UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

FORM 10-Q

For the quarterly period ended June 30, 2004

Commission File Number: 000-23278

BRAZIL FAST FOOD CORP.

Rua Voluntários da Pátria
89-90 Andar
Botafogo-Rio de Janeiro, Brazil
(Address of principal executive offices)

Registrant’s telephone number: 011 55 21 2564-6452

     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 o

     Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule 12b-2 of the Exchange Act). Yes o No x

     As of August 13, 2004 there were issued and outstanding 8,093,410 shares of the Registrant’s Common Stock, par value $0.0001.

Table of Contents

PART I — FINANCIAL INFORMATION

Item 1. Financial Statements.

Brazil Fast Food Corp. and Subsidiary
Consolidated Balance Sheets (Unaudited)
(in thousands of Brazilian Reais, except share amounts)

See Notes to Consolidated Financial Statements

2

Brazil Fast Food Corp. and Subsidiary
Consolidated Statements of Operations (Unaudited)
(in thousands of Brazilian Reais, except share amounts)

See Notes to Consolidated Financial Statements

3

Brazil Fast Food Corp. and Subsidiary
Consolidated Statements of Operations (Unaudited)
(in thousands of Brazilian Reais, except share amounts)

See Notes to Consolidated Financial Statements

4

Brazil Fast Food Corp. and Subsidiary
Consolidated Statements of Comprehensive Loss (Unaudited)
(in thousands of Brazilian Reais)

See Notes to Consolidated Financial Statements

5

Brazil Fast Food Corp. and Subsidiary
Consolidated Statements of Changes In Shareholders’ Equity (Unaudited)
(in thousands of Brazilian Reais)

See Notes to Consolidated Financial Statements

6

Brazil Fast Food Corp. and Subsidiary
Consolidated Statements of Cash Flows (Unaudited)
(in thousands of Brazilian Reais)

See Notes to Consolidated Financial Statements

7

Brazil Fast Food Corp. and Subsidiary
Notes to Consolidated Financial Statements (Unaudited)
(in thousands of Brazilian Reais)

Note 1 — Financial Statement Presentation

		The accompanying financial statements have been prepared by Brazil Fast Food Corp. (the “Company”), without audit. In the opinion of management, all adjustments (which include only normal recurring adjustments) necessary to present fairly the financial position, results of operations and cash flows at June 30, 2004 and for all periods presented have been made. The results of operations for the periods ended June 30, 2004 and 2003 are not necessarily indicative of the operating results for a full year. Unless otherwise specified all references in these financial statements to (i ) “Reais” or “R$” are to the Brazilian Real (singular), or to Brazilian Reais (plural), the legal currency of Brazil, and (ii ) “U.S. Dollars” or “$” are to United States’ dollars.
		Certain information and footnote disclosures prepared in accordance with generally accepted accounting principles and normally included in the financial statements have been condensed or omitted. It is suggested that these financial statements be read in conjunction with the consolidated financial statements and notes included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2003.

Note 2 — Management Plans Regarding Going Concern

		Since the acquisition of Venbo Comercio de Alimentos Ltda. in 1996, the Company has sustained net losses totaling approximately R$63,139 and at June 30, 2004, consolidated current liabilities exceed consolidated current assets by R$7,434.
		To date, the Company has been dependent upon its initial capital, additional equity and debt financing to fund its operating losses and capital needed for expansion. Currently, the Company has no significant unused credit line.
		Management plans to address its immediate and future cash flow needs by focusing on a number of areas including: the continued sale of non-profitable company-owned stores; reduction of expenses including headcount optimization; the continued expansion of its franchisee base, which will generate additional cash flows from royalties and franchise fees without significant capital expenditure; the introduction of new programs, such as a delivery call center, an internet delivery service and menu expansion to meet customer demand. In order to act on these plans and sustain current operations, the Company is dependent upon the continued forbearance of its creditors, as well as additional financing.
		There can be no assurance that management’s plans will be realized, or that additional financing will be available to the Company when needed, or at terms that are desirable. Furthermore, there can be no assurance that the Company will continue to receive the forbearance of its creditors, or that it will locate suitable new franchisees, or desirable locations for new franchisees to open stores. The Company’s ability to further reduce expenses and head count is directly impacted by its need to maintain an infrastructure to support its current and future chain of locations. The Company’s ability to remarket Company-owned stores to franchisees, and to generate cash flows from such activities, is impacted by the ability to locate suitable buyers with the interest and capital to complete

8

such transactions, and by the time to complete such sales. Additionally, the Company’s ability to achieve its plans is further impacted by the instability of the economic environment in Brazil, which has a direct impact on the desire and ability of consumers to visit fast food outlets. The Company is also dependent upon the continued employment of key personnel. These factors, among others, raise substantial doubt about the Company’s ability to continue as a going concern.

Note 3 – Contingencies And Reassessed Taxes

		During 1999, certain Brazilian taxes levied on the Company were not paid. In the second quarter of 2000, the Company reached an agreement with the state government to parcel unpaid taxes in sixty monthly payments, interest free, in amounts indexed to Brazil’s UNIDADE FISCAL DE REFERENCIA, which is currently 9.9% per year. In the same period, the Company applied to join a tax amnesty program and was accepted by the Brazilian Federal government (REFIS). Through this program, 1999 past due federal taxes must be paid in monthly installments equivalent to 1.2% of the Company’s gross sales, with interest accruing at rates set by the Brazilian Federal government, currently 10.2% per year.
		In the end of 2001 and beginning 2002 the Company did not pay some other state and federal taxes. In addition, Brazilian Social Securities Authorities applied penalties against the Company, by charging certain operating transactions not covered by the Company’s previous calculation of Social Security contributions.
		During December 2002, the Company applied to join and was accepted into another tax amnesty program offered by the Rio de Janeiro state government, through which the Company will parcel unpaid 2001 and 2002 state taxes, in one hundred and twenty monthly payments, interest free, in amounts indexed to Brazil’s UNIDADE FISCAL DE REFERENCIA, which is currently 9.9% per year.
		During January 2004, the Rio de Janeiro state government launched a debt-rescheduling program through which all previous amnestied debt, parceled in 36, 60 or 120 months, will be substantially reduced and paid in 6 monthly installments. The Company applied to such program during January, 2004 and rescheduled the majority of its state tax debt. Adjustments to the State Tax Obligations on Company’s balance sheet, derived from such program, will be recognized when the referred obligation is extinguished.
		During June 2003 the Brazilian Government had implemented another Federal tax amnesty (PAES), to which the Company applied and was accepted by the Government. Through this program the balance of the previous Federal tax amnesty program (REFIS) and unpaid 2001 and 2002 federal tax, as well as the Social Security penalties, are being paid in monthly installments equivalent to 1.5% of the Company’s gross sales, with interest accruing at rates set by the Brazilian Federal government, currently 10.2% per year.
		All installments related to those agreements have been paid on a timely basis. During fiscal 2004, the Company paid approximately R$812 related to such Brazilian Federal tax amnesty programs and approximately R$2,284 related to Rio de Janeiro state government agreements.

9

		Since June 2002, the Company has paid all its current taxes on a timely basis.
		During 2001, the Company claimed in Brazilian court that their lease financing contracts with IBM Leasing should not have their principal amounts indexed to the US dollar, but instead stated in Brazilian Reais bearing interest of 12% per annum. While awaiting the court’s determination, the Company has deposited all installment payments due under its lease financing agreements with the court in reais, inclusive of 12% per annum interest. The installment payments ceased on November, 2002, the end of the contract term. Despite the Company’s claim that it owes the lower amounts, the Company has accrued the full contracted amounts as of June 30, 2004.
		Liabilities related to tax amnesty programs and litigation consist of the following:

Note 4 – Services Provided In Exchange of Common Shares

		In May, 2002, the Company entered into an agreement requiring the Company to retain the services of Ricardo Bomeny to manage the Company’s subsidiary day-to-day operations for a term of two years. For such services the consultant, or an entity he indicates, would receive: (a) 240,000 shares for the first twelve months of such two-year term; (b) additional 260,000 shares at the end of the two-year term conditioned upon the attainment of specified targets; and (c) a sum in cash mutually agreed upon at May, 2004.
		During the first half of 2004 the Company charged R$286 to operating results related to those services (R$123 in 2003). Such amount is a result of number of shares owed on accrual basis during each periods, multiplied by their average fair value.

Note 5 – Stock Option Plan Activity

		During the six months ended June 30, 2004, there were no options granted or canceled under the Company’s Stock Option Plan.
		Under the Company’s Stock Option Plan, options to purchase a total of 49,375 shares have expired during the six months ended June 30, 2004.

10

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

Our Business

     Through our wholly-owned subsidiary, Venbo Comercio de Alimentos Ltda., a Brazilian limited liability company which conducts business under the trade name “Bob’s,” we own and, directly and through franchisees, operate the second largest chain of hamburger fast food restaurants in Brazil.

Results of Operations — Comparison of Three and Six Months Ended June 30, 2004 and 2003

     The following statement is comprised of results provided by Company’s operated stores business as well as results derived from franchise business. However, all the operating figures are stated as a percentage of the Net Restaurant Sales because the Company believes that, in general, either kind of business (restaurant operations or franchise net earns) move towards Net Restaurant Sales evolution, and, accordingly, cost and expenses should be analyzed in conjunction with such evolution.

The following table sets forth certain operating data for the periods of three and six months ended June 30, 2004 and 2003

11

Store Results

Net Restaurant Sales

     Net restaurant sales for our company-owned retail outlets increased R$1,795,000 or 12.9%, to R$ 15,697,000 for the three months ended June 30, 2004 as compared to R$ 13,902,000 for the three months ended June 30, 2003.

     Net restaurant sales for our company-owned retail outlets increased R$2,502,000 or 8.5%, to R$ 31,851,000 for the six months ended June 30, 2004 as compared to R$ 29,349,000 for the same period ended June 30, 2003.

     Same store sales increased approximately 7.1% for the three months ended June 30, 2004 and the three months ended June 30, 2003, and approximately 5.3% for the six months ended in the same period.

     Besides the improvement of the macroeconomic scenario in Brazil during 2004, those increases were due to (i) our promotional campaigns; (ii) introduction of new products, mainly the “grill line” sandwiches; (iii) an average increase of 10% in the sales prices of our products since June 30, 2003; (iv) implementation of incentive plans to our store personnel (v) expansion of number of own operated outlet from 58 at June 30, 2003 to 64 at June 30, 2004.

     These positive effects on restaurant sales were partially offset by the increase of one of the Brazilian Sales Taxes (COFINS) in January 2004.

Food, Beverage and Packaging Costs

     As a percentage of net restaurant sales, food, beverage and packaging costs were (37.8%) and (41.4%) for quarters ended June 30, 2004 and 2003, respectively. As a percentage of net restaurant sales, food, beverage and packaging costs were (37.5%) and (40.5%) for periods ended June 30, 2004 and 2003, respectively.

     Food, beverage and packaging costs decrease from period to period, is due to the our ongoing efforts on negotiations of long term agreements with some suppliers. The permanent growth of our franchise network is enhancing its negotiation power with the suppliers.

Payroll & Related Benefits

     As a percentage of net restaurant sales, store payroll and related benefits decreased from (24.1%) for the three months ended June 30, 2003 to (22.5%) for the same period ended June 30, 2004. As a percentage of net restaurant sales, store payroll and related benefits decreased from (23.2%) for the six months ended June 30, 2003 to (22.4%) for the same period ended June 30, 2004.

     From June 30, 2003 to June 30, 2004 a great portion of our store personnel had their salary increased on 4% due to union-driven agreements. As a consequence, social charges that

12

are computed based on employees salaries increased as well. Employee transportation costs also increased during the same period. On the other hand, the growth of our revenues (mentioned above) did not require significant increase of number of store employees. Accordingly, the payroll costs decreased as a percentage of restaurant sales, as a result of the optimization of our labor force.

Restaurant Occupancy Costs and Other Expenses

     Restaurant occupancy costs and other expenses expressed as a percentage of net restaurant sales were approximately (13.5%) and (13.2%) for the three months ended June 30, 2004 and 2003, respectively. Restaurant occupancy costs and other expenses expressed as a percentage of net restaurant sales were approximately (13.2%) and (12.4%) for the six months ended June 30, 2004 and 2003, respectively. This increase is mainly attributable to increases in our minimum rent obligations, which are indexed to Brazilian inflation, currently at 9.6% per annum as well as the operation of a new store which has greater lease costs.

Contracted Services

     Expenses related to contracted services expressed as a percentage of net restaurant sales were approximately (14.0%) and (13.8%) for the quarters ended June 30, 2004 and 2003, respectively.

     Expenses related to contracted services expressed as a percentage of net restaurant sales were approximately (13.9%) and (13.7%) for the periods of six months ended June 30, 2004 and 2003, respectively.

     These increases are mainly attributable to expenses related to our call center, which operations started in December 2003 as well as increases in the costs of maintenance parts. The effect of those increases was partially offset by the reduction obtained on security services contracted for special events occurred in 2004, as contrasted to 2003.

Other Store Cost and Expenses

     Other store cost and expenses expressed as a percentage of net restaurant sales were approximately (2.9%) and (2.2%) for the three months ended June 30, 2004 and 2003, respectively.

     Other store cost and expenses expressed as a percentage of net restaurant sales were approximately (3.8%) and (3.3%) for the periods ended June 30, 2004 and 2003, respectively.

     The increases are mainly attributable to the increase of insurance costs and higher traveling expenses due to new stores open away from the Company’s headquarters.

Franchise Results

Net Franchise Royalty Fees

     Net franchise royalty fees increased R$ 267,000 or 18.0%, to R$ 1,753,000 for the three months ended June 30, 2004 as compared to R$1,486,000 for the three months ended June 30, 2003.

13

     Net franchise royalty fees increased R$ 520,000 or 16.8%, to R$3,623,000 for the six months ended June 30, 2004 as compared to R$3,103,000 for the six months ended June 30, 2003. These increases are mainly attributable to the growth of our franchise business from 261 retail outlets as of June 30, 2003 to 299 retail outlets as of June 30, 2004.

Franchise Costs and Expenses

     Franchise cost and expenses expressed as a percentage of net restaurant sales were approximately (3.7%) and (4.3%) for the periods of three months ended June 30, 2004 and 2003, respectively.

     Franchise cost and expenses expressed as a percentage of net restaurant sales were approximately (3.1%) and (3.6%) for the periods of six months ended June 30, 2004 and 2003, respectively.

     Such decreases are attributable to the optimization of the franchise expenses related to the growth of the franchise network.

Marketing, General and Administrative (Expenses) Income

Marketing income (expenses)

     Marketing income (expenses) is comprised of selling expenses incurred by the Company and the income received from the franchisees related to the contractual marketing funds.

     As a percentage of net restaurant sales, net marketing (expenses) were approximately (1.7%) and (1.6%) for the three months ended June 30, 2004 and 2003, respectively, a flat evolution.

     For the six months ended June 30, 2004 and 2003 the Company presented net marketing income, which were approximately 0.1% and 0.4% of the respective net restaurant sales.

     The reason for resulting net expense for the quarter and net income for the period is that the investments in marketing during the first quarter is lower due to greater seasonal revenues during the same period.

General and Administrative Expenses

     As a percentage of restaurant sales, general and administrative expenses were approximately (13.3%) and (11.7%) for the three months ended June 30, 2004 and 2003, respectively, and approximately (11.8%) and (10.7%) for the six months ended June 30, 2004 and 2003, respectively.

     These increases are mainly attributable to increase on salaries and labor charges of our administrative personnel as well as increase on consultant fees regarding contracted services related to tax planning. The reduction of administrative personnel occurred during June 2004, derived extra expenses related to the legal obligations for employees dismissals.

14

Other Operating Income (Expenses)

     Other operating income (expenses) are mainly comprised of the initial fees paid by our franchisees, as well as income derived from suppliers, pursuant to terms of certain exclusivity agreements, net result of assets and non recurring income or expenses.

     Other operating income (expense) expressed as a percentage of net restaurant sales were 3.0%, for the three months ended June 30, 2004 and 6.3% for the three months ended June 30, 2003. This decrease is mainly attributable to lower initial fee recorded during the second quarter of 2004 as contrasted to the same period of 2003.

     Other operating income (expense) expressed as a percentage of net restaurant sales were 5.9%, for the periods ended June 30, 2004 and (1.4%) for the same period ended June 30, 2003.

     During the first quarter of 2003 the company recorded non-recurring expenses in amount of R$2,690,000 related to a provision for fines that might be applied against the Company by the Brazilian Social Security Authorities, which charged certain operating transactions not covered by the Company’s previous calculation of Social Security contributions and restated such unpaid debt.

     On the other hand, also during the first quarter of 2003, the Company recorded a non-recurring gain of R$643,000 related to a reversal of accrued Delaware Franchise Taxes derived from a review on such tax computation.

     Excluding the net effect of such non-recurring items, Other operating income (expense) would have been R$1,642,000 or 5.6% (expressed as a percentage of net restaurant sales) for the first quarter of 2003 contrasted to R$1,894,000 or 5.9% (expressed as a percentage of net restaurant sales) for the same period of 2004. Such increase is due to a greater amount of rebates negotiated with suppliers during the first quarter of 2004, compared to the same period of 2003.

Depreciation and Amortization

     As a percentage of net restaurant sales, depreciation and amortization were approximately (4.6%) and (6.2%) for the three months ended June 30, 2004 and 2003, respectively.

     As a percentage of net restaurant sales, depreciation and amortization were approximately (4.5%) and (5.9%) for the six months ended June 30, 2004 and 2003, respectively.

     The 2004 decrease is attributable to the completion of depreciation upon some assets (mainly computers and leasehold improvements).

Interest Income (Expenses) and Foreign Exchange Gain (loss)

Interest Income and Expenses

     As a percentage of net restaurant sales, net interest expense were approximately (6.9)% and (5.6)% for the three months ended June 30, 2004 and 2003, respectively. As a percentage of net restaurant sales, net interest expense were approximately (4.4)% and (5.5)% for the six months ended June 30, 2004 and 2003, respectively.

15

     The percentage decrease for the six months ended June 30, 2004 as compared to the same period in 2003 is primarily attributable to a reduction of the level of our bank indebtedness during January and April 2004. Since May 2004 the Company return to increase the cost of interest in order to fund the anticipation of tax payments discussed somewhere else in this report. Accordingly, this percentage increased for the three months ended June 30, 2004.

Foreign Exchange and Monetary Restatement Gain (Loss)

     As a percentage of net restaurant sales, net foreign exchange gain (losses) were approximately 4.0% and 2.7% for the three months ended June 30, 2004 and 2003, respectively.

     As a percentage of net restaurant sales, net foreign exchange gain (losses) were approximately (0.7)% and 0.1% for the periods ended June 30, 2004 and 2003, respectively.

Liquidity and Capital Resources

     Since March 1996, we have funded our cumulative operating losses of R$63,139,000 and made acquisitions of businesses and capital improvements (including remodeling of our stores) by using cash remaining at the closing of our acquisition of Venbo, by borrowing funds from various sources and from private placements of securities. As of June 30, 2004, we had cash on hand of R$684,000 and a working capital deficiency of R$7,434,000.

     For the quarter ended June 30, 2004, we had net cash used in operating activities of R$401,000, net cash used in investing activities of R$1,788,000 and net cash provided by financing activities of R$1,838,000. The disbursements related to the anticipation of payments of reassessed state taxes substantially impact net cash used in operating activities. Net cash used in investing activities was primarily the result of our investment in property and equipment to improve our retail operations. Net cash provided by financial activities were mainly to fund reassessed taxes paid in the period.

     Our earnings before interest, taxes, depreciation and amortization (EBITDA) were approximately R$3,658,000 for the period ended June 30, 2004 and approximately R$629 for the period ended June 30, 2003. EBITDA is not intended to be a performance measure that should be regarded as an alternative to, or more meaningful than, either loss from operations or net loss as an indicator of operating performance or cash flows as a measure of liquidity, as determined in accordance with accounting principles generally accepted in the United States.

16

Our cash resources are currently used primarily to pay for the servicing costs on our debt obligations. Our debt obligations as of June 30, 2004 were as follows:

At June 30, 2004, future maturities of notes payable are as follows:

a) Due on demand from various Brazilian financial institutions with interest rates ranging from 25% to 34% per annum, and guaranteed by certain officers and receivables. Currently, we have no relevant unused credit line.

(b) Credit facilities from related parties, including company and private individuals. Repayment of principal is indexed to IGP-M (currently at 9.6% per annum) with interest of 12.0% per annum. Those transactions were made at usual market value.

(c) This credit facility was used to purchase three stores. Repayment of principal with respect to one of these stores is due in 3 monthly installments of R$29. Repayment of principal with respect to the other two stores is due in 25 monthly installments of R$49 in addition of 2 annual installments of R$444, starting January, 2005, ending January 2006. There is no interest charged on these borrowings. Principal is indexed to Brazilian inflation measured by IGP-M. This facility is secured by the fixed assets purchased.

     During January 2004, the Rio de Janeiro state government launched a debt rescheduling program through which all previous Company’s amnestied debt, parceled in 36, 60 or 120 months, will be substantially reduced and paid in 6 monthly installments. We applied to be included in such debt-reschedule program. Adjustments to the State Tax Obligations on Company’s balance sheet, derived from such program, will be recognize when the referred obligation is extinguished.

     In addition, in 2000, we applied to, and were accepted by, the Brazilian federal government to join a tax amnesty program (REFIS), which restructured our outstanding 1999 federal tax obligations into monthly payments equal to 1.2% of our gross sales, with interest accruing at a rate set from time-to-time by the Brazilian federal government (TJLP), which was 10.2% a.a. as of June 30, 2004.

     During June 2003 the Brazilian Government had implemented another Federal tax amnesty (PAES), to which the Company applied and was accepted by the Government. Through

17

this program the balance of the previous Federal tax amnesty program (REFIS) and unpaid 2001 and 2002 federal tax, as well as the Social Security penalties, are being paid in monthly installments equivalent to 1.5% of the Company’s gross sales, with interest accruing at rates set by the Brazilian Federal government, currently 10.2% per year.

     Considering all the above mentioned fiscal debts, we are required to pay restructured past-due Brazilian state taxes of approximately R$2,681,000 and federal taxes of approximately R$15,003,000.

     All installments related to those agreements have been paid on a timely basis. During fiscal 2004, the Company paid approximately R$812,000 related to such Brazilian Federal tax amnesty programs and approximately R$2,284,000 related to Rio de Janeiro state government agreements.

     Since June 2002, we have paid all of our current taxes on a timely basis.

     We also have long-term contractual obligations in the form of operating lease obligations related to our owned and operated stores.

     The future minimum lease payments under those obligations with an initial or remaining non cancelable lease terms in excess of one year at June 30, 2004 are as follows: (Amounts in Brazilian Reais)

     In the past, we have generated cash and obtained financing sufficient to meet our debt obligations. We plan to fund our current debt obligations mainly through cash provided by our operations, borrowings and capital raising.

     Our average cost to open a retail outlet was approximately R$300,000 to R$500,000 including leasehold improvements, equipment and beginning inventory, as well as expenses for store design, site selection, lease negotiation, construction supervision and obtaining permits.

     We have estimated that our capital expenditures for fiscal 2004, which will be used to maintain and upgrade our current restaurant network, will be approximately R$3,000,000. We anticipate that the primary use of our cash resources during 2004 will be to service our debt obligations. During 2004, we intend to focus our efforts on expanding both the number of our franchisees and the number of our franchised stores, neither of which are expected to require significant capital expenditures.

18

     As discussed above, we have contractual obligations in different forms. The following table summarizes our contractual obligations and financial commitments, as well as their aggregate maturities. (Amounts in Brazilian Reais)

     Cash provided by operations along with our borrowing capacity and other sources of cash will be used to satisfy the obligations and our estimates for capital improvements (including remodeling of our stores).

     We plan to address our immediate and future cash flow needs to include focusing on a number of areas including:

	•		the sale of certain of our owned and operated stores;
	•		the reduction of expenses, including reducing our per-store headcount expense by continuing to expand our operations while maintaining our current headcount;
	•		the expansion of our franchisee base, which may be expected to generate additional cash flows from royalties and franchise fees without significant capital expenditures;
	•		the introduction of new programs and menu expansions to meet consumer needs and wishes; and
	•		negotiation with suppliers in order to obtain significant rebates in long term supply contracts.

Going Concern Issue

     In order to sustain our operations, we have, in the past, been dependent upon the continued forbearance of our creditors. While we are currently in full compliance with agreements with our creditors, there can be no assurance that we will not be forced to seek the forbearance of our creditors in the future. In addition, there can be no assurance that our plans will be realized, or that additional financing will be available to us when needed, or on terms that are desirable. Furthermore, there can be no assurance that we will locate suitable new franchisees, or desirable locations for new and existing franchisees to open stores. Our ability to further reduce expenses and optimize our headcount is directly impacted by our need to maintain an infrastructure to support changing the locations, if required, of both our current and future stores and operations. Our ability to re-market our owned and operated stores to franchisees, and to generate cash flows from such activities, is impacted by our ability to locate suitable buyers with the interest and capital to complete such transactions, and the time to complete such sales. Additionally, our ability to achieve our plans is further impacted by the instability of both the political and economic environment in Brazil, which has a direct impact on the desire and ability of consumers to visit fast food outlets. We are also dependent upon the continued employment of

19

key personnel. These factors, among others, raise substantial doubt about our ability to continue as a going concern.

Critical Accounting Policies And Estimates

     Management’s discussion and analysis of financial condition and results of operations are based upon our consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the U.S. The preparation of these financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses as well as related disclosures. On an ongoing basis, we evaluate our estimates and judgments based on historical experience and various other factors that are believed to be reasonable under the circumstances. Actual results may differ from these estimates under different assumptions or conditions.

     We annually review our financial reporting and disclosure practices and accounting policies to ensure that they provide accurate and transparent information relative to the current economic and business environment. We believe that of our significant accounting policies involve a higher degree of judgment and/or complexity.

     We follow SFAS No. 144 with regard to impairment of long lived assets and intangibles. If there is an indicator of impairment (i.e. negative operating cash flows) an estimate of undisclosed future cash flows produced by each restaurant within the asset grouping is compared to its carrying value. If any asset is determined to be impaired, the loss is measured by the excess of the carrying value. If any asset is determined to be impaired, the loss measured by the excess of the carrying amount of the asset over its fair value.

New Accounting Standards

Asset retirement obligations

     In June 2001, the Financial Accounting Standards Board issued SFAS No. 143, Accounting for Asset Retirement Obligations, effective January 1, 2003. The Statement requires legal obligations associated with the retirement of long-lived assets to be recognized at their fair value at the time that the obligations are incurred. Upon initial recognition of a liability, the cost will be capitalized as part of the related long-lived asset and allocated to expense over the useful life of the asset. The adoption of SFAS No. 143 did not have a material effect on the our results of operations or financial position.

Variable interest entities

     In January 2003, the Financial Accounting Standards Board issued FASB Interpretation No. 46 (FIN No. 46), Consolidation of Variable Interest Entities, which requires an enterprise to consolidate or make certain, disclosures about variable interest entities that meet certain criteria, effective January 1, 2003. FIN No. 46 is not applicable to the us.

Impairment of long-lived assets and intangible assets

     We follow SFAS Nos. 144 and 141 with regard to the impairment of long lived assets and intangibles. If there is an indicator of impairment (i.e. negative operating cash flows) an estimate of undiscounted future cash flows produced by each restaurant within the asset grouping is

20

compared to its carrying value. If any asset is determined to be impaired, the loss is measured by the excess of the carrying amount of the asset over its fair value.”

Off-Balance Sheet Arrangements

     We are not involved in any off-balance sheet arrangements.

Forward-Looking Statements

     Forward-looking statements in this report, including statements relating, among other things, to our business plans, business and growth strategies, objectives, expectations, trends, intentions and adequacy of resources, are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. The words “believe,” “expect,” “anticipate” and similar expressions identify forward-looking statements, which speak only as of the date the statement is made. Future events and actual results could differ materially from those set forth in, contemplated by, or underlying the forward-looking statements. Investors are cautioned that such forward-looking statements involve risks and uncertainties, some or all of which cannot be predicted or quantified and are beyond our control, including, without limitation, those risks and uncertainties described in the risk factors set forth in certain of our periodic filings with the Securities and Exchange Commission, including the risk factors set forth in our Annual Report on Form 10-K for the year ended December 31, 2003, as filed with the Securities and Exchange Commission on April 2, 2004. Investors are urged to read such periodic filings and the risk factors contained in those filings.

Item 3. Quantitative and Qualitative Disclosures About Market Risk.

     We do not engage in trading market risk-sensitive instruments or purchasing hedging instruments or “other than trading” instruments that are likely to expose us to market risk, whether interest rate, foreign currency exchange, commodity price or equity price risk. We have not issued debt instruments, entered into forward or futures contracts, purchased options or entered into swaps. Our primary market risk exposures are those relating to interest rate fluctuations and possible devaluations of the Brazilian currency. In particular, a change in Brazilian interest rates would affect the rates at which we could borrow funds under our several credit facilities with Brazilian banks and financial institutions.

Item 4. Controls and Procedures.

     In order to ensure that the information we must disclose in our filings with the Securities and Exchange Commission is recorded, processed, summarized and reported on a timely basis, we have formalized our disclosure controls and procedures. Our principal executive officer and acting principal financial officer, Ricardo Figueiredo Bomeny has reviewed and evaluated the effectiveness of our disclosure controls and procedures, as defined in Exchange Act Rules 13a-15(e) and 15d-15(e), as of June 30, 2004. Based on such evaluation, such officer has concluded that, as of June 30, 2004, our disclosure controls and procedures were effective in timely alerting him to material information relating to us (and our consolidated subsidiaries) required to be included in our periodic SEC filings. There has been no change in our internal control over financial reporting during the quarter ended June 30, 2004 that has materially affected, or is reasonably likely to materially affect our internal control over financial reporting.

21

PART II—OTHER INFORMATION

Item 4. Submission Of Matters To A Vote Of Security Holders.

     On June 1, 2004, we held our annual stockholders meeting. The holders of 4,836,660 shares of common stock were present in person or represented by proxy at the meeting. At the meeting, our stockholders re-elected the following persons to serve as our directors until the next annual meeting of stockholders or until their respective successors are duly elected and qualified:

Item 6. Exhibits and Reports on Form 8-K.

     a) Exhibits

31.1 Certification by Ricardo Figueiredo Bomeny, Chief Executive Officer and acting Chief Financial Officer, pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 .

32.1 Certification by Ricardo Figueiredo Bomeny, Chief Executive Officer and acting Chief Financial Officer, pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

     (b) Reports on Form 8-K

22

SIGNATURES

     Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

Date: August 16, 2004

	BRAZIL FAST FOOD CORP. (Registrant)
	By:	/s/ Ricardo Figueiredo Bomeny
		Ricardo Figueiredo Bomeny
		Chief Executive Officer and Acting Chief Financial Officer

23