FAMILY STEAK HOUSES OF FLORIDA INC - 10-K Annual Report

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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

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FORM 10-K
(MARK ONE)
( X ) ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934 (FEE REQUIRED)
FOR THE FISCAL YEAR ENDED JANUARY 3, 1996
OR
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF
THE SECURITIES EXCHANGE ACT OF 1934 (NO FEE REQUIRED)
COMMISSION FILE NO. 0-14311

FAMILY STEAK HOUSES OF FLORIDA, INC.
(exact name of registrant as specified in its charter)

FLORIDA NO. 59-2597349
(State of Incorporation) (I.R.S. Employer Identification)

2113 FLORIDA BOULEVARD
NEPTUNE BEACH, FLORIDA 32266
(Address of Principal Executive Offices)

Registrant's telephone number, including area code: (904) 249-4197
Securities registered pursuant to Section 12(b) of the Act:
NONE
Securities registered pursuant to Section 12(g) of the Act:

COMMON STOCK, $.01 PAR VALUE
(Title of Class)

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Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Sections 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days.
YES X NO

Indicate by 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 amendment to this
Form 10-K.
YES NO X

As of March 8, 1996, 10,860,033 shares of Common Stock of the registrant
were outstanding. The aggregate market value of such voting Common Stock (based
upon the closing sale price of the registrant's Common Stock on the NASDAQ
National Market System on March 8, 1996, as reported in The Wall Street Journal)
held by non-affiliates of the registrant was approximately $7,466,300.

DOCUMENTS INCORPORATED BY REFERENCE

Portions of the registrant's 1995 Annual Report to Shareholders are
incorporated by reference into Part II. Portions of the Proxy Statement for the
registrant's 1996 Annual Meeting of Shareholders are incorporated by reference
into Part III.

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PART I

ITEM 1. BUSINESS

GENERAL

Family Steak Houses of Florida, Inc. ("Family" or the "Company"), is the
sole franchisee of Ryan's Family Steak House restaurants ("Ryan's restaurants")
in the State of Florida.

The Company's first Ryan's restaurant was opened in Jacksonville, Florida,
in May 1982. As of January 3, 1996, the Company operated 24 Ryan's restaurants
in Florida, including nine in north Florida and fifteen in central and west
Florida.

A Ryan's restaurant is a family-oriented restaurant serving high-quality,
reasonably-priced food in a casual atmosphere with server-assisted service.
Ryan's restaurants serve lunch and dinner seven days a week and offer a variety
of charbroiled entrees, including various cuts of beef, chicken, and seafood.
Most of the restaurants serve a brunch on weekends only. Each restaurant
features a diverse selection of items from either a series of "scatter bars" or
a 65-foot, self-service, all-you-can-eat Mega Bar, and a separate fresh
bakery and dessert bar. In addition to traditional salad bar items, the
scatter bars or Mega Bars offer hot meats, pre-made salads, soups, baked
potatoes with toppings, cheeses and a variety of vegetables.

The Company believes that its operating strategy of selling top-quality
meals at reasonable prices, at food costs to the Company which are higher than
the industry average, creates a perception of value to its customers.

The Company operates its Ryan's restaurants under a Franchise Agreement
with Ryan's Family Steak Houses, Inc., ("Ryan's", or the "Franchisor") which
grants the Company the right to operate Ryan's Family Steak House restaurants
throughout most of the State of Florida.

COMPANY HISTORY

The Company was formed by the combination, effective February 1986, of six
limited partnerships, each of which owned and operated a Ryan's restaurant
franchise. In April 1986, the Company issued 4,266,000 shares of its common
stock in exchange for the assets and liabilities of the predecessor
partnerships and 1,134,000 shares of its common stock to Eddie L. Ervin, Jr.,
in consideration for Mr. Ervin assigning to the Company all of his rights under
the

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Franchise Agreement (as defined below). The Company completed its initial
public offering of 4,500,000 shares of its common stock in 1986 resulting
in net proceeds to the company of approximately $4,145,000.

RECENT DEVELOPMENTS

In March 1995, the Company entered into amended and restructured debt
agreements with its lenders. In August 1995, the Company received a notice from
The Travelers Insurance Company that it had sold its notes and certain warrants
it held for purchases of the Company's common stock to Cerberus Partners, L.P.
For a complete discussion of the debt restructure, see Note 5 to the
Consolidated Financial Statements in the Company's 1995 Annual Report to
Shareholders.

FRANCHISE AGREEMENT

The Company operates its Ryan's Restaurants under a Franchise Agreement
between the Company and the Franchisor dated as of September 16, 1987, which
Franchise Agreement amended and consolidated all previous franchise agreements
(as amended, the "Franchise Agreement"). The Franchise Agreement extends
through December 31, 2010 and provides for two additional ten-year renewal
options. The renewal options are subject to certain conditions, including the
condition that the Company has fully and faithfully performed its obligations
under the Franchise Agreement during its original term. Under the terms of the
Franchise Agreement, the Company has the right to use the registered mark
"Ryan's Family Steak House" and the right to use the Franchisor's techniques in
the operation of Ryan's Family Steak House restaurants.

In July 1994, the Company and the Franchisor amended the Franchise
Agreement. The amended agreement requires the Company to pay a royalty fee of
3.0% through May 1997 and 4.0% thereafter on the gross receipts of each Ryan's
Family Steak House restaurant. The Company paid royalty fees of 4.5% prior to
May 1994. Total royalty fee expenses were $1,263,200, $1,561,100 and $2,406,400
for the years ended January 3, 1996, December 28, 1994 and December 29, 1993,
respectively.

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The Franchise Agreement requires the Company to operate a minimum number
of Ryan's restaurants on December 31 of each year. Failure to operate the
minimum number will result in the loss of exclusivity rights to the Ryan's
concept in Florida. The following schedule outlines the number of Ryan's
restaurants required to be operated by the Company on December 31 of each year
under the Franchise Agreement:

Number of
Restaurants Required to
End of Fiscal Year be in Operation

1994-1996 24
1997 25
1998 26
1999 27
2000 28
2001 and subsequent years Increases by one each year

Prior to the June 1994 amendment to the Franchise Agreement, the Company
held exclusive franchise rights to build Ryan's restaurants in the State of
Florida, with the exception of Panama City, Florida and Escambia County,
Florida, where the Franchisor has the right to operate Ryan's restaurants.
Under the July 1994 Amendment to the Franchise Agreement, the Company
relinquished the franchise rights to most counties in northwest Florida and
south Florida in exchange for forgiveness of $500,000 in past due
royalty fees. The Company has the right to repurchase the exclusive franchise
rights to these counties for $500,000 at any time prior to June 30, 1998. In
addition, the Franchisor agreed not to develop any Ryan's restaurants in the
south Florida territory prior to June 30, 1996.

In conjunction with the execution of the July 1994 amendment to the
Franchise Agreement, the Company executed and delivered a note to the
Franchisor for payment of $800,000 in past due royalty fees. (See Note 5 to
the Consolidated Financial Statements in the Company's 1995 Annual Report to
Shareholders).

The Franchise Agreement contains provisions relating to the operation of
the Company's Ryan's restaurants. Upon the Company's failure to comply with
such provisions, the Franchisor may terminate the Franchise Agreement if such
default is not cured within 30 days of notice from the Franchisor. Termination
of the Franchise Agreement would result in the loss of the Company's right to
use the "Ryan's Family Steak House" name and concept and could result in the
sale of the physical assets of the Company to the Franchisor pursuant to a
right of first refusal. Termination of the Company's rights under the
Franchise Agreement may result in

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the disruption, and possibly the discontinuance, of the Company's operations.
The Company believes that it has operated and maintained each of its Ryan's
Family Steak House restaurants in accordance with the operational procedures
and standards set forth in the Franchise Agreement, as amended.

OPERATIONS OF RYAN'S RESTAURANTS

FORMAT. As of March 5, 1996, 23 of the Company's Ryan's Restaurants are
located in free-standing buildings which vary in size from 7,500 to 12,000
square feet. One of the Company's Ryan's restaurants is located in a mall.
Each restaurant is constructed of brick or stucco walls, interior and exterior,
with exposed woodwork. The interior of each Ryan's restaurant contains a
dining room, a customer ordering area, and a kitchen. The dining rooms seat a
total of between 270 and 420 persons and highlight centrally located,
illuminated scatter bars or Mega Bars and a fresh bakery bar. Each Ryan's
restaurant has parking for approximately 100 to 175 cars on lots of overall
size of approximately 50,000 to 70,000 square feet.

The Ryan's restaurants operate seven days a week. Hours of operation are
from 11:00 a.m. to 10:00 p.m., Sunday through Thursday, and from 11:00 a.m. to
11:00 p.m., Friday and Saturday. Restaurants that open for brunch open at 8:00
a.m. Saturday and Sunday. In a Ryan's restaurant, the customer enters the
restaurant, orders from the menu, and enters the dining room. Beverages are
brought to the table by servers. Entrees are cooked to order. The customer
ordering the salad bar is given unlimited access to the scatter bars or Mega
Bars and the bakery dessert bar. Customers receive table service of the
entree and beverage refills. For the year ended January 3, 1996, the average
weekly customer count per restaurant was approximately 5,520 and the average
cost of a meal, with beverage, was approximately $6.00.

RESTAURANT MANAGEMENT AND SUPERVISION. The Company manages the Ryan's
restaurants pursuant to a standardized operating and control system together
with comprehensive recruiting and training of personnel to maintain food and
service quality. In each Ryan's restaurant, the management group consists of a
general manager, a manager and one or two assistant managers, depending on
sales volume. The Company requires at least two members of the management
group on duty during all peak serving periods. Management-level personnel
usually begin employment at the manager trainee or assistant manager level,
depending on prior restaurant management experience. All new management-level
personnel must complete the Company's six-week training period prior to being
placed in a management position.

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Each restaurant management group reports to a supervisor. Presently, the
supervisors each oversee the operations of five to seven restaurants. The
supervisors report directly to the Vice President of Operations. Communication
and support from all departments in the Company are designed to assist the
supervisors in responding promptly to local problems and opportunities.

All restaurant managers and supervisors participate in incentive programs
based upon the profitability of their restaurants and upon the achievement of
certain pre-set goals. The Company believes these incentive programs enable it
to operate more efficiently and to attract qualified managers.

PURCHASING, QUALITY AND COST CONTROL. The Company has a centralized
purchase control program which is designed to ensure uniform product quality
in all restaurants. The program also helps to maintain reduced food, beverage,
and supply costs. The Company purchases approximately 90% of the products used
by the Company's Ryan's restaurants through the centralized purchase control
program. USDA choice grain-fed beef, the Company's primary commodity, is
closely monitored by the Company for advantageous purchasing and quality
control. The Company purchases beef through various producers and brokers both
on a contract basis and on a spot basis. Beef and other products are generally
delivered directly to the restaurants three times weekly, except for fresh
produce, which is delivered three to five times per week. The Company believes
that satisfactory sources of supply are available for all the items it
regularly uses.

The Franchise Agreement requires that all suppliers to Ryan's restaurants
be approved by the Franchisor. Through its relationship with the Franchisor,
the Company has obtained favorable pricing on the purchase of food products
from several suppliers. In June 1995, the Company renewed its agreement with
Kraft Foodservice, Inc. to serve as its primary supplier. Kraft was
subsequently purchased by Alliant Foodservice, Inc. The Alliant agreement has a
five-year term and is cancellable at any time with 60 days notice.

The Company maintains centralized financial and accounting controls for
its Ryan's restaurants. On a daily basis, restaurant managers forward customer
counts, sales information and supplier invoices to Company headquarters. On a
weekly basis, restaurant managers forward summarized sales reports and payroll
data. Physical inventories of all food and supply items are taken weekly, and
meat is inventoried daily.

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DEVELOPMENT

GENERAL. The Company operated 24 Ryan's restaurants as of January 3, 1996.

SITE LOCATION AND CONSTRUCTION. The Company considers the specific
location of a restaurant to be important to its long-term success. The site
selection process focuses on a variety of factors, including trade area
demographics (such as population density and household income level), an
evaluation of site characteristics (such as visibility, accessibility, and
traffic volume), and an analysis of the potential competition. In addition,
site selection is influenced by the general proximity of a site to other Ryan's
restaurants in order to improve the efficiency of the Company's field
supervisors and potential marketing programs. The Company obtains its new
restaurant sites using its real estate subsidiary. The Company generally
locates its restaurants near or adjacent to residential areas in an effort to
capitalize on repeat business from such areas as opposed to transient business.

The Company constructs its Ryan's restaurants using its contracting
subsidiary. Management believes that by performing site selection and
restaurant construction internally, the Company can maintain better control of
site selection, real estate cost and construction performance. While the
Company has not required performance and payment bonds, it undertakes to
closely supervise and monitor all construction and confirm payment of
subcontractors and suppliers. New Ryan's restaurants generally are completed
within three months of the date on which construction is commenced.

MANAGEMENT OF NEW RESTAURANTS. When a new Ryan's restaurant is opened,
the principal restaurant management positions are staffed with personnel who
have prior experience in a management position at another of the Company's
restaurants and who have undergone special training. Prior to opening, all
staff personnel at the new location undergo one week of intensive training
conducted by the Company's restaurant training team. Such training includes
preopening drills in which test meals are served to the invited public. Both
the staff at the new location and personnel experienced in store openings at
other locations participate in the training and drills.

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JOINT VENTURE

In December 1994, the Company formed a new subsidiary, Family Steak JV,
Inc. which acquired a 50% ownership in a Florida limited liability company,
Cross Creek Barbeque, L.C. ("Cross Creek"), for the purpose of opening a new
restaurant. The Company contributed certain furnishings, fixtures, and
equipment owned by its Wrangler's Roadhouse, Inc. subsidiary to Cross Creek and
the other 50% owner of Cross Creek contributed the cash necessary to remodel
and open the new Cross Creek restaurant. Wrangler's Roadhouse, Inc. leases the
land and building it formerly occupied to Cross Creek. The Cross Creek
restaurant opened in January 1995. As a result of unsatisfactory operational
performance, the Company sold its interest in the Cross Creek restaurant in
July 1995.

PROPRIETARY TRADE MARKS

The name "Ryan's Family Steak House," along with all ancillary signs,
building design and other symbols used in conjunction with the name, and the
name "Mega Bar", are the primary trademarks and service marks of the
Franchisor. Such marks are registered in the United States. All of these
registrations and the goodwill associated with the Franchisor's trademarks are
of material importance to the Company's business and are licensed to the
Company under the Franchise Agreement.

COMPETITION

The food service business in Florida is highly competitive and is often
affected by changes in the taste and eating habits of the public, economic
conditions affecting spending habits, local demographics, traffic patterns and
local and national economic conditions. The principal bases of competition in
the industry are the quality and price of the food products offered. Location,
speed of service and attractiveness of the facilities are also important
factors. The Company's restaurants are in competition with restaurants
operated or franchised by national, regional and local restaurant companies
offering a similar menu, many of which have greater resources than the Company.
The Company also is in competition with specialty food outlets and other
vendors of food.

In addition, the Franchisor has the right to operate one Ryan's restaurant
in Panama City, Florida, one Ryan's restaurant in Pensacola, Florida, and
operate additional Ryan's restaurants in Escambia County, Florida if such
restaurants are not located within five miles of a Ryan's restaurant operated
by the Company. Even though the Company believes that such five mile location
restriction will prevent direct competition between a restaurant owned by the

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Company and a restaurant owned by the Franchisor, competition with restaurants
owned by the Franchisor could occur. In addition, beginning in June 1996, the
Franchisor has the right to operate restaurants in several other west Florida
and south Florida counties.

EMPLOYEES

As of January 3, 1996, the Company employed approximately 1,320 persons,
of whom approximately 50% are considered by management as part-time employees.
No labor unions currently represent any of the Company's employees. The
Company has not experienced any work stoppages attributable to labor disputes
and considers employee relations to be good.

EXECUTIVE OFFICERS

The following persons were executive officers of the Company effective
January 3, 1996:

Lewis E. Christman, Jr., age 76, has been President and Chief Executive
Officer of the Company since April 1994. Mr. Christman was hired as a
consultant to oversee and direct the Company's purchasing program in January
1994 and has been a Director of the Company since May 1993. In addition, Mr.
Christman serves as President of each of the Company's subsidiaries. Mr.
Christman has been a partner in East Coast Marketing since 1990. From 1979 to
1989, Mr. Christman served as Chairman of the Board of Neptune Marketing, Inc.,
a food brokerage company.

Edward B. Alexander, age 37, has been Secretary and Treasurer of the
Company since November 1990. In addition, Mr. Alexander serves as Secretary of
each of the Company's subsidiaries. Mr. Alexander served as controller of the
Company from January 1989 to April 1990 and as Director of Finance since April
1990. From April 1985 until December 1988, Mr. Alexander was employed as
controller for Mac Papers, Inc., a wholesale paper products distributor. Prior
to April 1985, Mr. Alexander served as a senior accountant for the accounting
firm of Touche Ross & Co.

Bob Martin, age 67, has been Vice President of Family Steak Houses,
Inc. since April 1994. In addition, Mr. Martin has been Vice President of
Steak House Construction since 1986. Mr. Martin was project manager and
construction supervisor for all of the Company's restaurants. Prior to 1981,
Mr. Martin was Vice President of Universal Environmental Control Construction
Inc. from 1973 to 1981.

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Robert Scott, age 43, has been Vice President of Operations for the
Company since July 1994. From May 1983 to July 1994, Mr. Scott was employed by
Golden Corral Family Restaurants as a District Manager, responsible for 35
restaurants in his division. From November 1978 to April 1982, Mr. Scott was
employed as the Manager of Operations for Hardwicke Corporation (Restaurants
and Pubs). Prior to 1978, Mr. Scott was General Manager of a Ground Round
Restaurant.

William Stanley Smith, Jr., age 59, has been Executive Vice President of
the Company since April 1995. From June 1994 to April 1995, Mr. Smith was a
consultant to the Company. From October 1985 to June 1994, Mr. Smith served as
Vice President of Development of the Company. In addition, Mr. Smith serves as
Vice President of each of the Company's subsidiaries.

GOVERNMENT REGULATION

The Company is subject to the Fair Labor Standards Act which governs such
matters as minimum wage requirements, overtime and other working conditions. A
large number of the Company's restaurant personnel are paid at or slightly
above the federal minimum wage level and, accordingly, any change in such
minimum wage will affect the Company's labor costs. The Company is also subject
to the Equal Employment Opportunity Act and a variety of federal and state
statutes and regulations. The Company's restaurants are constructed to meet
local and state building requirements and are operated in accordance with state
and local regulations relating to the preparation and service of food.

The Company believes that it is in substantial compliance with all
applicable federal, state and local statutues, regulations and ordinances and
that compliance has had no material effect on the Company's capital
expenditures, earnings or competitive position, and such compliance is not
expected to have a material adverse effect upon the Company's operations. The
Company, however, cannot predict the impact of possible future legislation or
regulation on its operations.

SOURCES AND AVAILABILITY OF RAW MATERIALS

The Company procures its food and other products from a variety of
suppliers, and follows a policy of obtaining its food and products from several
major suppliers under competitive terms. A substantial portion of the beef
used by the Company is obtained from one supplier, although the Company
believes comparable beef meeting its specifications is available in adequate
quantities from other suppliers. To ensure against interruption in the flow of
food supplies due to unforeseen or catastrophic events, to take advantage of
favorable purchasing opportunities, and to insure that

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meat received by the Company is properly aged, the Company maintains a two to
six week supply of beef.

WORKING CAPITAL REQUIREMENTS

Substantially all of the Company's revenues are derived from cash sales.
Inventories are purchased on credit and are converted rapidly to cash. The
Company does not maintain significant receivables and inventories. Therefore,
with the exception of debt service, working capital requirements for continuing
operations are not significant.

In March 1995, the Company entered into an Amended and Restated Note
Agreement, dated as of February 1, 1995, with The Travelers Insurance Company
and certain of its affiliates ("the Note Agreement"). In August 1995, the
Travelers Notes were sold to Cerberus Partners, L.P. The Cerberus Notes are due
May 30, 1998 and provide for an interest rate of 9.0%, and monthly principal
reductions of $65,000 beginning January 1, 1996. As of January 3, 1996, the
outstanding balance due under the Cerberus Notes was $11,607,800.

The Note Agreement includes detachable Warrants for purchases of up to
1,750,000 shares of the Company's common stock at an exercise price of $.40 per
share. The Cerberus Notes are secured by second mortgages on twenty-two of the
Company's restaurant properties. The Note Agreement provides for various
covenants including prepayment options, the maintenance of prescribed debt
service coverages, limitations on the declaration of cash dividends, sale of
assets, and certain other restrictions.

Also in March 1995, the Company entered into an Amended and Restated Loan
Agreement with The Daiwa Bank, Limited, and SouthTrust Bank of Alabama,
National Association (the "Bank Loan"), which extends the maturity date of its
secured term loan with the banks until May 30, 1998. The Bank Loan bears
interest at prime rate plus 0.50%, with monthly principal payments of $41,250
beginning April 1, 1995 ($67,100 prior to April 1, 1995). The Bank Loan is
secured by first mortgages on twenty-two of the Company's restaurant
properties, and provides for various covenants substantially consistent with
those of the Travelers Agreement. As of January 3, 1996, the outstanding
balance under the Bank Loan was $4,163,000.

SEASONALITY

The Company's operations are subject to some seasonal fluctuations.
Revenues per restaurant generally increase from January through April and
decline from September through December.

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RESEARCH

The Company relies on the Franchisor to maintain ongoing research programs
relating to the development of new products and evaluation of marketing
activities. Although research and development activities are important to the
Company, no expenditures for research and development have been incurred by the
Company.

CUSTOMERS

No material part of the Company's business is dependent upon a single
customer or a few customers.

INFORMATION AS TO CLASSES OF SIMILAR PRODUCTS OR SERVICES

The Company operates in only one industry segment. All significant
revenues and pre-tax earnings relate to retail sales of food to the general
public through restaurants owned and operated by the Company. The Company has
no operations outside the continental United States.

ITEM 2. PROPERTIES

Location Date Opened
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Jacksonville May 1982
Jacksonville May 1983
Jacksonville November 1983
Orange Park May 1984
Jacksonville May 1985
Jacksonville July 1985
Ocala September 1986
Neptune Beach November 1986
Lakeland February 1987
Lakeland March 1987
Winter Haven August 1987
Apopka September 1987
Gainesville December 1987
Hudson February 1988
New Port Richey May 1988
Tampa June 1988
Tallahassee August 1988
Daytona Beach September 1988
Tampa November 1988
Orlando January 1989
Orlando February 1989
Clearwater August 1989
Melbourne November 1989
Lake City March 1991

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As of March 1995, the Company operated 24 Ryan's restaurants. The specific
rate at which the Company is able to open new restaurants will be determined by
its ability to locate suitable sites on satisfactory terms, raise the necessary
capital, secure appropriate governmental permits and approvals and recruit and
train management personnel.

As of January 3, 1996, the Company owned the real property on which 22 of
its restaurants were located. All of these properties were subject to first
and second mortgages securing the Cerberus Notes and the Bank Loan.

The Company leases the real property on which two of its restaurants are
located. Those restaurants are located at 3546 Blanding Boulevard,
Jacksonville, Florida and in Clearwater, Florida.

The executive offices of the Company, consisting of approximately 3,500
square feet, are leased at a monthly rental rate of $2,680, plus sales tax,
from William Stanley Smith, Jr., an officer and director of the Company. The
Company paid $35,995 in rental payments to Mr. Smith in fiscal year 1995.

The Company currently leases 2,800 square feet of mixed warehouse and
office space from Eddie L. Ervin, Jr., a former officer and director of the
Company. The aggregate monthly payment due is approximately $1,495, plus sales
tax. The Company paid $20,151 in rental payments to Mr. Ervin in fiscal year
1995.

ITEM 3. LEGAL PROCEEDINGS

The Company is subject to various pending legal proceedings arising in the
normal course of business. In the opinion of management, based on the advice
of legal counsel the ultimate disposition of these claims and litigation will
not have a material adverse effect on the financial position or results of
operations of the Company.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

None.

PART II

ITEM 5. MARKET FOR THE REGISTRANT'S COMMON EQUITY AND
RELATED STOCKHOLDER MATTERS

The information contained under the caption "Common Stock Data" in the
Company's 1995 Annual Report to Shareholders is incorporated herein by
reference.

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ITEM 6. SELECTED FINANCIAL DATA

The information contained under the caption "Five-Year Financial Summary"
in the Company's 1995 Annual Report to Shareholders is incorporated herein by
reference.

ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS

The information contained under the caption "Management's Discussion and
Analysis of Financial Condition and Results of Operations" in the Company's
1995 Annual Report to Shareholders is incorporated herein by reference.

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

The Consolidated Financial Statements of the Company and the Report of
Independent Certified Public Accountants as contained in the Company's 1995
Annual Report to Shareholders are incorporated herein by reference.

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE.

None.
PART III

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT

The information regarding directors contained under the caption "Election
of Directors" in the Company's Proxy Statement for the 1996 Annual Meeting of
Shareholders, which will be filed with the Securities and Exchange Commission
prior to May 2, 1996, is incorporated herein by reference.

Securities and Exchange Commission Rules under Section 16(a) of the
Securities Exchange Act of 1934 require the Company's officers and directors,
and persons who own more than 10% of a registered class of the Company's equity
securities, to file reports of ownership and changes in ownership with the
Securities and Exchange Commission and the National Association of Securities
Dealers and to furnish the Company with copies of all Section 16(a) forms they
file.

Based solely on its review of the copies of such forms received by it or
written representations from certain reporting persons that no Forms 5 were
required for those persons, the Company believes that, during the 1995 fiscal
year, all filing requirements applicable to its officers,

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directors, and greater-than-10% beneficial owners were complied with on a
timely basis, except as set forth under the caption "Compliance with Section
16(a) of the Securities Exchange Act of 1934" in the Company's Proxy Statement
for the Annual Meeting of Shareholders, which will be filed with the Securities
and Exchange Commission prior to May 2, 1996, which is incorporated herein by
reference.

The information regarding executive officers is set forth in Item 1 of
this report under the caption "Executive Officers."

ITEM 11. EXECUTIVE COMPENSATION

The information contained under the caption "Executive Pay" in the
Company's Proxy Statement for the 1996 Annual Meeting of Shareholders, which
will be filed with the Securities and Exchange Commission prior to May 2, 1996,
is incorporated herein by reference.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

The information contained under the caption "Security Ownership of Certain
Beneficial Owners and Management" in the Company's Proxy Statement for the 1996
Annual Meeting of Shareholders, which will be filed with the Securities and
Exchange Commission prior to May 2, 1996, is incorporated herein by reference.

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

The information contained under the caption "Election of Directors -
Certain Relationships and Related Transactions" in the Company's Proxy
Statement for the 1996 Annual Meeting of Shareholders, which will be filed with
the Securities and Exchange Commission prior to May 2, 1996, is incorporated
herein by reference.

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PART IV

ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS ON FORM 8-K.

(a)1. The financial statements listed below are filed with this report on
Form 10-K or are incorporated herein by reference from the Company's
1995 Annual Report to Shareholders. With the exception of the pages
listed below, the 1995 Annual Report to Shareholders is not deemed
"filed" as a part of this report on Form 10-K.

Page
Reference
---------
Form 1995
10-K Annual Report
---- -------------

Consent of Independent Certified
Public Accountants F-1
Report of Independent Certified
Public Accountants 21
Consolidated Statements of Operations 8
Consolidated Balance Sheets 9
Consolidated Statements of Share-
holders' Equity 11
Consolidated Statements of Cash Flows 10
Notes to Consolidated Financial
Statements 12

(a)2. No financial statement schedules have been included since the required
information is not applicable or the information required is included
in the financial statements or the notes thereto.

(a)3. The following exhibits are filed as part of this report on Form 10-K,
and this list comprises the Exhibit Index.

No. Exhibit

3.01 Articles of Incorporation of Family Steak Houses of Florida,
Inc. (Exhibit 3.01 to the Company's Registration Statement on Form
S-1, Registration No. 33-1887, is incorporated herein by reference.)

3.02 Bylaws of Family Steak Houses of Florida, Inc. (Exhibit 3.02
to the Company's Registration Statement on Form S-1, Registration
No. 33-1887, is incorporated herein by reference.)

16
17

3.03 Articles of Amendment to the Articles of Incorporation of
Family Steak Houses of Florida, Inc. (Exhibit 3.03 to the Company's
Registration Statement on Form S-1, Registration No. 33-1887, is
incorporated herein by reference.)

3.04 Articles of Amendment to the Articles of Incorporation of
Family Steak Houses of Florida, Inc. (Exhibit 3.04 to the Company's
Registration Statement on Form S-1, Registration No. 33-1887, is
incorporated herein by reference.)

4.01 Specimen Stock Certificate for shares of the Company's Common
Stock (Exhibit 4.01 to the Company's Registration Statement on Form
S-1, Registration No. 33-1887, is incorporated herein by reference.)

10.01 Amended Franchise Agreement between Family Steak Houses of
Florida, Inc. and Ryan's Family Steak Houses, Inc., dated September
16, 1987. (Exhibit 10.01 to the Company's Registration Statement on
Form S-1, filed with the Commission on October 2, 1987, Registration
No. 33-17620, is incorporated herein by reference.)

10.02 Lease regarding the restaurant located at 3549 Blanding
Boulevard, Jacksonville, Florida (Exhibit 10.03 to the Company's
Registration Statement on Form S-1, Registration No. 33-1887, is
incorporated herein by reference.)

l0.03 Lease, dated May 18, 1989, between the Company and Stoneybrook
Associates, Ltd., for a restaurant located in Clearwater, Florida.
(Exhibit 10.25 to the Company's Registration Statement on Form S-1,
filed with the Commission on September 29, 1989, Registration No.
33-17620, is incorporated herein by reference.)

10.04 Amended and Restated Loan Agreement, dated March 14, 1995,
by the Company and certain of its subsidiaries, as borrowers,
in favor of The Daiwa Bank, Limited, and SouthTrust Bank of
Alabama, National Association, as lenders. (Exhibit 10.04 to the
Company's Annual Report on Form 10-K, filed with the Commission on
March 28, 1995, is incorporated herein by reference).

17
18

10.05 Second Amended and Restated Renewal Mortgage and Security
Agreement and Mortgage Spreading Agreement, dated March 14,
1995, by the Company as mortgagor, and The Daiwa Bank, Limited
and SouthTrust Bank of Alabama, National Association, as lenders.
(Exhibit 10.05 to the Company's Annual Report on Form 10-K,
filed with the Commission on March 28, 1995, is incorporated herein
by reference).

10.06 Amended and Restated Senior Note Agreement, dated as of
February 1, 1995, by the Company and certain of its subsidiaries, as
maker, and The Phoenix Insurance Company, The Travelers Indemnity
Company, and The Travelers Insurance Company, as noteholders.
(Exhibit 10.06 to the Company's Annual Report on Form 10-K, filed
with the Commission on March 28, 1995, is incorporated herein by
reference).

10.07 Amended and Restated Warrant to Purchase Shares of Common
Stock, void after October 1, 2003, which represents warrants issued
to The Phoenix Insurance Company, The Travelers Indemnity Company,
and The Travelers Insurance Company. (Exhibit 10.07 to the Company's
Annual Report on Form 10-K, filed with the Commission on March 28,
1995, is incorporated herein by reference).

10.08 Warrant to Purchase Shares of Common Stock, void after
October 1, 2003, which represents warrants issued to The
Phoenix Insurance Company, The Travelers Indemnity Company, and
The Travelers Insurance Company. (Exhibit 10.08 to the Company's
Annual Report on Form 10-K, filed with the Commission on March 28,
1995, is incorporated herein by reference).

10.09 Employment agreement between the Company and William
Stanley Smith, Jr., dated as of June 20, 1995. (Exhibit 10.01 to
the Company's Quarterly Report on Form 10-Q, filed with the
Commission on August 9, 1995, is incorporated herein by reference).

10.10 Employment agreement between the Company and Lewis E.
Christman, Jr., dated as of June 20, 1995. (Exhibit 10.02 to the
Company's Quarterly Report on Form 10-Q, filed with the Commission on
August 9, 1995, is incorporated herein by reference).

18
19

10.11 Employment agreement between the Company and Edward B.
Alexander, dated as of April 1, 1995. (Exhibit 10.03 to the Company's
Quarterly Report on Form 10-Q, filed with the Commission on August 9,
1995, is incorporated herein by reference).

10.12 Employment agreement between the Company and Robert J.
Martin, dated as of June 20, 1995. (Exhibit 10.04 to the Company's
Quarterly Report on Form 10-Q, filed with the Commission on August 9,
1995, is incorporated herein by reference).

10.13 Employment agreement between the Company and Robert
Scott, dated as of June 20, 1995. (Exhibit 10.05 to the Company's
Quarterly Report on Form 10-Q, filed with the Commission on August 9,
1995, is incorporated herein by reference).

10.14 Lease dated March 1, 1994 between the Company and Eddie L.
Ervin, Jr., for corporate office and warehouse space in Neptune
Beach, Florida. (Exhibit 10.15 to the Company's Annual Report on Form
10-K, filed with the Commission on March 28, 1995, is incorporated
herein by reference).

10.15 Lease dated March 1, 1994 between the Company and William
Stanley Smith, Jr., for executive offices in Neptune Beach, Florida.
(Exhibit 10.16 to the Company's Annual Report on Form 10-K, filed
with the Commission on March 28, 1995, is incorporated herein by
reference).

10.16 Amendment of Franchise Agreement between Ryan's Family
Steak Houses, Inc. and the Company dated July 11, 1994. (Exhibit
10.17 to the Company's Annual Report on Form 10-K, filed with the
Commission on March 28, 1995, is incorporated herein by reference).

10.17 Agreement between the Company and Kraft Foodservice, Inc., as
the Company's primary food product distribution. (Exhibit 10.06 to
the Company's Annual Report on Form 10-Q, filed with the Commission
on August 9, 1995, is incorporated herein by reference).

10.18 Second Amended and Restated Renewal Promissory Note,
dated March 14, 1995, by the Company and certain of its
subsidiaries, as maker, in favor of SouthTrust Bank of Alabama,
National Association. (Exhibit 10.18 to the Company's Annual Report
Form 10-K, filed with the Commission on March 28, 1995, is
incorporated herein by reference).

19
20
10.19 Second Amended and Restated Renewal Promissory Note, dated
March 14, 1995, by the Company and certain of its subsidiaries,
as maker, in favor of The Daiwa Bank, Limited. (Exhibit 10.19
to the Company's Annual Report on Form 10-K, filed with the
Commission on March 28, 1995, is incorporated herein by reference).

10.20 Mortage and Security Agreement, dated March 14, 1995, by
the Company, as Mortgagor, in favor of The Travelers Insurance
Company, as collateral agent. (Exhibit 10.20 to the Company's
Annual Report on Form 10-K, filed with the Commission on March 28,
1995, is incorporated herein by reference).

10.21 Amended and Restated 9.0% Senior Notes, due June 1, 1998, by
the Company, as maker, in favor of TRAL & CO., an affiliate
of The Travelers Insurance Company, dated as of February 1, 1995.
(Exhibit 10.21 to the Company's Annual Report on Form 10-K, filed
with the Commission on March 28, 1995, is incorporated herein by
reference).

10.22 Agreement regarding termination of consulting services between
the Company and Eddie L. Ervin, Jr., dated April 17, 1995.

10.23 Letter of notification to the Company from The Travelers
Insurance Company regarding its sale of Senior Notes and Warrants to
Cerberus Partners, L.P.

13.01 1995 Annual Report to Shareholders.

21.01 Family Rustic Investments, Inc., a Florida
corporation, Steak House Construction Corporation, a Florida
corporation, Wrangler's Roadhouse, Inc., a Florida corporation and
Steak House Realty Corporation, a Florida corporation, are wholly
owned subsidiaries of the Company.

23.0l Consent of Independent Certified Public Accountants - Deloitte
& Touche LLP.

27.00 Financial data schedule (electronic filing only).

(b) None.

(c) See (a)3. above for a list of all exhibits filed herewith and the
Exhibit Index.

(d) None.

20
21

SIGNATURES

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.

FAMILY STEAK HOUSES OF FLORIDA, INC.

Date: March 20, 1996 BY: /s/ Lewis E. Christman, Jr.
---------------------------
Lewis E. Christman, Jr., President

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

Signature Title Date
- --------- ----- ----

/s/ Lewis E. Christman, Jr. President (Principal March 18, 1996
- --------------------------- Executive Officer
Lewis E. Christman, Jr. and Director)

/s/ Edward B. Alexander Secretary and Treasurer March 18, 1996
- ----------------------- (Principal Financial and
Edward B. Alexander Accounting Officer).

/s/ Robert J. Martin Vice President and March 18, 1996
- -------------------- Director
Robert J. Martin

/s/ William S. Smith, Jr. Executive Vice President March 18, 1996
- ------------------------- and Director
William S. Smith, Jr.

/s/ Michael J. Walters Controller March 18, 1996
- ----------------------
Michael J. Walters

/s/ Joseph M. Glickstein, Jr. Director March 18, 1996
- -----------------------------
Joseph M. Glickstein, Jr.

/s/ Richard M. Gray Director March 18, 1996
- -------------------
Richard M. Gray

22

INDEX TO EXHIBITS

EXHIBIT
NO. DESCRIPTION OF EXHIBIT
- --- ----------------------

3.01 Articles of Incorporation of Family Steak Houses of Florida, Inc.
(Exhibit 3.01 to the Company's Registration Statement on Form S-1,
Registration No. 33-1887, is incorporated herein by reference.)

3.02 Bylaws of Family Steak Houses of Florida, Inc. (Exhibit 3.02 to the
Company's Registration Statement on Form S-1, Registration No.
33-1887, is incorporated herein by reference.)

3.03 Articles of Amendment to the Articles of Incorporation of Family Steak
Houses of Florida, Inc. (Exhibit 3.03 to the Company's Registration
Statement on Form S-1, Registration No. 33-1887, is incorporated
herein by reference.)

3.04 Articles of Amendment to the Articles of Incorporation of Family Steak
Houses of Florida, Inc. (Exhibit 3.04 to the Company's Registration
Statement on Form S-1, Registration No. 33-1887, is incorporated
herein by reference.)

4.01 Specimen Stock Certificate for shares of the Company's Common Stock
(Exhibit 4.01 to the Company's Registration Statement on Form S-1,
Registration No. 33-1887, is incorporated herein by reference.)

10.01 Amended Franchise Agreement between Family Steak Houses of Florida,
Inc., and Ryan's Family Steak Houses, Inc., dated September 16, 1987.
(Exhibit 10.01 to the Company's Registration Statement on Form S-1,
filed with the Commission on October 2, 1987, Registration
No. 33-17620, is incorporated herein by reference.)

10.02 Lease regarding the restaurant located at 3549 Blanding Boulevard,
Jacksonville, Florida (Exhibit 10.03 to the Company's Registration
Statement on Form S-1, Registration No. 33-1887, is incorporated
herein by reference.)

23

10.03 Lease, dated May 18, 1989, between the Company and Stoneybrook
Associates, Ltd., for a restaurant located in Clearwater, Florida.
(Exhibit 10.25 to the Company's Registration Statement on Form S-1,
filed with the Commission on September 29, 1989, Registration
No. 33-17620, incorporated herein by reference.)

10.04 Amended and Restated Loan Agreement, dated March 14, 1995, by the
Company and certain of its subsidiaries, as borrowers, in favor
of The Daiwa Bank, Limited, and SouthTrust Bank of Alabama, National
Association, as lenders. (Exhibit 10.04 to the Company's Annual Report
on Form 10-K, filed with the Commission on March 28, 1995, is
incorporated herein by reference).

10.05 Second Amended and Restated Renewal Mortgage and Security Agreement
and Mortgage Spreading Agreement, dated March 14, 1995, by the
Company as mortgagor, and The Daiwa Bank, Limited, and SouthTrust
Bank of Alabama, National Association, as lenders. (Exhibit 10.05 to
the Company's Annual Report on Form 10-K, filed with the Commission on
March 28, 1995, is incorporated herein by reference).

10.06 Amended and Restated Senior Note Agreement, dated as of February 1,
1995, by the Company and certain of its subsidiaries, as maker, and The
Phoenix Insurance Company, The Travelers Indemnity Company, and The
Travelers Insurance Company, as noteholders. (Exhibit 10.06 to the
Company's Annual Report on Form 10-K, filed with the Commission on
March 28, 1995, is incorporated herein by reference).

10.07 Amended and Restated Warrant to Purchase Shares of Common Stock, void
after October 1, 2003, which represents warrants issued to The Phoenix
Insurance Company, The Travelers Indemnity Company, and The Travelers
Insurance Company. (Exhibit 10.07 to the Company's Annual Report on
Form 10-K, filed with the Commission on March 28, 1995, is
incorporated herein by reference).

10.08 Warrant to Purchase Shares of Common Stock, void after October 1,
2003, which represents warrants issued to The Phoenix Insurance
Company, The Travelers Indemnity Company, and The Travelers Insurance
Company. (Exhibit 10.08 to the Company's Annual Report on Form 10-K,
with the Commission on March 28, 1995, is incorporated herein by
reference).
24

10.09 Employment agreement between the Company and William Stanley Smith,
Jr., dated as of June 20, 1995. (Exhibit 10.01 to the Company's Annual
Report on Form 10-Q, filed with the Commission on August 9, 1995, is
incorporated herein by reference).

10.10 Employment agreement between the Company and Lewis E. Christman,
Jr., dated as of June 20, 1995. (Exhibit 10.02 to the Company's
Annual Report on Form 10-Q, filed with the Commission on August 9,
is incorporated herein by reference).

10.11 Employment agreement between the Company and Edward B. Alexander,
dated as of April 1, 1995. (Exhibit 10.03 to the Company's Annual
Report on Form 10-Q, filed with the Commission on August 9, 1995, is
incorporated herein by reference).

10.12 Employment agreement between the Company and Robert J. Martin, dated
as of June 20, 1995. (Exhibit 10.04 to the Company's Annual Report
on Form 10-Q, filed with the Commission on August 9, 1995, is
incorporated herein by reference).

10.13 Employment agreement between the Company and Robert Scott, dated
as of June 20, 1995. (Exhibit 10.05 to the Company's Annual Report on
Form 10-Q, filed with the Commission on August 9, 1995, is
incorporated by reference).

10.14 Lease dated March 1, 1994 between the Company and Eddie L. Ervin,
Jr., for corporate office and warehouse space in Neptune Beach,
Florida. (Exhibit 10.15 to the Company's Annual Report on Form 10-K,
filed with the Commission on March 28, 1995, is incorporated herein
by reference.

10.15 Lease dated March 1, 1994 between the Company and William Stanley
Smith, Jr., for executive offices in Neptune Beach, Florida. (Exhibit
10.16 to the Company's Annual Report on Form 10-K, filed with the
Commission on March 28, 1995, is incorporated herein by reference).

10.16 Amendment of Franchise Agreement between Ryan's Family Steak Houses,
Inc. and the Company dated July 11, 1994. (Exhibit 10.17 to the
Company's Annual Report on Form 10-K, filed with the Commission on
March 28 1995, is incorporated herein by reference).
25

10.17 Agreement between the Company and Kraft Foodservice, Inc., as the
Company's primary food product distribution. (Exhibit 10.06 to the
Company's Annual Report on Form 10-Q, filed with the Commission on
August 9, 1995, is incorporated herein by reference).

10.18 Second Amended and Restated Renewal Promissory Note, dated March
14, 1995, by the Company and certain of its subsidiaries, as maker, in
favor of SouthTrust Bank of Alabama, National Association. (Exhibit
10.18 to the Company's Annual Report on Form 10-K, filed with the
Commission on March 28, 1995, is incorporated herein by reference).

10.19 Second Amended and Restated Renewal Promissory Note, dated March 14,
1995, by the Company and certain of its subsidiaries, as maker, in
favor of The Daiwa Bank, Limited. (Exhibit 10.19 to the Company's
Annual Report on Form 10-K, filed with the Commission on March 28,
1995, is incorporated herein by reference).

10.20 Mortage and Security Agreement, dated March 14, 1995, by the Company,
as Mortgagor, in favor of The Travelers Insurance Company, as
collateral agent. (Exhibit 10.20 to the Company's Annual Report on Form
10-K, filed with the Commission on March 28, 1995, is incorporated
herein by reference).

10.21 Amended and Restated 9.0% Senior Notes, due June 1, 1998, by the
Company, as maker, in favor of TRAL & CO., an affiliate of The
Travelers Insurance Company, dated as of February 1, 1995. (Exhibit
10.21 to the Company's Annual Report on Form 10-K, filed with the
Commission March 28, 1995, is incorporated herein by reference).

10.22 Agreement regarding termination of consulting services between the
Company and Eddie L. Ervin, Jr., dated April 17, 1995.

10.23 Letter of notification to the Company from The Travelers Insurance
Company regarding its sale of Senior Notes and Warrants to Cerberus
Partners, L.P..

13.01 1995 Annual Report to Shareholders.

26

21.01 Family Rustic Investments, Inc., a Florida corporation, Steak House
Construction Corporation, a Florida corporation, Wrangler's Roadhouse,
Inc., a Florida corporation, Family Steak JV, Inc., a Florida
corporation, and Steak House Realty Corporation, a Florida corporation,
are wholly owned subsidiaries of the Company.

23.01 Consent of Independent Certified Public Accountants - Deloitte &
Touche LLP.

27.00 Financial Data Schedule (electronic filing only).

(b) None.

(c) See (a)3. above for a list of all exhibits filed herewith and the
Exhibit Index.

(d) None.