of certain rent reductions, deferrals, and other negotiated concessions from certain landlords. Actual results could vary significantly 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.

The Company is subject to Federal, state and local income taxes. Deferred income taxes are provided on the tax effect of presently existing temporary differences, existing net operating loss and tax credit carryforwards. The tax effect is measured using the enacted marginal tax rates and laws that will be in effect when the differences and carryforwards are expected to be reversed or utilized. Temporary differences consist principally of depreciation caused by using different lives for financial and tax reporting, the expensing of smallwares when incurred for tax purposes while such costs are capitalized for financial purposes and the expensing of costs related to restaurant closures and other disposals for financial purposes prior to being deducted for tax purposes. When the Company cannot determine that it is more likely than not that the deferred tax assets will be realized, a valuation allowance against the deferred tax asset is recorded.

Revenue from food and beverage sales is recorded at the date services are provided. Typically all customers pay at the time the service is provided, however, due to the company opening a new banquet facility, the company allows certain parties to pay in arrears. The revenue from banquets is also recorded when the service is provided and any uncollected amounts are recorded to other receivables included on the Consolidated Balance Sheets.

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 will 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.

(a)   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 4 , 2003                                    By: /s/Vincent F. Orza, Jr.

                                                                                Vincent F. Orza, Jr.

                                                                                Chief Executive Officer

Date: March 4, 2003                                    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 4, 2003                                  By: /s/Vincent F. Orza, Jr.

                                                                                Vincent F. Orza, Jr.

                                                                                Chairman of the Board

                                                                                and Director

Date: March 4, 2003                                   By: /s/James M. Burke

                                                                               James M. Burke

                                                                              Assistant Secretary and Director

Date: March 4, 2003                                  By: /s/Edward D. Orza

                                                                              Edward D. Orza,

                                                                              Director

Date: March 4, 2003                                  By: /s/Patricia L. Orza

                                                                              Patricia L. Orza,

                                                                              Secretary and Director

Date: March 4, 2003                                  By: /s/Thomas F. Golden

                                                                             Thomas F. Golden,

                                                                             Director

Date: March 4, 2003                                  By: /s/Philip Friedman

                                                                             Philip Friedman,

                                                                             Director

Date: March 4, 2003                                 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 Ernst and Young LLP, independent auditors, to conduct an audit of and express an opinion as to the fairness of the presentation of the 2002 consolidated financial statements. Their report is included on the following page.

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

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

March 4, 2003

Board of Directors
Eateries, Inc.

We have audited the accompanying consolidated balance sheet of Eateries, Inc. and subsidiaries as of December 29, 2002 and the related consolidated statements of income, stockholders’ equity and other comprehensive income and cash flows for the fiscal year then ended. 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. The Consolidated financial statements of Eateries, Inc. and subsidiaries for the years ended December 30, 2001 and December 31, 2000 were audited by other auditors who have ceased operations and whose report dated February 27, 2002, expressed an unqualified opinion on those statements.

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 audit provides 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 29, 2002, and the consolidated results of its operations and its cash flows for the fiscal year then ended December 29, 2002, in conformity with accounting principles generally accepted in the United States.

As discussed above, the financial statements of Eateries, Inc. and subsidiaries as of December 29, 2001 and December 31, 2000, and for the fiscal years then ended were audited by other auditors who have ceased operations. As disclosed in Note 2 under the heading "Stock-based Compensation", the Company accounts for fixed price stock options in accordance with Accounting Principles Bulletin Opinion No. 25. The 2001 and 2000 financial statements have been revised to include the additional disclosures required by Statement of Financial Accounting Standards No. 148, Accounting for Stock-Based Compensation – Transition and Disclosure, which was adopted by the Company as of December 29, 2002. Our audit procedures with respect to these disclosures in Note 2 relating to 2001 and 2000 included (a) agreeing the previously reported net income to the previously issued financial statements, the previously reported pro forma net income to the previously issued financial statements and the pro forma compensation cost to underlying records obtained from management, and (b) testing the mathematical accuracy of the reconciliation of reported net income to pro forma net income, and the related basic and diluted income per share amounts. In our opinion, the disclosures for 2001 and 2000 in Note 2 are appropriate. However, we were not engaged to audit, review, or apply any procedures to the 2001 and 2000 financial statements of the Company other than with respect to such disclosures and, accordingly, we do not express an opinion or any other form of assurance on the 2001 and 2000 financial statements taken as a whole.

                                                                                                                                         ERNST AND YOUNG LLP

Oklahoma City, Oklahoma
March 4, 2003

We have not been able to obtain, after reasonable efforts, the reissued report or consent of Arthur Andersen LLP related to the 2001 financial statements included in this Annual Report on Form 10-K. Therefore, we have included a copy of their previously issued report and have relied on Rule 437a under the Securities Act of 1933 to dispense with the requirement to file a written consent from Arthur Andersen LLP consenting to the incorporation by reference of their report into a previously filed Annual Report on Forma 10-K. As a result, an investor’s ability to assert claims against Arthur Andersen LLP may be limited. Since we have been unable to obtain the written consent of Arthur Andersen LLP, an investor may not be able to recover against Arthur Andersen LLP under Section 11 of the Secutirites Act of 1933 for any untrue statements of material fact contained in such report or financial statements or any omissions to state a material fact required to be stated therein.

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 30, 2001 and December 31, 2000 and the related consolidated statements of income, stockholders’ equity and other comprehensive income and cash flows for each of the three years in the period ended December 30, 2001. 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 30, 2001 and December 31, 2000, and the consolidated results of its operations and its cash flows for each of the three years in the period ended December 30, 2001, in conformity with accounting principles generally accepted in the United States.

                                                                                                                                                     ARTHUR ANDERSEN LLP

Oklahoma City, Oklahoma
February 27, 2002