EXHIBIT 13(e)

Report of Ernst & Young LLP, Independent Auditors

Shareholders and Board of Directors
Piccadilly Cafeterias, Inc.
Baton Rouge, Louisiana

We  have audited the accompanying  consolidated  balance  sheets  of  Piccadilly
Cafeterias, Inc. as of  June  30,  1997  and 1996, and the related  consolidated
statements of income, changes in shareholders' equity, and cash flows for each
of the three years in the period ended June 30, 1997. These financial 
statements are the responsibility of the Company's management. Our
responsibility is to express an opinion on these financial statements based
on our audits.

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

In our opinion, the  financial  statements referred to above present fairly, 
in all material respects, the consolidated  financial  position  of Piccadilly 
Cafeterias, Inc. at June 30, 1997 and 1996, and the consolidated results of its
operations and its cash flows for each of the three years in the period ended  
June  30,  1997  in conformity with generally accepted accounting principles.

As  discussed  in  Note  2  to  the  consolidated financial statements, in 1996 
the Company changed its method of accounting for the impairment of long-lived 
assets.



Ernst & Young LLP
New Orleans, Louisiana
July 21, 1997