U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

FORM 10-K
THE SECURITIES EXCHANGE ACT OF 1934

/X/ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the fiscal year ended December 31, 2000

/ / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES
EXCHANGE ACT OF 1934

For the transition period from _______________ to ______

Commission file number 0-21423

CHICAGO PIZZA & BREWERY, INC.
(Exact name of registrant as specified in its charter)

CALIFORNIA 33-0485615
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)

16162 Beach Boulevard
Suite 100
Huntington Beach, California 92647
(714) 848-3747
(Address, including zip code, and telephone number, including
area code, of registrant's principal executive offices)

Securities registered under Section 12(b) of the Exchange Act: None

Securities registered under Section 12(g) of the Exchange Act:

Title of Each Class Name of each Exchange on Which Registered
------------------- -----------------------------------------
Common Stock, No Par Value NASDAQ

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

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
of Regulation S-X 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. X
--

The aggregate market value of the common stock of the Registrant ("Common
Stock") held by non-affiliates as of December 31, 2000 based on the market price
at March 16, 2001 was $8,029,744. As of March 16, 2000, there were 7,658,321
shares of Common Stock of the Registrant outstanding and 7,964,584 Redeemable
Warrants of the Registrant outstanding.

DOCUMENTS INCORPORATED BY REFERENCE
Certain portions of the following documents are incorporated by reference into
Part III of this Form 10-K: The Registrant's Proxy Statement for the Annual
Meeting of Shareholders.

INDEX

PART I

ITEM 1. DESCRIPTION OF BUSINESS 1
ITEM 2. PROPERTIES 6
ITEM 3. LEGAL PROCEEDINGS 6
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS 6

PART II

ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND
RELATED SHAREHOLDER MATTERS 6
ITEM 6. SELECTED FINANCIAL DATA 8
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS 9
ITEM 8. FINANCIAL STATEMENTS 15
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
ON ACCOUNTING AND FINANCIAL DISCLOSURE 15

PART III

ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT 15
ITEM 11. EXECUTIVE COMPENSATION 15
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
AND MANAGEMENT 15
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS 15

PART IV

ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS
ON FORM 8-K 16

CHICAGO PIZZA & BREWERY, INC.

PART I

ITEM 1. DESCRIPTION OF BUSINESS

GENERAL

Chicago Pizza & Brewery, Inc. (the "Company" or "BJ's") owns and operates 28
restaurants located in Southern California, Oregon and Colorado and an interest
in one restaurant in Lahaina, Maui. Each of these restaurants is operated as
either a BJ's Restaurant & Brewery, a BJ's Pizza & Grill, a BJ's Restaurant &
Brewhouse or a Pietro's Pizza restaurant. The menu at the BJ's restaurants
feature BJ's award-winning, signature deep-dish pizza, BJ's own hand-crafted
beers as well as a great selection of appetizers, entrees, pastas, sandwiches,
specialty salads and desserts. The five BJ's Restaurant & Brewery restaurants
feature in-house brewing facilities where BJ's hand-crafted beers are produced.
The six Pietro's Pizza restaurants serve primarily Pietro's thin-crust pizza in
a very casual, counter-service environment.

The Company was incorporated in California on October 1, 1991 originally to
assume the operation of the then existing five BJ's restaurants. In January
1995, the Company purchased the BJ's restaurants and concept from its founders.
Since that time, the Company has completed the (i) expansion of the BJ's menu to
include high-quality sandwiches, pastas, entrees, specialty salads and desserts;
(ii) enhancement of the BJ's concept through a comprehensive new logo and
identity program, new uniforms, a new interior design concept and redesigned
signage; (iii) addition of BJ's restaurants and microbreweries to the concept
to produce BJ's own hand-crafted beers; (iv) purchase of the Pietro's Pizza
chain in the Northwest in March 1996, converting seven of the Pietro's
restaurants to BJ's.

The enhancement of the BJ's concept and the menu expansion have contributed to
same store sales increases at the BJ's restaurants open the entire comparable
periods of 9.8%, 6.5% and 15.7% for the years 2000, 1999 and 1998 respectively.

The opening of the Company's first microbrewery in Brea, California in August
1996 marked the beginning of the Company's production of award-winning
hand-crafted specialty beers which are distributed to all of the Company's
restaurants. The breweries have added an exciting dimension to the BJ's concept
which further distinguishes BJ's from many other restaurant operations.

The acquisition of the Pietro's restaurants and the conversion of several of
those restaurants to BJ's has given the Company a significant presence in the
Oregon market. Due to the relative success of the Company's larger restaurants,
management has determined that the Company's resources will be best utilized in
the development of additional larger restaurants in prime locations.
Consequently, there are currently no plans to convert additional Pietro's units
to BJ's.

The Company's current focus is on the development of the larger footprint BJ's
restaurants in high profile locations with favorable demographics. During 2000,
the Company opened BJ's Restaurant & Brewhouses in Valencia, California,
Burbank, California and Huntington Beach, California in March, June and October,
respectively, and a BJ's Restaurant & Brewery in West Covina, California in
August. The Company anticipates opening a BJ's Restaurant & Brewhouse in Irvine,
California in late summer 2001 and is in negotiations for additional sites in
California and Arizona.

The Company's fundamental business strategy is to grow through the additional
development and expansion of the BJ's brand. The BJ's brand represents
exceptional food and specialty beers accompanied by great value, in a fun,
casual environment.

In addition to developing new BJ's restaurant and brewery operations, the
Company plans to pursue acquisition opportunities which may involve conversion
to the BJ's concept or the operation of additional complementary concepts.

There can be no assurance that future events, including problems, delays,
additional expenses and difficulties encountered in expansion and conversion of
restaurants, will not adversely impact the Company's ability to meet its
operational objectives or require additional financing, or that such financing
will be available if necessary.

RESTAURANT CONCEPT AND MENU

The Company believes it is positioned for competitive advantage by offering
customers moderate prices, and excellent food from a menu that features
award-winning pizza, bountiful salads, soups, pastas, sandwiches, entrees and
desserts. The popularity of BJ's restaurants, management believes, is due to
the broadness of their appeal, with menu items ranging from pizza to steaks and
ribs.

The BJ's menu has been developed on a foundation of excellence. BJ's core
product, its deep-dish, Chicago-style pizza, has been highly acclaimed since it
was originally developed in 1978. This unique version of Chicago-style pizza is
unusually light, with a crispy, flavorful crust. Management believes BJ's
lighter crust helps give it a broader appeal than some other versions of
deep-dish pizza. The pizza is topped with high-quality meats, fresh vegetables
and whole-milk mozzarella cheese. BJ's pizza consistently has been awarded "best
pizza" honors by restaurant critics and public opinion polls in Orange County,
California. In addition, BJ's recently won the award for "best pizza on Maui" in
a poll conducted by the Maui News.

Management's objective in developing BJ's expanded menu was to ensure that all
items on the menu maintained and enhanced BJ's reputation for quality. BJ's
offers large portions of high quality food, creating a real value orientation.
Because of the relatively low food cost associated with pizza, BJ's highest
volume item, the restaurants are able to maintain favorable gross profit margins
while providing a value to the customer.

BJ's restaurants provide a variety of beers for every taste, offering a
constantly evolving selection of domestic, imported and micro-brewed beers. BJ's
own hand-crafted beers are the focus of the beer selection and feature five
standard beers along with a rotating selection of seasonal specialties. While
the BJ's beers are produced at the Company's central brewery locations, they are
distributed to, and offered at all of the BJ's and Pietro's restaurants.
Management believes that internally produced beer provides a variety of
benefits, including:

1. The quality and freshness of the BJ's brewed beers, which is under the
constant supervision of the Company's Vice President of Brewing Operations, is
superior to beer purchased from external sources.

2. The production costs of internally brewed beer can be significantly less
than purchased beer. The relatively low production costs and premium pricing
often associated with micro-brewed beers has a positive impact on gross profit
margins. The cost savings are maximized when the brewery is operating at or
near capacity. This is the basis for the Company's "central brewery" structure.

RESTAURANT LOCATIONS AND EXPANSION PLANS

The following table sets forth data regarding the Company's existing and future
restaurant locations:

Year Opened/
Acquired Square Feet
------------ -----------
CALIFORNIA
Balboa Island ..........................................1995 2,600
La Jolla Village .......................................1995 3,000
Laguna Beach ...........................................1995 2,150
Belmont Shore ..........................................1995 2,910
Seal Beach .............................................1994 2,369
Huntington Beach .......................................1994 3,430
Westwood Village, Los Angeles ..........................1996 2,450
Brea (Microbrewery) ....................................1996 10,000
Arcadia ................................................1999 7,371
Woodland Hills (Microbrewery) ..........................1999 13,000
La Mesa ................................................1999 7,200
Valencia ...............................................1999 7,000
West Covina (Microbrewery) .............................2000 12,000
Huntington Beach II ....................................2000 8,031
Burbank ................................................2000 11,000
Irvine* ................................................2001 7,826

COLORADO
Boulder (Microbrewery) .................................1997 5,500

HAWAII
Lahaina, Maui ..........................................1994 3,430

OREGON
Hood River (Pietro's) ..................................1996 7,000
Gresham ................................................1996 5,016
Milwaukie (Pietro's) ...................................1996 8,064
Salem (Pietro's) .......................................1996 6,875
Jantzen Beach (Microbrewery) ...........................1996 7,932
Eugene II (Pietro's) ...................................1996 4,443
Eugene IV ..............................................1996 4,345
Portland (Stark) .......................................1996 6,405
Portland (Lloyd Center) (Microbrewery) .................1996 4,341
Portland (Burnside) ....................................1996 3,483
Portland (Lombard) (Pietro's) ..........................1996 5,700
McMinnville (Pietro's) .................................1996 2,900

* Expected to open in late summer 2001.

In addition to the above locations, the Company is evaluating potential
locations in California, Arizona and Colorado. The Company's ability to open
additional restaurants will depend upon a number of factors, including, but not
limited to , the availability of qualified management, restaurant staff and
other personnel, the cost and availability of suitable locations, regulatory
limitations regarding common ownership of breweries and restaurants in certain
states, cost effective and timely construction of restaurants (which can be
delayed by a variety of controllable and non-controllable factors), securing of
required governmental permits and approvals and the Company's ability to
generate funds from existing operations or external financing. There can be no
assurance that the Company will be able to open its planned restaurants in a
timely or cost effective manner, if at all.

MARKETING

To date, the majority of marketing has been accomplished through community-based
promotions and customer referrals. Management's philosophy relating to the BJ's
restaurants has been to "spend its marketing dollars on the plate," or use funds
that would typically be allocated to marketing to provide a better product and
value to its existing guests. Management believes this will result in increased
frequency of visits and greater customer referrals. BJ's expenditures on
advertising and marketing are typically 1.0% of sales.

BJ's is very much involved in the local community and charitable causes,
providing food and resources for many worthwhile events. Management feels very
strongly about its commitment to helping others, and this philosophy has
benefited the Company in its relations with its surrounding communities. BJ's
commitment to supporting worthwhile causes is exemplified by its "Cookies for
Kids" program, which provides a donation to the Cystic Fibrosis Foundation for
each Pizookie sold. The Pizookie, BJ's extremely popular dessert, is a cookie,
freshly baked in a mini pizza pan, and topped with vanilla bean ice cream.

Pietro's marketing strategy relies much more on the distribution of discount
coupons. Expenditures for marketing relating to the Pietro's restaurants are
typically 7.0% of sales (excluding discounts).

OPERATIONS

The Company's policy is to staff the restaurants with enthusiastic people, who
can be an integral part of BJ's fun, casual atmosphere. Prior experience in the
industry is only one of the qualities management looks for in its employees.
Enthusiasm, motivation and the ability to interact well with the Company's
clientele are the most important qualities for BJ's management and staff.

Both management and staff undergo thorough formal training prior to assuming
their positions at the restaurants. Management has designated certain managers,
servers and cooks as "trainers," who are responsible for properly training and
monitoring all new employees. In addition, the Company's Director of Food and
Beverage and regional managers supervise the training functions in their
particular areas.

The Company purchases its food product from several wholesale distributors. The
majority of food and operating supplies for the California restaurants is
currently purchased from Jacmar Sales, with which the Company has had a
long-term relationship. The Company has recently started purchasing a majority
of food and operating supplies for the Northwest Restaurants from Alliant Food
Services, a vendor which has supplied the Company's Boulder, Colorado store for
several years. Product specifications are very strict because the Company
insists on using fresh, high-quality ingredients.

COMPETITION

The restaurant industry is highly competitive. A great number of restaurants
and other food and beverage service operations compete both directly and
indirectly with the Company in many areas, including food quality and service,

the price-value relationship, beer quality and selection, and atmosphere, among
other factors. Many competitors who use concepts similar to that of the Company
are well-established, and often have substantially greater resources.

Because the restaurant industry can be significantly affected by changes in
consumer tastes, national, regional or local economic conditions, demographic
trends, traffic patterns, weather and the type and number of competing
restaurants, any changes in these factors could adversely affect the Company. In
addition, factors such as inflation and increased food, liquor, labor and other
employee compensation costs could also adversely affect the Company. The Company
believes, however, that its ability to offer high-quality food at moderate
prices with superior service in a distinctive dining environment will be the key
to overcoming these obstacles.

RELATED PARTY TRANSACTIONS

As of December 31, 2000, the Jacmar Companies and their affiliates (collectively
referred to herein as "Jacmar") owned approximately 15.5% of the Company's
outstanding common stock. On December 20, 2000, Jacmar agreed to purchase
approximately 2.2 million shares from ASSI, Inc. (a shareholder of the Company),
in a transaction that closed on January 18, 2001. In addition, Jacmar agreed to
purchase approximately 661,000 shares from two of the Company's officers in a
transaction that closed on March 13, 2001. These stock purchases resulted in an
increase in the percentage ownership of Jacmar and their affiliates to
approximately 53.0% of the outstanding stock of the Company. The Company agreed
to grant registration rights to Jacmar on the shares purchased from ASSI, Inc.
and Jacmar agreed to assist the Company in obtaining additional financing for
new restaurant projects.

In connection with the sale of shares by ASSI, Inc. to Jacmar in December 2000,
the Company agreed to issue an option to ASSI, Inc. in exchange for a release
of any claims of ASSI, Inc., including any rights it might have had to purchase
additional shares from the Company under an agreement that was pending
immediately prior to the Jacmar transaction. The option is exercisable for
200,000 shares at an exercise price of $4.00 per share, and is exercisable until
December 31, 2005.

The Company also entered into an agreement on February 22, 2001 to sell an
aggregate of 800,000 shares of common stock to Jacmar at $2.50 per share on or
before April 30, 2001. Upon the closing of that transaction, Jacmar will own
57.4% of the Company's outstanding stock. In addition, the Company has agreed
to sell Jacmar up to an additional 3.2 million shares at $2.50 on or before
August 15, 2001. The exact amount of shares to be purchased of the 3.2 million
shares the Company has made available and the date of purchase are to be
determined by Jacmar, provided that the Company's obligation to sell the shares
expires on August 15, 2001. The sale of the up to 3.2 million shares is subject
to a shareholder vote and the receipt of a favorable fairness opinion. The
Company agreed to grant registration rights on the shares purchased by Jacmar
under this agreement.

The sale of the 800,000 shares to Jacmar enabled the Company to obtain an $8
million bank loan facility, including a $4 million term loan to replace its
existing debt and an additional $4 million line of credit to fund expansion on
an as-needed basis. The terms of the loan are described under the heading
"Management's Discussion and Analysis of Financial Condition and Results of
Operation - Restaurant Development Loan."

The Company has approximately 8 million warrants outstanding, which, before the
sale of additional shares to Jacmar , have an exercise price of $5.50 per share.
The sale of the 800,000 shares of common stock to Jacmar in April 2001 will
trigger the anti-dilution provision of the warrant agreement, resulting in an
adjustment of the exercise price of the warrants to $5.35 per share. If the
entire 3.2 million additional shares are purchased by Jacmar pursuant to the
agreement, the warrant exercise price would be adjusted to $4.89 per share.
Jacmar, through its specialty wholesale food distributorship, is the Company's
largest supplier of product and paper goods. Jacmar supplied the Company with
approximately $6,647,000, $4,200,000 and $2,671,000 worth of food and beverage
products for the years ended December 31, 2000, 1999 and 1998, respectively. As
of December 31, 2000 and 1999, the Company had payables to Jacmar of
approximately $1,562,000 and $380,000, respectively, for merchandise. The
Company is charged 1.0% per month on product statements more than thirty days
old.

GOVERNMENT REGULATIONS

The Company is subject to various federal, state and local laws, rules and
regulations that affect its business. Each of the Company's restaurants is
subject to licensing and regulation by a number of governmental authorities,
which may include alcoholic beverage control, building, land use, health, safety
and fire agencies in the state or municipality in which the restaurant is
located. Difficulties obtaining the required licenses or approvals could delay

or prevent the development of a new restaurant in a particular area or could
adversely affect the operation of an existing restaurant. Similar difficulties,
such as the inability to obtain a liquor, restaurant license or a given
restaurant's products and services could also limit restaurant development
and/or profitability. Management believes, however, that the Company is in
compliance in all material respects with all relevant laws, rules, and
regulations. Furthermore, the Company has never experienced abnormal
difficulties or delays in obtaining the licenses or approvals required to open a
new restaurant or continue the operation of its existing restaurants.
Additionally, management is not aware of any environmental regulations that
have had or that it believes will have a materially adverse effect upon the
operations of the Company.

Alcoholic beverage control regulations require each of the Company's restaurants
to apply to a federal and state authority and, in certain locations, municipal
authorities for a license and permit to sell alcoholic beverages on the
premises. Typically, licenses must be renewed annually and may be revoked or
suspended for cause by such authority at any time. Alcoholic beverage control
regulations relate to numerous aspects of the daily operations of the
Company's restaurants, including minimum age of patrons and employees, hours of
operation, advertising, wholesale purchasing, inventory control and handling,
and storage and dispensing of alcoholic beverages. The Company has not
encountered any material problems relating to alcoholic beverage licenses or
permits to date and does not expect to encounter any material problems going
forward. The failure to receive or retain, or a delay in obtaining, a liquor
license in a particular location could adversely affect the Company's ability to
obtain such a license elsewhere.

The Company is subject to "dram-shop" statutes in California and other states
in which it operates. Those statutes generally provide a person who has been
injured by an intoxicated person the right to recover damages from an
establishment that has wrongfully served alcoholic beverages to such person. The
Company carries liquor liability coverage as part of its existing comprehensive
general liability insurance which it believes is consistent with coverage
carried by other entities in the restaurant industry and will help protect the
Company from possible claims. Even though the Company carries liquor liability
insurance, a judgment against the Company under a dram-shop statute in excess of
the Company's liability coverage could have a materially adverse effect on the
Company. To date, the Company has never been the subject of a "dram-shop"
claim.

Various federal and state labor laws, rules and regulations govern the
Company's relationship with its employees, including such matters as minimum
wage requirements, overtime and working conditions. Significant additional
governmental mandates such as an increased minimum wage, an increase in paid
leaves of absence, extensions in health benefits or increased tax reporting and
payment requirements for employees who receive gratuities, could negatively
impact the Company's restaurants.

EMPLOYEES

As of March 1, 2001, the Company employed 1,510 employees at its fifteen
California Restaurants, one Hawaii restaurant, and one Boulder, Colorado
restaurant. Additionally, 335 are employed at the twelve restaurants in Oregon.
The Company also employs 31 administrative and field supervisory personnel at
its corporate offices. Historically, the Company has experienced relatively
little turnover of restaurant management employees. The Company believes that it
maintains favorable relations with its employees, and currently no unions or
collective bargaining arrangements exist.

INSURANCE

The Company maintains worker's compensation insurance and general liability
insurance coverage which it believes will be adequate to protect the Company,
its business, assets and operations. There is no assurance that any insurance
coverage maintained by the Company will be adequate, that it can continue to
obtain and maintain such insurance at all or that the premium costs will not
rise to an extent that they adversely affect the Company or the Company's
ability to economically obtain or maintain such insurance.

TRADEMARKS AND COPYRIGHTS

The Company's registered trademarks and service marks include, among others, the
word mark "BJ's Chicago Pizzeria", and our stylized logo which includes the
words "BJ's Pizza, Grill, Brewery". In addition, the Company has registered the
word marks "BJ'S," "Tatonka" and "Harvest Hefeweizen" for its proprietary beer
and "Pizookie" for its proprietary dessert. The Company has also filed for word
marks, with registration pending, for ""BJ's Restaurant & Brewery," "BJ's
Restaurant & Brewhouse" and "BJ's Pizza & Grill" and has registered all of its
marks with the United States Patents and Trademark Office. Management believes
that the trademarks, service marks and other proprietary rights have significant
value and are important to the Company's brand-building effort and the marketing
of its restaurant concepts, however, there are other restaurants using the name
BJ's throughout the United States. The Company has in the past, and expects to

continue to, vigorously protect its proprietary rights. Management cannot
predict, however, whether steps taken by the Company to protect its proprietary
rights will be adequate to prevent misappropriation of these rights or the use
by others of restaurant features based upon, or otherwise similar to, our
concept. It may be difficult for the Company to prevent others from copying
elements of its concept and any litigation to enforce its rights will likely be
costly.

ITEM 2. PROPERTIES

All of the Company's restaurants are on leased premises and are subject to
varying lease-specific arrangements. For example, some of the leases require a
flat rent, subject to regional cost-of-living increases, while others
additionally include a percentage of gross sales. In addition, certain of these
leases expire in the near future, and there is no automatic renewal or option to
renew. No assurance can be given that leases can be renewed, or, if renewed,
that rents will not increase substantially, both of which would adversely affect
the Company. Other leases are subject to renewal at fair market value, which
could involve substantial increases. Total restaurant lease expense in 2000 was
approximately $3,269,000.

With respect to future restaurant sites, the Company believes the locations of
its restaurants are important to its long-term success and will devote
significant time and resources to analyzing prospective sites. The Company's
strategy is to open its restaurants in high-profile locations with strong
customer traffic during day, evening and weekend hours. The Company has
developed specific criteria for evaluating prospective sites, including
demographic information, visibility and traffic patterns.

During 2000, the Company combined its executive headquarters, previously located
in Mission Viejo, California, and its Northwest administrative offices, which
maintained the Company's business activities and provided management and
financial reporting, in a 5,547 square-foot leased facility in Huntington Beach,
California. The lease expires on September 30, 2005 and currently provides for
approximately $104,256 in annual rent as well as additional charges for taxes
and operating expenses.

ITEM 3. LEGAL PROCEEDINGS

Restaurants such as those operated by the Company are subject to a continuous
stream of litigation in the ordinary course of business, most of which the
Company expects to be covered by its general liability insurance. Punitive
damages awards, however, are not covered by the Company's general liability
insurance. To date, the Company has not paid punitive damages with respect to
any claims, but there can be no assurance that punitive damages will not be
awarded with respect to any future claims or any other actions. Although the
Company is not currently a party to any legal proceedings that would have a
material adverse effect upon the Company's business or financial position, it is
possible that in the future the Company could become a party to such
proceedings.

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

No matters were submitted to a vote of security holders in the fourth quarter of
2000.

PART II

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

On October 8, 1996, the Company's Common Stock and Redeemable Warrants became
listed on the NASDAQ Small Cap Market ("NASDAQ") (Symbols: CHGO and CHGOW) in
connection with the Initial Public Offering. On March 16, 2001, the closing
prices of the Common Stock and Redeemable Warrants were $2.75 per share and
$0.09 per Redeemable Warrant, respectively. The table below shows the high and
low sales prices as reported by NASDAQ. The sales prices represent inter-dealer
quotations without adjustments for retail mark-ups, mark-downs
or commissions.

Calendar Year ended
December 31, Common Stock Redeemable Warrants
- ------------ ------------ --------------------
High Low High Low
----- ----- ----- -----
1999
- --------------

First Quarter $1.81 $1.25 $0.13 $0.02
Second Quarter $2.00 $1.22 $0.13 $0.06
Third Quarter $2.06 $1.56 $0.13 $0.06
Fourth Quarter $1.88 $1.25 $0.09 $0.06

2000
- --------------
First Quarter $1.63 $1.13 $0.19 $0.06
Second Quarter $1.75 $1.38 $0.13 $0.03
Third Quarter $3.00 $1.56 $0.16 $0.06
Fourth Quarter $3.59 $2.78 $0.25 $0.09

<FN>
As of March 16, 2000, the Company had 117 shareholders (not including
beneficial owners holding shares in nominee accounts) of record and 112
holders of Redeemable Warrants of record.

DIVIDEND POLICY

The Company has not paid any dividends since its inception and has currently not
allocated any funds for the payment of dividends. Rather, it is the current
policy of the Company to retain earnings, if any, for expansion of its
operations, remodeling of existing restaurants and other general corporate
purposes. The Company has no plans to pay any cash dividends in the foreseeable
future. Should the Company decide to pay dividends in the future, such payments
would be at the discretion of the Board of Directors.

ITEM 6. SELECTED FINANCIAL DATA

The selected consolidated financial data should be read in conjunction with the
Consolidated Financial Statements and related notes thereto as well as with the
discussion below.

Year Ended December 31,
-----------------------
2000 1999 1998 1997 1996
-------- --------- -------- -------- ---------
(in thousands, except per share data)
Statement of Operations Data:

Revenues . . . . . . . . . . . . . . . . . . . . $52,346 $ 37,393 $30,051 $26,191 $ 19,865
Cost of sales. . . . . . . . . . . . . . . . . . 14,456 10,491 8,458 7,732 6,182
------- --------- -------- -------- ---------

Gross profit . . . . . . . . . . . . . . . . . . 37,890 26,902 21,593 18,459 13,683
------- --------- -------- -------- ---------

Costs and Expenses:
Labor and benefits . . . . . . . . . . . . . . . 18,772 13,542 10,831 9,086 6,933
Occupancy. . . . . . . . . . . . . . . . . . . . 4,160 2,998 2,563 2,363 1,877
Operating expenses . . . . . . . . . . . . . . . 5,520 4,161 3,520 3,385 2,998
Costs to open/close restaurants (1). . . . . . . 2,460 665
General and administrative . . . . . . . . . . . 3,922 3,218 2,583 2,636 2,258
Depreciation and amortization. . . . . . . . . . 2,002 1,517 1,737 1,389 1,037
------- --------- -------- -------- ---------

Total costs and expenses . . . . . . . . . . . . 36,836 26,101 21,234 18,859 15,103
------- --------- -------- -------- ---------

Income (loss) from operations. . . . . . . . . . 1,054 801 359 (400) (1,420)
------- --------- -------- --------- ---------
Other Income (expense):
Gain on involuntary conversion of assets 202
Interest expense, net. . . . . . . . . . . . . . (549) (251) (212) (125) (507)
Other income (expense), net. . . . . . . . . . . 4 16 (5) 20 (380)
-------- --------- -------- -------- ---------

Total other income (expense) . . . . . . . . . . (545) (235) (217) 97 (887)
-------- --------- -------- -------- ---------

Income (loss) before minority interest, taxes
And change in accounting . . . . . . . . . . 509 566 142 (303) (2,307)
Minority interest in partnership . . . . . . . . (42) (44) (56) (11) 27
-------- --------- -------- -------- ---------

Income before taxes and change in accounting . . 467 522 86 (314) (2,280)
Income tax benefit (expense) (2) . . . . . . . . 1,477 (26) (1) (1) (9)
-------- --------- -------- -------- ---------

Net income(loss) before change in accounting . . 1,944 496 85 (315) (2,289)
Cumulative effect of change in accounting (3) 106
-------- --------- -------- -------- ---------
Net income (loss). . . . . . . . . . . . . . . . $ 1,944 $ 390 $ 85 ($315) ($2,289)
======== ========= ======== ======== =========

Net income (loss) per share:
Basic and diluted. . . . . . . . . . . . . $ 0.25 $ 0.05 $ 0.01 ($0.05) ($0.52)
======== ========= ======== ======== =========

Weighted average shares outstanding:
Basic. . . . . . . . . . . . . . . . . . . 7,658 7,401 6,408 6,408 4,392
======= ========= ======== ======== =========
Diluted. . . . . . . . . . . . . . . . . . 7,770 7,411 6,420 6,408 4,392
======= ========= ======== ======== =========

Balance Sheet Data (end of period):
Working capital (deficit). . . . . . . . . . . . ($5,396) ($2,549) ($796) $ 232 $ 3,329
Intangible assets, net . . . . . . . . . . . . . 5,760 5,202 5,367 5,452 5,676
Total assets . . . . . . . . . . . . . . . . . . 29,992 19,144 17,595 17,842 18,914
Total long-term debt (including current portion) 6,059 2,861 2,927 3,543 3,964
Minority interest. . . . . . . . . . . . . . . . 263 249 235 211 215
Shareholders' equity . . . . . . . . . . . . . . 15,043 13,099 11,893 11,808 12,123

<FN>

(1) For the year ended December 31, 2000, includes a $1.4 million charge related to costs associated
with the closing of four restaurants expected to be closed in 2001.
(2) For the year ended December 31, 2000, includes a $1.7 million benefit for the elimination of the
net deferred tax asset valuation allowance.
(3) Reflects the Company's change in method of accounting for preopening costs in 1999.

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

FORWARD LOOKING STATEMENTS

The following discussion and analysis should be read in conjunction with the
Company's Consolidated Financial Statements and notes thereto included elsewhere
in this Form 10-K. Except for the historical information contained herein, the
discussion in this Form 10-K contains certain forward looking statements that
involve risks and uncertainties, such as statements of the Company's plans,
objectives, expectations and intentions. The cautionary statements made in
this Form 10-K should be read as being applicable to all related forward-looking
statements wherever they appear in this Form 10-K. The Company's actual results
could differ materially from those discussed here. Factors that could cause or
contribute to such differences include, without limitation, those factors
discussed herein including: (i) the Company's ability to manage growth and
conversions, (ii) construction delays, (iii) marketing and other limitations as
a result of the Company's historic concentration in Southern California and
current concentration in the Northwest, (iv) restaurant and brewery industry
competition, (v) impact of certain brewery business considerations, including
without limitation, dependence upon suppliers and related hazards, (vi)
increase in food costs and wages, including without limitation the recent
increase in minimum wage, (vii) consumer trends, (viii) potential uninsured
losses and liabilities, (ix) trademark and servicemark risks, and (x) other
general economic and regulatory conditions and requirements.

GENERAL

Chicago Pizza & Brewery, Inc. (the "Company" or "BJ's") owns and operates 28
restaurants located in Southern California, Oregon and Colorado and an interest
in one restaurant in Lahaina, Maui. Each of these restaurants is operated as
either a BJ's Pizza & Grill, BJ's Restaurant & Brewery, a BJ's Restaurant &
Brewhouse or a Pietro's Pizza restaurant. The menu at the BJ's restaurants
feature BJ's award-winning, signature deep-dish pizza, BJ's own hand-crafted
beers as well as a great selection of appetizers, entrees, pastas, sandwiches,
specialty salads and desserts. The five BJ's Restaurant & Brewery restaurants
feature in-house brewing facilities where BJ's hand-crafted beers are produced.
The eight Pietro's Pizza restaurants serve primarily Pietro's thin-crust pizza
in a very casual, counter-service environment.

The Company's revenues are derived primarily from food and beverage sales at its
restaurants. The Company's expenses consist primarily of food and beverage
costs, labor costs (consisting of wages and benefits), operating expenses
(consisting of marketing costs, repairs and maintenance, supplies, utilities and
other operating expenses), occupancy costs, general and administrative expenses
and depreciation and amortization expenses.

RESULTS OF OPERATIONS

FISCAL YEAR 2000 COMPARED TO FISCAL YEAR 1999

Revenues. Total revenues for the year ended December 31, 2000 increased to
$52,346,000 from $37,393,000 for the comparable twelve-month period of 1999, an
increase of $14,953,000 or 40.0%. The increase is primarily the result of:

The opening of restaurant and brewhouses in Arcadia, La Mesa, Valencia, Burbank
and Huntington Beach, California in January 1999, November 1999, March 2000,
June 2000, and October 2000, respectively, and restaurant & breweries in
Woodland Hills and West Covina, California in April 1999 and August 2000,
respectively. These new locations provided an increase in revenues of
$13,684,000 during the twelve months of 2000.

An increase in the BJ's restaurants same store sales for the comparable periods
of $2,368,000, or 9.8%. Management believes this increase was due to (i) an

increase in customer counts in the California and Colorado restaurants, and (ii)
an increase in check averages resulting from a minor price increase implemented
in November 1999.

Cost of Sales. Cost of food, beverages and paper (cost of sales) for the
restaurants increased to $14,456,000 for the year ended December 31, 2000 from
$10,490,000 for the comparable twelve-month period of 1999, an increase of
$3,966,000 or 37.8%. As a percentage of sales, cost of sales declined to 27.6%
from 28.1% for the twelve-month period of 1999. The Company's BJ's same-store
cost of sales, as a percentage of sales, improved to 27.7% during the year ended
December 31, 2000 from 28.0% for 1999. The same-store Northwest Pietro's
restaurants reduced their cost of sales to 26.6% for the twelve months of 2000
from 27.9% for the comparable period of 1999.

The improvement in same store cost of sales was partially offset by the higher
food costs associated with the opening of the new restaurants in Valencia,
Burbank, West Covina and Huntington Beach, California. As a percentage of their
revenues, these four new stores collectively incurred cost of sales of 28.9% for
the portions of 2000 during which they were open. A higher cost of sales
percentage in the early months of operations is in line with the Company's
experience when opening new restaurants.

Labor. Labor costs for the restaurants increased to $18,772,000 for the year
ended December 31, 2000 from $13,542,000 for the comparable twelve-month period
of 1999, an increase of $5,230,000 or 38.6%. As a percentage of revenues, labor
costs decreased slightly to 35.9% in 2000 from 36.2% in 1999. The overall
increase was primarily attributable to the opening of the four California
restaurants during 2000; labor costs at these restaurants totaled $3,634,000.
As a percentage of revenues, these four restaurants had labor costs of 37.3% for
the portions of 2000 during which they were operating. The Company
intentionally overstaffs new restaurants during the startup phase of operations
to allow for newly trained employees, an initial higher customer count and to
ensure a good dining experience by its customers.

Same-store BJ's labor costs increased $755,000, or 9.4%, to $8,792,000 for the
year ended December 31, 2000 from $8,037,000 for the comparable twelve-month
period of 1999. This increase was necessary to support the growth in same-store
BJ's revenues for the twelve-month period. As a percentage of revenues,
same-store labor costs for 2000 were unchanged at 34.9% for the comparable
twelve-month periods.

Occupancy. Occupancy costs increased to $4,160,000 during the year ended
December 31, 2000 from $2,998,000 during the twelve months of 1999, an increase
of $1,162,000, or 38.8%. The seven BJ's restaurants opened during 1999 and 2000
accounted for $1,167,000 of the net increase in occupancy costs from 1999 to
2000. A decrease of $129,000 in occupancy costs attributable to the closure of
two Pietro's restaurants partially offset the increase due to the new BJ's
restaurants. As a percentage of revenues, total occupancy costs declined
slightly to 7.9% from 8.0% for the 1999 period, which can be attributed to
increased revenues at the same-store BJ's restaurants.

Operating Expenses. Operating expenses increased to $5,520,000 during the year
ended December 31, 2000 from $4,160,000 for the comparable twelve-month period
of 1999, an increase of $1,360,000 or 32.7%. The two restaurant & breweries and
the five restaurant & brewhouses opened during 1999 and 2000 accounted for
$1,341,000 of the increase in operating costs during 2000. As a percentage of
revenues, operating expenses decreased to 10.5% in 2000 from 11.1% in 1999.
Operating expenses include restaurant-level operating costs, the major
components of which include marketing, repairs and maintenance, supplies and
utilities. Management believes the decrease in operating expenses as a
percentage of revenues resulted from a focus on more efficient operations at
recently opened restaurants.

General and Administrative Expenses. General and administrative expenses
increased to $3,922,000 during the year ended December 31, 2000 from $3,218,000
during 1999, an increase of $704,000 or 21.9%. The increase in general and
administrative expenses was primarily due to acquiring resources to implement
and support the Company's growth strategy, incurring costs in locating and
evaluating sites for future restaurants and developing staff and systems to
manage anticipated future expansion. As a percentage of revenues, general and
administrative expenses decreased to 7.5% from the 8.6% of the comparable
twelve-month period of 1999.

Restaurant Opening Costs. During the year ended December 31, 2000, the
Company incurred costs of $943,000 due to preparations for the openings of its
new restaurants in Valencia, Burbank and Huntington Beach, California and the
restaurant & brewery in West Covina, California. These costs will fluctuate from

year to year, possibly significantly, depending upon, but not limited to, the
number of restaurants under development, the size and concept of the restaurants
being developed and the complexity of the staff hiring and training process.

Restaurant Closing Expenses. During the year ended December 31, 2000, the
Company incurred costs of $114,000 due to the closure of a Pietro's restaurant
in Oregon and the abandonment of a site in Aloha, Oregon. The Company also
identified four additional restaurants in the Northwest that it intends to
either sell, if possible, or close during 2001. These stores have historically
not been profitable and are not considered essential to the Company's future
plans. A reserve of $1,403,000 was established to cover probable costs
associated with closing these restaurants. The amount of this reserve was
determined by evaluating the remaining length of the leases and monthly rent,
related costs such as common area charges and property taxes, the net book value
of the equipment and improvements, net of the likelihood of potential sub-lease
rental or lease buy-out costs and the probability of any sales proceeds.

Depreciation and Amortization. Depreciation and amortization increased to
$2,002,000 during the year ended December 31, 2000 from $1,517,000 for the
twelve months of 1999, an increase of $485,000 or 32.0%. This increase was
primarily due to the addition of restaurant and brewery equipment, furniture and
leasehold improvements totaling $4,497,000 and $8,950,000 during 1999 and 2000,
respectively, for the two BJ's restaurant and breweries and five BJ's restaurant
and brewhouses developed during those two most recent years. Depreciation of
capital assets during 2000 at these new restaurants and breweries increased by
$446,000 when compared with the prior year. This increase was partially offset
by the closing of three Northwest restaurants since late May of 1999.

Interest Expense. Interest expense increased to $553,000 during the year ended
December 31, 2000 from $315,000 during the twelve months of 1999, an increase of
$238,000. This increase was due to the additional debt incurred by the Company
to finance equipment and improvements for the new restaurants in Valencia,
Burbank, West Covina and Huntington Beach, California. Interest expense related
to these projects totaled $243,000 during the twelve months of 2000. A bank
commitment fee for this credit facility of $41,000 was fully amortized during
2000 in anticipation of this debt being refinanced by another lending
institution under more favorable terms. These additions to interest expense were
partially offset by reduced interest expense on older debt and capitalized
leases due to normal principal amortization.

FISCAL YEAR 1999 COMPARED TO FISCAL YEAR 1998

Revenues. Total revenues for the year ended December 31, 1999 increased to
$37,393,000 from $30,052,000 for the comparable period in 1998, an increase of
$7,341,000 or 24.4%. The increase is primarily the result of:

The opening of restaurants in Arcadia and La Mesa, California in January 1999
and November 1999, respectively, and a restaurant & brewery in Woodland Hills,
California in April 1999. These new locations provided $6,862,000 in revenues
during the periods of 1999 in which they were operating.

An increase in the BJ's restaurants same store sales for comparable periods, of
$1,524,000 or 6.5%. Management believes this increase was due to (i) an
increase in customer counts in the California and Colorado restaurants, and (ii)
an increase in check averages produced by a price increase implemented in
January 1999.

The increase in revenues resulting from the above factors was partially offset
by the closing during the year of two restaurants in Oregon, a BJ's in The
Dalles in May 1999 and a Pietro's in Eugene in June 1999. The closures in
mid-year of these locations reduced revenues by $927,000 when compared with
1998, during which they were open the entire year.

Cost of Sales. Cost of food, beverages and paper (cost of sales) for the
restaurants increased to $10,490,000 for the year ended December 31, 1999 from
$8,459,000 for the comparable period of 1998, an increase of $2,031,000 or
24.0%. This increase was in line with the 24.4% increase in revenues discussed
above. As a percentage of sales, cost of sales was stable at 28.1% for both 1999
and 1998.

The Company's same-store cost of sales, as a percentage of sales, improved to
28.0% during the year ended December 31, 1999 from 28.9% for the comparable

period of 1998. A continued emphasis during 1999 on efficiencies as well as menu
price increases for the California stores in January 1999 and for the Northwest
stores in January 1999 was necessary for the Company to keep pace with continued
high prices for cheese and other selected food items during 1999.

The improvement in same store cost of sales was partially offset by the higher
food costs associated with the opening of the new California restaurants. As a
percentage of their revenues, these stores collectively incurred food costs of
30.2% for the periods of 1999 during which they were operational. A higher cost
of sales percentage in the early months of operations is in line with the
Company's experience when opening new restaurants. Also partially offsetting the
improvement in same-store cost of sales were the food costs at the two
restaurants closed during 1999. For the periods of 1999 during which they were
open, these restaurants, as a percentage of their sales, incurred food costs of
29.5%.

Labor. Labor costs for the restaurants increased to $13,542,000 in the year
ended December 31, 1999 from $10,830,000 for the comparable period in 1998, an
increase of $2,712,000 or 25.0%. As a percentage of revenues, labor costs
increased to 36.2% in the1999 period from 36.0% in the 1998 period. The overall
increase, as well as the percentage increase, is attributable to the opening of
the new California restaurants. Labor costs at these three restaurants totaled
$2,769,000, or 40.4%, of their collective sales. The Company intentionally
overstaffs new restaurants during the startup phase of operations to ensure a
good dining experience by its customers. As a result of gradually reducing
staffing towards the level of a mature restaurant, the new stores showed a
reduction in labor costs by December 1999, as a percentage of sales.

Same-store labor costs increased $372,000, or 3.8%, to $10,232,000 for the year
ended December 31, 1999 from $9,860,000 for the comparable period of 1998. As a
percentage of revenues, however, same-store labor costs for the twelve months of
1999 declined to 34.3% from 34.9% for the comparable period of 1998. Management
feels the improvement in same-store labor costs is the result of planned labor
controls.

Occupancy. Occupancy costs increased to $2,998,000 during the year ended
December 31, 1999 from $2,563,000 during the comparable period in 1998, an
increase of $435,000, or 17.0%. As a percentage of revenues, occupancy costs
decreased to 8.0% in the 1999 period from 8.5% in the 1998 period. The primary
reason for the decrease in occupancy costs relative to revenues was the increase
in comparable store sales. Additionally, the two Northwest stores closed during
1999 experienced a combined occupancy cost percentage of 12.4% for the
twelve-month period ended December 31, 1998.

Operating Expenses. Operating expenses increased to $4,160,000 during the year
ended December 31, 1999 from $3,520,000 during the comparable period in 1998, an
increase of $640,000 or 18.2%. However, as a percentage of revenues, operating
expenses decreased to 11.1% in the 1999 period from 11.7% in the 1998 period.
Operating expenses include restaurant-level operating costs, the major
components of which include marketing, repairs and maintenance, supplies and
utilities. Management believes the primary reasons for the decrease in operating
expenses as a percentage of revenues were (i) the increase in same store sales,
and (ii) a focus on more efficient restaurant operations.

General and Administrative Expenses. General and administrative expenses
increased to $3,218,000 during the year ended December 31, 1999 from $2,583,000
during the comparable period in 1998, an increase of $635,000 or 24.6%. As a
percentage of revenues, however, general and administrative expenses remained
unchanged at 8.6% in 1999, the percentage experienced in the comparable period
of 1998. The increase in general and administrative expenses was primarily due
to acquiring resources to plan and implement the Company's growth strategy,
incurring costs in locating and evaluating sites for future restaurants and
developing staff and systems to manage anticipated future expansion.

Preopening Costs. During the first quarter of 1999, the company adopted
Statement of Position 98-5 (SOP 98-5), Accounting for the Costs of Start-Up
Activities, which requires all costs of start-up activities that are not
otherwise capitalizable as long-lived assets to be expensed as incurred. The
Company previously deferred its restaurant preopening costs and amortized them
over the twelve-month period following the opening of each new restaurant. This
new accounting standard accelerates the Company's recognition of costs
associated with the opening of new restaurants.

During the twelve month period ended December 31, 1999, the Company incurred
costs of $517,000 due to preparations for the opening of its new restaurants in
Arcadia, Woodland Hills and La Mesa, California that, under previous accounting
standards, would have been capitalized and amortized over a 12-month period.
These costs will fluctuate from year to year, possibly significantly, depending
upon, but not limited to, the number of restaurants under development, the size
and concept of the restaurants being developed and the complexity of the staff
hiring and training process.

Depreciation and Amortization. Depreciation and amortization decreased to
$1,517,000 during the year ended December 31, 1999 from $1,737,000 during the
comparable period in 1998, a decrease of $220,000 or 12.7%. The decrease was
primarily due to the implementation of SOP 98-5, noted in the previous section.
During the twelve months ended December 31, 1998, the Company's amortization and
depreciation costs included $384,000 amortization of previously capitalized
preopening costs. The Company expensed the remaining capitalized preopening
costs of $106,000 as a cumulative effect of change in accounting principle in
the first quarter of 1999.

Excluding the amortization of preopening costs, amortization and depreciation
for 1998 was $1,353,000. On a comparable cost basis, depreciation and
amortization for the year of 1999 increased $164,000, or 12.1%. This increase
was primarily due to the addition of restaurant equipment and furniture,
improvements and brewery equipment utilized in the development of the three new
California restaurants.

Interest Expense. Interest expense, net of interest income, increased to
$250,000 during the year ended December 31, 1999 from $211,000 during the
comparable period in 1998, an increase of $39,000 or 18.5%. This increase was
primarily due to the additional debt incurred by the Company to finance
equipment for the new restaurants in Arcadia, California and Woodland Hills,
California. Interest expense related to this financing was $67,000 during 1999;
this amount was partially offset by reduced interest expense on older debt due
to normal principal amortization.

LIQUIDITY AND CAPITAL RESOURCES

The Company's operating activities, as detailed in the Consolidated Statement of
Cash Flows, provided $6,552,000 net cash during the year ended December 31,
2000, a $4,278,000, or 188.1%, increase over the $2,274,000 generated in the
prior year. The increase in cash from operating activities during 2000 was due
to a $2,033,000 increase in accounts payable during the year. Of the accounts
payable balance at December 31, 2000, $1,562,000 was owed to the Jacmar
Companies, a related party. This represents approximately sixty-nine days of
purchases, and will be paid in accordance with a schedule agreed to by both
parties commencing in late November 2000.

Of cash generated by operating activities in the year ended December 31, 2000,
approximately $4,534,000, or 69.2%, was put into restaurant development. Total
capital expenditures for the acquisition of restaurant and brewery equipment and
leasehold improvements to construct new restaurants was $8,934,000 and
$4,470,000 for the years ended December 31, 2000 and 1999, respectively. These
expenditures were required to develop the new California restaurants in
Valencia, Burbank, West Covina and Huntington Beach. The Company received
contributions totaling $401,000 from the landlord to partially offset the cost
of tenant improvements at its Valencia, California development. Debt reduction
on loans exclusive of recent borrowings for construction, including the
principal portion of capitalized lease payments, for the years ended December
31, 2000 and 1999 totaled $802,000 and $770,000, respectively.

Due to restaurant development requiring the utilization of a substantial portion
of operating cashflow since early 1999, the Company has had little opportunity
to build working capital. The four California restaurants opened during 2000
mentioned above together with the Arcadia, La Mesa and Woodland Hills,
California restaurants opened during 1999, were considered essential to the
Company's growth strategy. Management expects this additional future cashflow,
as well as the cashflow of prior existing stores, to improve the Company's
working capital position.

Management believes that the Company's current resources and operational
cashflow is sufficient to sustain its operations for at least the next year. The
Company intends to resume the development of additional restaurants and has
available a $4,000,000 revolving construction loan facility for this purpose.
The Company entered into an agreement on February 22, 2001 to sell an aggregate
of 800,000 shares of common stock to Jacmar at $2.50 per share on or before

April 30, 2001. Upon the closing of that transaction, Jacmar will own 57.4% of
the Company's outstanding stock. In addition, the Company has agreed to sell
Jacmar up to an additional 3.2 million shares at $2.50 on or before August 15,
2001. The exact amount of shares to be purchased of the 3.2 million shares the
Company has made available and the date of purchase are to be determined by
Jacmar, provided that the Company's obligation to sell the shares expires on
August 15, 2001. The sale of the up to 3.2 million shares is subject to a
shareholder vote and the receipt of a favorable fairness opinion.

RESTAURANT DEVELOPMENT LOAN

In February 2001, the Company entered into an agreement with a bank for a
collateralized credit facility for a maximum amount of $8,000,000. There was an
initial funding of $4,000,000 to replace an existing loan on terms more
favorable to the Company. The funded term loan portion of the facility bears
interest at 2.0 percent per annum in excess of the bank's LIBOR rate. The rates
keyed to LIBOR are fixed for various lengths of time at the Company's option.
Current indebtedness bears an interest rate of 7.15%. The borrowed funds,
augmented by the Company's operating cashflow, were used for construction and
equipment costs related to the development of the four restaurants opened during
2000. As required by the agreement, monthly principal repayments of $66,667
commenced on March 13, 2001.

Under the revolving portion of this credit facility, the Company is able to
borrow amounts from time to time, in aggregate not to exceed $4,000,000, to
finance capital expenditures associated with the opening of new restaurants, and
for working capital purposes. The rates for these borrowings will be 2.0 percent
per annum in excess of the bank's LIBOR rate and fixed for various lengths of
time at the Company's option. Amounts borrowed under the revolving portion of
the facility can be converted into one or more four-year term loans in minimum
amounts of $1,000,000 at the Company's option. Term loans created through the
conversion facility will be charged interest in accordance with the same
LIBOR-based rate structure as the revolving portion. The Company is required to
maintain a ratio of EBITDA (earnings before interest, taxes, depreciation and
amortization), less taxes paid, less maintenance capital expenditures to
consolidated debt service of not less than 2.0 to 1.0 at the close of each
fiscal quarter for the four consecutive quarters then ending. The Company must
also not exceed a ratio of funded indebtedness (borrowed funds including capital
leases) to EBITDA of 1.75 to 1.0. Capital expenditures related to the opening of
new stores cannot exceed $7,000,000 annually.

In conjunction with the loan agreement, the Company granted a
collateralized interest to the bank in all of the Company's inventory,
accounts, equipment and trademarks, whether now owned or hereinafter acquired.
Also included under this security agreement are all proceeds, including
insurance proceeds, from the sale, destruction, loss or other disposition of the
collateralized property.

IMPACT OF INFLATION

Impact of inflation on food, labor and occupancy costs can significantly affect
the Company's operations. Many of the Company's employees are paid hourly rates
related to the federal minimum wage, which has been increased numerous times and
remains subject to future increases.

SEASONALITY AND ADVERSE WEATHER

The Company's results of operations have historically been impacted by
seasonality, which directly impacts tourism at the Company's coastal locations.
The summer months (June through August) have traditionally been higher volume
periods than other periods of the year.

IMPACT OF RECENT ACCOUNTING PRONOUNCEMENTS

In June 1998, the Financial Accounting Standards Board issued SFAS No. 133,
"Accounting for Derivative Instruments and Hedging Activities.". SFAS No. 133
requires companies to record derivatives on the balance sheet as assets or
liabilities, measured at fair value. It also requires that gains or losses
resulting from the changes in value of those derivatives be accounted for
depending on the use of the derivative and whether it qualifies for hedge
accounting. Adoption of SFAS No. 133, as amended by SFAS No. 137 in June 1999,
is required for the fiscal year beginning January 1, 2001; the adoption had no

impact on the Company's consolidated financial position, results of operations
or cash flows.

In December 1999, the Securities and Exchange Commission issued Staff Accounting
Bulletin No. 101, Revenue Recognition in Financial Statements. SAB No. 101
summarizes the Staff's views in applying generally accepted accounting
principles to revenue recognition in the financial statements. The bulletin was
effective in the fourth quarter of 2000. The Company was in compliance with
these standards; accordingly, the adoption of SAB No. 101 did not have an impact
on its consolidated financial position, results of operations or cash flows.

ITEM 8. FINANCIAL STATEMENTS

See the Index to Financial Statements attached hereto.

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 required by this Item is incorporated herein by reference to the
information contained in the Proxy Statement relating to the Annual Meeting of
Shareholders, which will be filed with the Securities and Exchange Commission no
later than 120 days after the close of the year ended December 31, 2000.

ITEM 11. EXECUTIVE COMPENSATION

The information required by this Item is incorporated herein by reference to
the information contained in the Proxy Statement relating to the Annual Meeting
of Shareholders, which will be filed with the Securities and Exchange
Commission no later than 120 days after the close of the year ended December 31,
2000.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS

PART IV

ITEM 14. EXHIBITS AND REPORTS ON FORM 8-K

(a) (1) CONSOLIDATED FINANCIAL STATEMENTS

The following documents are contained in Part II, Item 8 of this
Annual Report on Form 10-K:

Consolidated Balance Sheets at December 31, 2000 and 1999.

Consolidated Statements of Operations for each of the three years
in the period ended December 31, 2000.

Consolidated Statement of Shareholders' Equity for each of the three
years in the period ended December 31, 2000.

Consolidated Statements of Cash Flows for each of the three years
in the period ended December 31, 2000.

Notes to the Consolidated Financial Statements.

Report of Independent Accountants.

(2) FINANCIAL STATEMENT SCHEDULES

All schedules are omitted because they are not applicable or the
required information is shown in the consolidated financial
statements or notes thereto.

(3) EXHIBITS

Exhibit
Number Description
------ -----------

2.1 Asset Purchase Agreement by and between the Company and Roman
Systems, Inc. incorporated by reference to Exhibit 2.2 of the
Registration Statement.

2.2 Secured Promissory Note by and between the Company and Roman
Systems, Inc. filed as Exhibit 2.3 of the Registration
Statement.

3.1 Amended and Restated Articles of Incorporation of the
Company, as amended, incorporated by reference to Exhibit1 of
the Registration Statement.

3.2 Bylaws of the Company, incorporated by reference to Exhibit
3.2 of the Registration Statement.

4.1 Specimen Common Stock Certificate of the Company,
incorporated by reference to Exhibit 4.1 of the Registration
Statement.

4.2 Warrant Agreement, incorporated by reference to Exhibit
4.2 of the Registration Statement.

4.3 Specimen Common Stock Purchase Warrant, incorporated by
reference to Exhibit 4.3 of the Registration Statement.

4.4 Form of Representative's Warrant, incorporated by reference
to Exhibit of the Registration Statement.

10.1 Form of Employment Agreement of Jeremiah J. Hennessy,
incorporated by reference to Exhibit 10.1 of the
Registration Statement (superceded by new Employment Agreement
effective as of January 1, 2001 attached as Exhibit 10.10).

Exhibit
Number Description
------ -----------

10.2 Form of Employment Agreement of Paul Motenko,
incorporated by reference to Exhibit 10.2 of the
Registration Statement (superceded by new Employment Agreement
effective as of January 1, 2001 attached as Exhibit 10.9).

10.3 Form of Indemnification Agreement with Officers and
Directors, incorporated by reference to Exhibit 10.6 of
the Registration Statement.

10.4 Chicago Pizza & Brewery, Inc. Stock Option Plan,
incorporated by reference to Exhibit 10.7 of the
Registration Statement.

10.5 Lease Agreement - Corporate Headquarters, Huntington Beach,
California, dated November 1, 1999, between Chicago Pizza &
Brewery, Inc. and Huntington Executive Park, a California
Limited Partnership, for corporate offices.

10.6 BJ's Lahaina, L.P. Partnership Agreement, incorporated by
reference to Exhibit 10.16 of the Registration Statement.

10.7 Pepsi Supplier Agreement, incorporated by reference to
Exhibit 10.17 of the Registration Statement.

10.8 Real Estate Lease, dated February 16, 2001, between Chicago
Pizza & Brewery, Inc. and Irvine Market Place for a BJ's
Restaurant & Brewhouse restaurant.

10.9 Employment Agreement dated January 1, 2001 between the Company
and P.M. Motenko, employed as Co-Chief Executive Officer and
Co-Chairman of the Board of Directors.

10.10 Employment Agreement dated January 1, 2001 between the
Company and J.J. Hennessy, employed as Co-Chief Executive
Officer and Co-Chairman of the Board of Directors.

10.11 Loan Agreement between Chicago Pizza & Brewery, Inc. and Union
Bank of California for a secured $8,000,000 credit facility for
restaurant development.

10.12 Stock Purchase Agreement by and between the Company, The Jacmar
Companies and William H. Tilley dated February 22, 2001.

10.13 Facilitation Agreement between BJ Chicago LLC ("LLC") and
Chicago Pizza & Brewery, Inc. dated December 20, 2000 in
furtherance of the Stock Purchase Agreement between LLC and
ASSI, Inc.

10.14 Employment Agreement dated June 21, 1999 between the Company
and Ernest T. Klinger, incorporated by reference to the
Company's Form 10-Q dated June 30, 1999.

10.15 Option Agreement dated December 20, 2001 between the Company
Company and Paul A. Motenko to purchase shares of the Company's
common stock.

10.16 Option Agreement dated December 20, 2001 between the Company
Company and Jeremiah J. Hennessy to purchase shares of the
Company's common stock.

10.17 Option Agreement dated December 20, 2001 between the Company
Company and ASSI, Inc. to purchase shares of the Company's
common stock.

21 List of Subsidiaries, incorporated by reference to Exhibit 21.1
of the Registration Statement.

27.1 Financial Data Schedule.

(b) The Company filed no Reports on Form 8-K during the fiscal year
ended December 31, 2000.

SIGNATURES

In accordance with 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.

CHICAGO PIZZA & BREWERY, INC.

By: /s/PAUL A. MOTENKO
Paul A. Motenko, Co-Chief Executive Officer
and Secretary

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

Signature Capacity Date
- --------- -------- ------

By: /s/PAUL A. MOTENKO Director, Co-Chief Executive March 29, 2001
- -------------------- Officer, Co-Chairman of the
Paul A. Motenko Board and Vice-President and
Secretary

By: /s/JEREMIAH J. HENNESSY Director, Co-Chief Executive March 29, 2001
- -------------------- Officer, and Co-Chairman of
Jeremiah J. Hennessy the Board of Directors

By: /s/BARRY J. GRUMMAN Director March 29, 2001
- --------------------
Barry J. Grumman

By: /s/STANLEY B. SCHNEIDER Director March 29, 2001
- --------------------
Stanley B. Schneider

By: /s/JAMES A. DAL POZZO Director March 29, 2001
- --------------------
James A. Dal Pozzo

By: /s/SHANN M. BRASSFIELD Director March 29, 2001
- --------------------
Shann M. Brassfield

CHICAGO PIZZA & BREWERY, INC.
-----------------------------

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

Page
----

Report Of Independent Accountants 20

Consolidated Balance Sheets At December 31, 2000 and 1999 21

Consolidated Statements Of Operations For Each Of The Three Years
In The Period Ended December 31, 2000 22

Consolidated Statements Of Shareholders' Equity For Each Of The Three
Years In The Period Ended December 31, 2000 23

Consolidated Statements Of Cash Flows For Each Of The Three
Years In The Period Ended December 31, 2000 24

Notes To Consolidated Financial Statements 25

REPORT OF INDEPENDENT ACCOUNTANTS
__________

To the Board of Directors and Shareholders of Chicago Pizza & Brewery, Inc.:

In our opinion, the accompanying consolidated balance sheets and the related
consolidated statements of operations, shareholders' equity and cash flows
present fairly, in all material respects, the financial position of Chicago
Pizza & Brewery, Inc. and its subsidiaries at December 31, 2000 and 1999, and
the results of their operations and their cash flows for each of the three years
in the period ended December 31, 2000 in conformity with accounting principles
generally accepted in the United States of America. 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 of these statements in accordance with auditing standards
generally accepted in the United States of America, which 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, assessing the accounting principles used and significant estimates
made by management, and evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.

As discussed in Note 1 of the consolidated financial statements, the Company
changed its method of accounting for preopening costs in 1999.

PricewaterhouseCoopers LLP

Los Angeles, California
March 14, 2001

CHICAGO PIZZA & BREWERY, INC.
CONSOLIDATED BALANCE SHEETS

DECEMBER 31,
------------
2000 1999
------------ ------------
ASSETS:

Current assets:
Cash and cash equivalents. . . . . . . . . . . . . . . . . $ 1,405,379 $ 188,811
Accounts receivable. . . . . . . . . . . . . . . . . . . . 181,325 141,968
Inventory. . . . . . . . . . . . . . . . . . . . . . . . . 570,147 455,880
Prepaids and other current assets. . . . . . . . . . . . . 305,685 271,854
------------ ------------

Total current assets . . . . . . . . . . . . . . . . . . . 2,462,536 1,058,513

Property and equipment, net. . . . . . . . . . . . . . . . 19,534,640 12,529,913

Deferred income taxes. . . . . . . . . . . . . . . . . . . 1,773,545 -
Intangible assets, net . . . . . . . . . . . . . . . . . . 5,759,972 5,202,085
Other assets . . . . . . . . . . . . . . . . . . . . . . . 461,675 353,595
------------ ------------

Total assets . . . . . . . . . . . . . . . . . . . . . . . $29,992,368 $19,144,106
============ ============

LIABILITIES AND SHAREHOLDERS' EQUITY:
Current liabilities:
Accounts payable . . . . . . . . . . . . . . . . . . . . . $ 3,147,436 $ 1,114,757
Accrued expenses . . . . . . . . . . . . . . . . . . . . . 3,471,946 1,710,984
Current portion of notes payable to related parties. . . . 378,068 350,341
Current portion of long-term debt. . . . . . . . . . . . . 838,756 284,919
Current portion of obligations under capital lease . . . . 22,592 146,942
------------ ------------

Total current liabilities. . . . . . . . . . . . . . . . . 7,858,798 3,607,943

Notes payable to related parties . . . . . . . . . . . . . 990,933 1,368,807
Long-term debt . . . . . . . . . . . . . . . . . . . . . . 3,828,629 687,331
Reserve for store closures . . . . . . . . . . . . . . . . 876,830 -
Other liabilities. . . . . . . . . . . . . . . . . . . . . 1,130,420 131,705
------------ ------------

Total liabilities. . . . . . . . . . . . . . . . . . . . . 14,685,610 5,795,786
------------ ------------

Commitments and contingencies (Note 8)

Minority interest in partnership . . . . . . . . . . . . . 263,343 249,159

Shareholders' equity:
Preferred stock, 5,000,000 shares authorized, none issued
or outstanding . . . . . . . . . . . . . . . . . . . . - -
Common stock, no par value, 60,000,000 shares authorized
and 7,658,321 shares issued and outstanding as of
December 31, 2000 and 1999.. . . . . . . . . . . . . . 16,076,132 16,076,132
Capital surplus. . . . . . . . . . . . . . . . . . . . . . 975,280 975,280
Accumulated deficit. . . . . . . . . . . . . . . . . . . . (2,007,997) (3,952,251)
------------ ------------

Total shareholders' equity . . . . . . . . . . . . . . . . 15,043,415 13,099,161
------------ ------------

Total liabilities and shareholders' equity . . . . . . . . $29,992,368 $19,144,106
============ ============
<FN>

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

CHICAGO PIZZA & BREWERY, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS

FOR THE YEARS ENDED DECEMBER 31,
--------------------------------
2000 1999 1998
------------ ------------ ------------

Revenues. . . . . . . . . . . . . . . . . . . . . . . . . . . $52,346,259 $37,392,793 $30,051,503
Cost of sales . . . . . . . . . . . . . . . . . . . . . . . . 14,455,677 10,490,329 8,458,829
------------ ------------ ------------

Gross profit . . . . . . . . . . . . . . . . . . . . . 37,890,582 26,902,464 21,592,674
------------ ------------ ------------

Costs and expenses:
Labor and benefits. . . . . . . . . . . . . . . . . . . . . . 18,771,949 13,542,002 10,830,181
Occupancy . . . . . . . . . . . . . . . . . . . . . . . . . . 4,160,417 2,998,346 2,562,825
Operating expenses. . . . . . . . . . . . . . . . . . . . . . 5,520,070 4,160,479 3,520,221
General and administrative. . . . . . . . . . . . . . . . . . 3,922,462 3,217,921 2,583,384
Depreciation and amortization . . . . . . . . . . . . . . . . 2,002,009 1,517,428 1,737,430
Restaurant opening expense. . . . . . . . . . . . . . . . . . 942,796 516,953 -
Restaurant closing expense. . . . . . . . . . . . . . . . . . 1,517,301 148,464 -
------------ ------------ ------------

Total cost and expenses . . . . . . . . . . . . . . . . . . . 36,837,004 26,101,593 21,234,041
------------ ------------ ------------

Income from operations. . . . . . . . . . . . . . . . . 1,053,578 800,871 358,633
------------ ------------ ------------

Other income (expense):
Interest income . . . . . . . . . . . . . . . . . . . . . . . 4,254 64,839 95,153
Interest expense. . . . . . . . . . . . . . . . . . . . . . . (553,411) (315,086) (306,259)
Other income (expense), net . . . . . . . . . . . . . . . . . 4,296 15,852 (5,090)
------------ ------------ ------------

Total other expense . . . . . . . . . . . . . . . . . . . . . (544,861) (234,395) (216,196)
------------ ------------ ------------

Income before minority interest, income taxes and
change in accounting. . . . . . . . . . . . . . . . 508,717 566,476 142,437

Income applicable to minority interest in partnership . . . . (41,711) (44,227) (56,254)
------------ ------------ ------------

Income before income taxes and change in accounting . . 467,006 522,249 86,183

Income tax benefit (expense). . . . . . . . . . . . . . . . . 1,477,248 (25,601) (1,600)
------------ ------------ ------------

Income before change in accounting. . . . . . . . . . . 1,944,254 496,648 84,583
Cumulative effect of change in accounting . . . . . . . . . . - 106,175 -
------------ ------------ ------------

Net income. . . . . . . . . . . . . . . . . . . . . . . . . . $ 1,944,254 $ 390,473 $ 84,583
============ ============ ===========

Net income (loss) per share:
Basic and diluted:
Net income before cumulative effect of change in accounting . $ 0.25 $ 0.07 $ 0.01
Cumulative effect of change in accounting . . . . . . . - (0.02) -
------------ ------------ ------------
Net income. . . . . . . . . . . . . . . . . . . . . . . . . . $ 0.25 $ 0.05 $ 0.01
============ ============ ============

Basic weighted average number of common shares outstanding. . 7,658,321 7,401,472 6,408,321
============ ============ ============

Diluted weighted average number of common shares outstanding. 7,769,682 7,410,722 6,419,851
============ ============ ============
<FN>

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

CHICAGO PIZZA & BREWERY, INC.
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY

Common Stock
------------
Capital Accumulated
Shares Amount Surplus Deficit Total
--------- ----------- ----------- ------------ ------------

Balance, December 31, 1997 . . . . . . 6,408,321 $15,039,646 $1,196,029 ($4,427,307) $11,808,368

Net income . . . . . . . . . . . . . . 84,583 84,583
--------- ----------- ----------- ------------ ------------

Balance, December 31, 1998 . . . . . . 6,408,321 15,039,646 1,196,029 (4,342,724) 11,892,951

Private placement of common stock, net 1,250,000 876,486 876,486

Reallocation of value of 3,200,000
Warrants cancelled under terms
of private placement . . . . . . . 160,000 (160,000)

Purchase of redeemable warrants. . . . (60,749) (60,749)

Net income . . . . . . . . . . . . . . 390,473 390,473
--------- ----------- ----------- ------------ ------------

Balance, December 31, 1999 . . . . . . 7,658,321 16,076,132 975,280 (3,952,251) 13,099,161

Net income . . . . . . . . . . . . . . 1,944,254 1,944,254
--------- ----------- ----------- ------------ ------------

Balance, December 31, 2000 . . . . . . 7,658,321 $16,076,132 $ 975,280 ($2,007,997) $15,043,415
========= =========== =========== ============ ============

<FN>

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

CHICAGO PIZZA & BREWERY, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE YEARS ENDED DECEMBER 31,
--------------------------------
2000 1999 1998
------------ ------------ ------------

Cash flows from operating activities:
Net income . . . . . . . . . . . . . . . . . . . . . . . . . $ 1,944,254 $ 390,473 $ 84,583
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation and amortization. . . . . . . . . . . . . . . . 2,002,009 1,517,428 1,737,430
Reserve for store closures . . . . . . . . . . . . . . . . . 1,403,001 - -
Deferred income taxes. . . . . . . . . . . . . . . . . . . . (1,773,545) - -
Change in accounting principle . . . . . . . . . . . . . . . - 106,175 -
Loss on sale of restaurant equipment . . . . . . . . . . . . 75,299 116,318 -
Minority interest in partnership . . . . . . . . . . . . . . 41,711 44,227 56,254
Changes in assets and liabilities:
Accounts receivable. . . . . . . . . . . . . . . . . . . (56,687) 33,744 (14,063)
Inventory. . . . . . . . . . . . . . . . . . . . . . . . (114,267) (110,006) 15,425
Prepaids and other current assets. . . . . . . . . . . . (33,831) (210,453) (32,852)
Other assets . . . . . . . . . . . . . . . . . . . . . . (148,136) (9,397) (36,584)
Accounts payable . . . . . . . . . . . . . . . . . . . . 2,032,679 (15,935) 87,836
Accrued expenses . . . . . . . . . . . . . . . . . . . . 1,213,335 424,445 185,362
Other liabilities. . . . . . . . . . . . . . . . . . . . (33,575) (12,968) (12,968)
------------ ------------ ------------

Net cash provided by operating activities . . . . . . 6,552,247 2,274,051 2,070,423
------------ ------------ ------------

Cash flows from investing activities:
Purchases of equipment . . . . . . . . . . . . . . . . . . . (8,934,070) (4,470,283) (2,038,596)
Purchase of liquor licenses . . . . . . . . . . . . . . . . - - (53,545)
Proceeds from sale of restaurant equipment, net of expenses 27,000 55,270 7,000
------------ ------------ ------------

Net cash used in investing activities . . . . . . . . (8,907,070) (4,415,013) (2,085,141)
------------ ------------ ------------

Cash flows from financing activities:
Proceeds from sale of common stock . . . . . . . . . . . . . - 1,000,000 -
Construction and equipment loan proceeds . . . . . . . . . . 4,000,000 699,604 -
Landlord contribution for tenant improvements. . . . . . . . 400,508 - -
Release of cash pledged as collateral. . . . . . . . . . . . - - 560,830
Repurchase of redeemable warrants. . . . . . . . . . . . . . - (60,749) -
Payments on related party debt . . . . . . . . . . . . . . . (350,147) (339,533) (336,306)
Payments on debt . . . . . . . . . . . . . . . . . . . . . . (304,865) (293,034) (285,150)
Principal payments on capital lease obligations. . . . . . . (146,577) (137,112) (106,877)
Distributions to minority interest partners. . . . . . . . . (27,528) (30,108) (32,423)
------------ ------------ ------------

Net cash provided by (used in) financing activities . 3,571,391 839,068 (199,926)
------------ ------------ ------------

Net increase (decrease) in cash and cash equivalents. 1,216,568 (1,301,894) (214,644)

Cash and cash equivalents, beginning of period . . . . . . . 188,811 1,490,705 1,705,349
------------ ------------ ------------

Cash and cash equivalents, end of period . . . . . . . . . . $ 1,405,379 $ 188,811 $ 1,490,705
============ ============ ============

<FN>

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

CHICAGO PIZZA & BREWERY, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
------------------------------------------

1. The Company And Summary Of Significant Accounting Policies:

OPERATIONS

Chicago Pizza & Brewery, Inc. (the "Company" or "BJ's") was incorporated in
California on October 1, 1991. The Company owns and operates 28 restaurants
located in Southern California, Oregon and Colorado and a controlling interest
in one restaurant in Lahaina, Maui. Each of the restaurants is currently
operated as either a BJ's Pizza, Restaurant & Brewery, a BJ's Pizza & Grill, a
BJ's Restaurant & Brewhouse or, located exclusively in Oregon, a Pietro's Pizza.
During 2000, the Company opened four restaurants in Southern California: BJ's
Restaurant & Brewhouses in Valencia, Burbank and Huntington Beach in March, June
and October, respectively, and a BJ's Restaurant & Brewery in West Covina in
August.

BASIS OF PRESENTATION

These financial statements are presented on a consolidated basis, and include
the accounts of the Company, its wholly owned subsidiary, Chicago Pizza
Northwest, Inc. and BJ's Lahaina, L.P. The Company operates in the restaurant
industry exclusively in the United States. All intercompany transactions and
balances have been eliminated.

CASH AND CASH EQUIVALENTS

Cash and cash equivalents consist of highly liquid investments with an original
maturity of three months or less when purchased. Cash and cash equivalents are
stated at cost, which approximates fair market value.

INVENTORY

Inventory is stated at the lower of cost (first-in, first-out) or market and is
comprised primarily of food and beverages for the restaurant operations.

PROPERTY AND EQUIPMENT

Property and equipment are recorded at cost. Renewals and betterments that
materially extend the life of an asset are capitalized while maintenance and
repair costs are charged to operations as incurred. When property and equipment
are sold or otherwise disposed of, the asset account and related accumulated
depreciation and amortization accounts are relieved, and any gain or loss is
included in operations.
Depreciation and amortization is computed using the straight-line method
over the estimated useful lives of
the related assets or, for leasehold improvements, over the term of the lease,
if less. The following are the estimated useful lives:

Furniture and fixtures 7 years
Equipment 5-10 years
Leasehold improvements 7-25 years

CHICAGO PIZZA & BREWERY, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, Continued
-----------------------------------------------------

1. The Company And Summary Of Significant Accounting Policies (continued):

LEASES

Leases that meet certain criteria are capitalized and included with property and
equipment. The resulting
assets and liabilities are recorded at the lesser of cost or amounts equal to
the present value of the future minimum lease payment at the beginning of the
lease term. Such assets are amortized evenly over the related life of the lease
or the useful lives of the assets, whichever is less. Interest expense relating
to these liabilities is recorded to effect constant rates over the terms of the
leases. Leases that do not meet the criteria for capitalization are classified
as operating leases and rental payments are charged to expense as incurred on a
straight-line basis over the term of the lease.

PREOPENING EXPENSES

As had been the practice of many restaurant entities, the Company previously
deferred its restaurant preopening costs and amortized them over the
twelve-month period following the opening of each new restaurant. In April 1998,
the Accounting Standards Executive Committee of the American Institute of
Certified Public Accountants issued Statement of Position 98-5 (SOP 98-5),
Accounting for the Costs of Start-Up Activities. SOP 98-5 requires all costs of
start-up activities that are not otherwise capitalizable as long-lived assets to
be expensed as incurred. The Company adopted SOP 98-5 during the first quarter
of 1999. This new accounting standard accelerates the Company's recognition of
costs associated with the opening of new restaurants but will benefit the
post-opening results of new restaurants. The Company's total deferred preopening
costs were $106,175 at January 1, 1999. As provided by SOP 98-5, the Company
wrote off the balance of deferred preopening costs during the first quarter of
1999 as a cumulative effect of a change in accounting principle.

INTANGIBLE ASSETS

Goodwill from the acquisition of the net assets of Roman Systems, the
acquisition of the limited partnership interests of BJ's Belmont Shore, L.P. and
BJ's La Jolla, L.P., and the acquisition of Pietro's represent the excess of
cost over fair value of net assets acquired. Goodwill is amortized over 40
years using the straight-line method beginning on the date of acquisition. Also
included in intangible assets are trademarks, which are amortized over 10 years
and covenants not to compete, which are being amortized over periods ranging
from 3 to 8.5 years.

LONG-LIVED ASSETS

In accordance with SFAS 121, "Accounting for the Impairment of Long-Lived Assets
and for Long-Lived Assets to be Disposed of", long-lived assets held and used by
the Company are reviewed for impairment whenever events or changes in
circumstances indicate that the carrying amount of an asset may not be
recoverable. For purposes of evaluating the recoverability of long-lived assets,
the recoverability test is performed using undiscounted net cash flows of the
individual stores and consolidated undiscounted net cash flows for long-lived
assets not identifiable to individual stores compared to the related carrying
value. If the sum of the undiscounted future cash flows is less than the
carrying amount of the asset, an impairment loss is recognized.

REVENUE RECOGNITION

Revenue from restaurant sales is recognized when food and beverage is sold.

ADVERTISING COSTS

Advertising costs are expensed as incurred. Advertising expense for the years
ended December 31, 2000, 1999 and 1998 were $628,769, $657,808 and $558,291,
respectively.
26

CHICAGO PIZZA & BREWERY, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, Continued
-----------------------------------------------------

1. The Company And Summary Of Significant Accounting Policies (continued):

INCOME TAXES

Deferred income taxes are recognized based on the tax consequences in future
years of differences between the tax bases of assets and liabilities and their
financial reporting amounts at each year-end based on enacted tax laws and
statutory tax rates applicable to the periods in which differences are expected
to affect taxable income. Valuation allowances are established, when necessary,
to reduce deferred tax assets to the amount expected to be realized. The
provision for income taxes represents the tax payable for the period and the
change during the period in deferred tax assets and liabilities.

MINORITY INTEREST

For the consolidated financial statements as of December 31, 2000 and 1999,
minority interest represents the limited partners' interests totaling 46.32% for
BJ's Lahaina, L.P.

USE OF ESTIMATES

The preparation of financial statements in accordance with generally accepted
accounting principles requires management to make estimates and assumptions for
the reporting period and as of the financial statement date. These estimates
and assumptions affect the reported amounts of assets and liabilities, the
disclosure of contingent assets and liabilities, and the reported amounts of
revenues and expenses. Actual results could differ from those estimates.

FAIR VALUE OF FINANCIAL INSTRUMENTS

Statement of Financial Accounting Standards ("SFAS") Opinion No. 107,
"Disclosure About Fair Value of Financial Instruments", requires disclosure of
fair value information about most financial instruments both on and off the
balance sheet, if it is practicable to estimate. Disclosures regarding the fair
value of financial instruments have been derived using external market sources,
estimates using present value or other valuation techniques. The carrying value
of cash, accounts payable, accrued liabilities and short-term debt approximate
fair values because of the short-term maturity of these instruments. The fair
value of long-term debt closely approximates its carrying value.

NET INCOME PER SHARE

Basic net income per share is computed by dividing the net income attributable
to common stockholders by the weighted average number of common shares
outstanding during the period. Dilutive net income per share reflects the
potential dilution that could occur if stock options and warrants issued by the
Company to sell common stock at set prices were exercised. The financial
statements present basic and dilutive net income per share. Common share
equivalents included in the diluted computation represent shares issuable upon
assumed exercises of outstanding stock options and warrants using the treasury
stock method.

STOCK-BASED COMPENSATION

The Company accounts for its stock-based compensation plan using the intrinsic
value method prescribed in APB Opinion No. 25, "Accounting for Stock Issued to
Employees". SFAS No. 123, "Accounting for Stock-based Compensation", encourages,
but does not require companies to record stock-based compensation plans at fair
value. The Company has elected to continue accounting for stock-based
compensation in accordance with APB No. 25, but will comply with the required
disclosures under SFAS No. 123.

RECENT ACCOUNTING PRONOUNCEMENTS

In June 1998, the Financial Accounting Standards Board issued SFAS No. 133,
"Accounting for Derivative Instruments and Hedging Activities". SFAS No. 133
requires companies to record derivatives on the

CHICAGO PIZZA & BREWERY, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, Continued
-----------------------------------------------------

1. The Company And Summary Of Significant Accounting Policies (continued):

balance sheet as assets or liabilities, measured at fair value. It also requires
that gains or losses resulting from the changes in value of those derivatives be
accounted for depending on the use of the derivative and whether it qualifies
for hedge accounting. Adoption of SFAS No. 133, as amended by SFAS No. 137 in
June 1999, is required for the fiscal year beginning January 1, 2001; the
adoption had no impact on the Company's consolidated financial position, results
of operations or cash flows.

RECLASSIFICATIONS

Certain reclassifications have been made to prior years' financial statements to
conform to the current year presentation.

2. Concentration Of Credit Risk:

Financial instruments which potentially subject the Company to a concentration
of credit risk principally consist of cash and cash equivalents. The Company
maintains its cash accounts at various banking institutions. At times, cash and
cash equivalent balances may be in excess of the FDIC insurance limit. Cash
equivalents represent money market funds and certificates of deposits.

3. Property and Equipment:

Property and equipment consisted of the following as of:

DECEMBER 31,
------------
2000 1999
------------ ------------

Furniture and fixtures. . . . . . . . . . . . . $ 1,931,068 $ 1,181,972
Equipment . . . . . . . . . . . . . . . . . . . 7,781,847 5,534,479
Leasehold improvements. . . . . . . . . . . . . 15,746,973 9,545,323
------------ ------------
25,459,888 16,261,774
Less, accumulated depreciation and amortization (5,930,768) (4,204,880)
------------ ------------
19,529,120 12,056,894
Construction in progress. . . . . . . . . . . . 5,520 473,019
------------ ------------
$19,534,640 $12,529,913
============ ============

CHICAGO PIZZA & BREWERY, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, Continued
-----------------------------------------------------

4. Intangible Assets:

Intangible assets consisted of the following as of:

DECEMBER 31,
------------
2000 1999
---------- ----------

Goodwill . . . . . . . . . . . $5,867,358 $5,867,358
Covenants not to compete . . . 759,472 50,000
Other. . . . . . . . . . . . . 96,503 84,000
6,723,333 6,001,358
Less, accumulated amortization 963,361 799,273
---------- ----------
$5,759,972 $5,202,085
========== ==========

CHICAGO PIZZA & BREWERY, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, Continued
-----------------------------------------------------

5. Accrued Expenses:

Accrued expenses consisted of the following as of:

DECEMBER 31,
------------
2000 1999
---------- ----------

Accrued rent. . . . . . . . $ 355,876 $ 232,515
Payroll related liabilities 1,479,133 1,007,506
Reserve for store closures. 526,171 -
Other . . . . . . . . . . . 1,110,766 470,963
---------- ----------
$3,471,946 $1,710,984
========== ==========

6. Debt:

RELATED PARTY DEBT

Related party debt consisted of the following as of:

DECEMBER 31,
------------
2000 1999
---------- ----------

Note payable to Roman Systems, with fixed interest
rate of 7%, due in monthly installments of $38,195
Maturing April 1, 2004, collateralized by the BJ's
Laguna, BJ's La Jolla and BJ's Balboa restaurants. . $1,369,001 $1,719,148

Less, current portion. . . . . . . . . . . . . . . . 378,068 350,341
---------- ----------

$ 990,933 $1,368,807
========== ==========

Future maturities of related party debt for each of the five years subsequent to
December 31, 2000 and thereafter are as follows:

2001 $378,068
2002 405,989
2003 433,909
2004 151,035
----------
$1,369,001
==========

Total interest expense on related party debt for the years ended December 31,
2000, 1999 and 1998 was approximately $108,000, $136,000 and $164,000,
respectively.

CHICAGO PIZZA & BREWERY, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, Continued
-----------------------------------------------------

6. Debt (continued):

OTHER LONG-TERM DEBT

Other long-term debt consisted of the following as of :

DECEMBER 31,
------------
2000 1999
---------- --------

Notes payable to a financial institution with interest rate of
2% plus the bank's index (9.50% at December 31, 2000)
due in monthly installments of $66,667, maturing
March 13, 2006. Collateralized by improvements,
Restaurant equipment, furniture and intangibles not
Otherwise Specifically pledged.. . . . . . . . . . . . . . . . $4,000,000 -

Notes payable to a financial institution with implicit
Interest rates of 11.63% to 13.68% due in monthly
Installments of $12,176, maturing February 15, 2006,
Collateralized by improvements and restaurant equipment
and furniture at the BJ's Arcadia and BJ's Woodland Hills
Restaurants. . . . . . . . . . . . . . . . . . . . . . . . . . 562,580 $637,007

Note payable to a financial institution with interest rate of
2% plus the bank's reference rate (9.50% at December 31,
2000 and 8.50% at December 31, 1999), due in monthly
Installments of $12,513, maturing March 1, 2001. . . . . . . . 30,541 180,695

Notes payable to taxing authorities for Pietro's outstanding
tax claims as part of the Debtor's Plan of Reorganization,
due in quarterly installments of $32,670 from July 1, 1996
Through April 1, 1997 and $20,071 from July 1, 1997
Through June 30, 2001 and varying payments totaling an
Aggregate of $34,122 from October 1, 2001 until April 1,
2002. Interest accrues at 8.25%.. . . . . . . . . . . . . . . 74,264 154,548
---------- --------
4,667,385 972,250
Less, current portion. . . . . . . . . . . . . . . . . . . . . 838,756 284,919
---------- --------

$3,828,629 $687,331
========== ========

Future maturities of other long-term debt for years subsequent to December 31,
2000 are as follows:

2001 $838,756
2002 911,108
2003 906,203
2004 919,506
2005 934,480
Thereafter 157,332
-----------
$4,667,385
===========

Total interest expense on other long-term debt for the years ended December 31,
2000, 1999 and 1998 was approximately $343,000, $120,000 and $76,000,
respectively.
30

CHICAGO PIZZA & BREWERY, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, Continued
-----------------------------------------------------

6. Debt (continued):

7. Capital Leases:

The Company leases point-of-sale and other equipment under capital lease
arrangements. The equipment financed by the capital leases has an original cost
of $257,109 and $469,187 for leases outstanding at December 31, 2000 and 1999,
respectively. Accumulated amortization related to these leases is $132,825 and
$165,735 as of December 31, 2000 and 1999, respectively. The obligations under
capital leases have a weighted average interest rate of 18.8% and mature at
various dates through 2002. Annual future minimum lease payments for years
subsequent to December 31, 2000 are as follows:

2001 $23,536
2002 354
------
Total minimum payments 23,890
Less, amount representing interest 951
------
Obligations under capital leases 22,939
Less, current portion 22,592
------
Long-term portion $347
====

Imputed interest expense on capital leases for the years ended December 31,
2000, 1999 and 1998 was approximately $20,000, $59,000 and $66,000,
respectively.

8. Commitments and Contingencies:

LEASES

The Company leases its restaurant and office facilities under noncancelable
operating leases with remaining terms ranging from approximately 1 to 16 years
with renewal options ranging from 5 to 15 years. Rent expense for the years
ended December 31, 2000, 1999 and 1998 was $3,373,806, $2,490,252 and
$2,184,223, respectively.

The Company has certain operating leases which contain fixed escalation clauses.
Rent expense for these leases has been calculated on a straight-line basis over
the term of the leases. A deferred credit in the amount of $154,253 and
$189,582 has been established and included in accrued expenses at December 31,
2000 and December 31, 1999, respectively, for the difference between the amount
charged to expense and the amount paid. The deferred credit will be amortized
over the life of the leases.

A number of the leases also provide for contingent rentals based on a percentage
of sales above a specified minimum. Total contingent rentals, included in rent
expense, above the minimum, for the years ended December 31, 2000, 1999 and 1998
were $640,700, $289,054 and $189,572, respectively.

CHICAGO PIZZA & BREWERY, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, Continued
-----------------------------------------------------

8. Commitments and Contingencies (continued):

The following are the future minimum rental payments under noncancelable
operating leases for each of the five years subsequent to December 31, 2000 and
in total thereafter:

2001 $3,226,477
2002 3,068,989
2003 2,731,843
2004 2,296,948
2005 1,905,547
Thereafter 7,712,355
-----------
$20,942,159
===========

With respect to the lease for the Richland, Washington restaurant, which was
closed and sold by the Company, the Company remains liable in the event of
default by the current lessee. The Company may also be liable for additional
expenses, such as insurance, real estate taxes, utilities and maintenance and
repairs. Management currently has no reason to believe that such expenses, if
incurred, will be significant.

LEGAL PROCEEDINGS

Restaurants such as those operated by the Company are subject to a continuous
stream of litigation in the ordinary course of business, most of which the
Company expects to be covered by its general liability insurance. Punitive
damages awards, however, are not covered by the Company's general liability
insurance. To date, the Company has not paid punitive damages with respect to
any claims, but there can be no assurance that punitive damages will not be
awarded with respect to any future claims or any other actions. The Company is
currently not a party to any litigation that could have a material adverse
effect on its results of operations, financial position or cash flows.

EMPLOYMENT AGREEMENTS

Effective January 1, 2001, the Company entered into a revised employment
agreement with two of its officers. The agreement provides for a minimum annual
salary of $225,000 each, subject to escalation annually in accordance with the
Consumer Price Index, and certain benefits through December 31, 2006. The
agreement may be terminated by either party. The agreement also contain
provisions for additional cash compensation based on earnings or income of the
Company and provides to the executive options to purchase up to 330,679 shares
of the Company's common stock at an exercise price of $2.75 per share. The
agreement contains provisions granting the employee the right to receive salary
and benefits, as individually defined, if the employee is terminated by the
Company without cause.

On December 20, 2000, the Company's President voluntarily terminated his
employment agreement with the Company under a provision giving him the right to
terminate upon a change in control of the Company. Under the employment
agreement, he has certain rights to receive compensation equal to the amount of
compensation to which he would have been entitled under his agreement for its
term. The Company has recorded an accrual at December 31, 2000 for amounts due
under the employment agreement.

CHICAGO PIZZA & BREWERY, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, Continued
-----------------------------------------------------

9. Shareholders' Equity:

PREFERRED STOCK

The Company is authorized to issue 5,000,000 shares in one or more series of
preferred stock and to determine the rights, preferences, privileges and
restrictions to be granted to, or imposed upon, any such series, including the
voting rights, redemption provisions (including sinking fund provisions),
dividend rights, dividend rates, liquidation rates, liquidation preferences,
conversion rights and the description and
number of shares constituting any wholly unissued series of preferred stock. No
shares of preferred stock were issued or outstanding at December 31, 2000 or
1999. The Company currently has no plans to issue shares of preferred stock.

COMMON STOCK

Shareholders of the Company's outstanding common stock are entitled to receive
dividends if and when declared by the Board of Directors. Shareholders are
entitled to one vote for each share of common stock held of record. Pursuant to
the requirements of California law, shareholders are entitled to cumulate votes
in connection with the election of directors.

In March 1999, the Company sold, through a private placement, 1,250,000 shares
of its common stock to ASSI, Inc. in exchange for a cash payment of $1,000,000,
the termination of two consulting agreements and cancellation of 3.2 million of
the Company's redeemable warrants held by ASSI, Inc

CAPITAL SURPLUS

The Company issued Redeemable Warrants with the Company's IPO on October 15,
1996. At December 31, 2000, the Company had 7,964,584 Redeemable Warrants
outstanding. Each redeemable warrant entitles the holder thereof to purchase,
previously, one share of Common Stock at a price of 110% of the initial public
offering price per share ($5.50), subject to adjustment in accordance with the
anti-dilution and other provisions referred to below.

The Redeemable Warrants are subject to redemption by the Company at any time, at
a price of $.25 per Redeemable Warrant if the average closing bid price of the
Common Stock equals or exceeds 140% of the IPO price per share ($7.00) for any
20 trading days within a period of 30 consecutive trading days ending on the
fifth trading day prior to the date of notice of redemption. Redemption of the
Redeemable Warrants can be made only after 30 days notice, during which period
the holders of the Redeemable Warrants may exercise the Redeemable Warrants

10. Income Taxes:

The (benefit) provision for income tax consists of the following for the years
ended December 31:

2000 1999 1998
----------- ------- -------

Current:
Federal. . . . . . . . . . . . . . $287,357 $23,101 -
State. . . . . . . . . . . . . . . 8,940 2,500 $1,600
--------- ------- ------
296,297 25,601 1,600
Deferred:
Federal. . . . . . . . . . . . . . (1,736,164) - -
State. . . . . . . . . . . . . . . (37,381) - -
(1,773,545) - -
------------- ------- ------
(Benefit) provision for income taxes ($1,477,248) $25,601 $1,600
============= ======= ======

CHICAGO PIZZA & BREWERY, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, Continued
-----------------------------------------------------

10. Income Taxes (continued):

The temporary differences which give rise to deferred tax provision (benefit)
consist of the following for the years ended December 31:

2000 1999 1998
------------ ---------- ---------

Property and equipment. . . . . . . . ($45,031) $ 151,850 $ 20,457
Goodwill. . . . . . . . . . . . . . . 80,307 108,812 116,762
Accrued expense and other liabilities (646,412) (12,117) (6,123)
Investment in partnerships. . . . . . (13,121) (12,045) (44,896)
Net operating losses. . . . . . . . . 868,337 176,161 32,854
Income tax credits. . . . . . . . . . (262,471) (231,391) (99,655)
Other . . . . . . . . . . . . . . . . (32,390) (70,698) 58,197
Change in valuation allowance . . . . (1,722,764) (110,572) (77,596)
------------ ---------- ---------
($1,773,545) - -
============ ========== =========

The provision (benefit) for income taxes differs from the amount that would
result from applying the federal statutory rate as follows for the years ended
December 31:

2000 1999 1998
-------- ------- --------

Income tax at statutory rates. . . . . . . 34.0% 34.0% 34.0%
Non-deductible expenses. . . . . . . . . . 6.2% 6.5% -
State income taxes, net of federal benefit 6.8% 0.4% 1.2%
Change in valuation allowance. . . . . . . (368.9)% (0.4)% 65.6%
Change in credits. . . . . . . . . . . . . (67.4)% (55.0)% (150.8)%
Employer tax credit disallowance . . . . . 22.4% 17.6% 46.9%
Other, net . . . . . . . . . . . . . . . . 50.6% 0.2% 5.0%
-------- ------- --------
(316.3%) 3.5% 1.9%
======== ======= ========

The components of the deferred income tax asset and (liability) consist of the
following at December 31:

2000 1999 1998
----------- ------------ ------------

Property and equipment. . . . . . . . $ 64,791 $ 20,107 $ 171,957
Goodwill. . . . . . . . . . . . . . . (472,020) (398,597) (289,785)
Accrued expense and other liabilities 695,740 50,179 38,062
Investment in partnerships. . . . . . 94,749 83,050 71,005
Net operating losses. . . . . . . . . 544,385 1,421,129 1,597,290
Income tax credits. . . . . . . . . . 839,865 528,111 284,375
Other . . . . . . . . . . . . . . . . 6,035 18,785 (39,568)
----------- ------------ ------------
1,773,545 1,722,764 1,833,336
Valuation allowance . . . . . . . . . - (1,722,764) (1,833,336)
----------- ------------ ------------

Net deferred income taxes . . . . . . $1,773,545 $ - $ -
=========== ============ ============

As of December 31, 2000, the Company had net operating loss carryforwards for
federal and state purposes of approximately $1,600,000 and $0 respectively. At
December 31, 1999, the respective tax carryforwards were approximately
$3,880,000 and $1,140,000. The net operating loss carryforwards begin expiring
in 2008 for federal purposes and began in 1997 for state purposes.

The Company has a federal credit for FICA taxes paid on employees' tip income of
approximately $780,000. The credit will begin to expire in 2011.

CHICAGO PIZZA & BREWERY, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, Continued
-----------------------------------------------------

Income taxes (continued):

The utilization of net operating loss ("NOL") and credit carryforwards may be
limited under the provisions of Internal Revenue Code Section 382 and similar
state provisions due to the Initial Public Offering in 1996. Prior to 2000, the
Company had not previously generated taxable income, and there was no
opportunity to carryback losses to prior periods, and accordingly the Company
provided a valuation allowance for its net deferred tax assets. Management
believes, based on continuing improved operations and projected operations, it
is more likely than not that the Company will generate taxable income sufficient
to realize the tax benefit associated with the future deductible deferred tax
assets and loss carryforwards prior to their expiration. As a result, the
Company eliminated the valuation allowance totaling $1,722,764 as of December
31, 2000.

11. Supplemental Cash Flow Information :

Supplemental cash flow items consisted of the following for the years ended
December 31:

2000 1999 1998
-------- -------- --------

Cash paid for:
Interest . . $498,152 $308,792 $306,523
Taxes. . . . $ 31,134 $ 25,601 $ 1,600

Supplemental information on noncash investing and financing activities consisted
of the following for the years ended December 31:

2000 1999 1998
---- ------ --------

Equipment purchases under a capital lease - $3,600 $135,718

12. 1996 Stock Option Plan:

The Company adopted the 1996 Stock Option Plan as of August 7, 1996 under which
options may be granted to purchase up to 600,000 shares of common stock, and was
amended on September 28, 1999, increasing the total number of shares under the
plan to 1,200,000. The 1996 Stock Option Plan provides for the options issued to
be either incentive stock options or non-statutory stock options as defined
under Section 422A of the Internal Revenue Code. The exercise price of the
shares under the option shall
be equal to or exceed 100% of the fair market value of the shares at the date of
option grant. The 1996 Stock Option Plan expires on June 30, 2005 unless
terminated earlier. The options generally vest over a three-year period.

CHICAGO PIZZA & BREWERY, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, Continued
-----------------------------------------------------

12. 1996 Stock Option Plan (continued):

The following is a summary of changes in options outstanding pursuant to the
plan for the years ended December 31, 2000, 1999 and 1998:

Weighted
Average Exercise
Shares Price
---------- ----------------

Outstanding options at December 31, 1997 352,909 $ 4.14
Granted. . . . . . . . . . . . . . . . . 176,500 $ 1.88
Exercised. . . . . . . . . . . . . . . . - -
Terminated . . . . . . . . . . . . . . . (79,409) $ 4.94
---------- ------

Outstanding options at December 31, 1998 450,000 $ 3.11
Granted. . . . . . . . . . . . . . . . . 528,000 $ 1.26
Exercised. . . . . . . . . . . . . . . . - -
Terminated . . . . . . . . . . . . . . . (51,500) $ 3.53
---------- ------

Outstanding options at December 31, 1999 926,500 $ 2.38
Granted. . . . . . . . . . . . . . . . . 158,500 $ 2.14
Exercised. . . . . . . . . . . . . . . . - -
Terminated . . . . . . . . . . . . . . . (27,500) $ 1.98
---------- ------
Outstanding options at December 31, 2000 1,057,500 $ 2.14

Options exercisable at end of year . . . 734,835 $ 2.20
========== ======

The per share weighted average fair value for options granted in 2000, 1999 and
1998 was $1.35, $1.26 and $0.93, respectively. Information relating to
significant option groups outstanding at December 31, 2000 are as follows:

Life of
Exercise Outstanding Outstanding Options
Price Shares Shares(Yr.) Exercisable
- --------- ----------- ------------ -----------

5.00 50,000 5.77 50,000
3.00 154,500 7.02 89,500
2.00 75,000 5.77 75,000
1.88 586,500 7.99 434,335
1.81 53,000 8.56 51,000
1.69 20,000 8.74 10,000
1.55 93,500 9.75 -
1.00 25,000 6.31 25,000
----------- ------------ -----------

Total 1,057,500 7.74 734,835
=========== ============ ===========

The Company has adopted the disclosure-only provisions of SFAS Statement No.
123, "Accounting for Stock-Based Compensation" and will continue to use the
intrinsic value based method of accounting prescribed by APB Opinion No. 25,
"Accounting for Stock Issued to Employees." Accordingly, since
options were granted with an option price equal to the grant date market value
of the Company's common stock, no compensation cost has been recognized for the
stock option plan. Had compensation cost for the Company's stock option plan
been determined based on the fair value of the option at the grant date for

CHICAGO PIZZA & BREWERY, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, Continued
-----------------------------------------------------

12. 1996 Stock Option Plan:

awards in 2000, 1999 and 1998 consistent with the provisions of SFAS No. 123,
the Company's net income and basic income per share would have been decreased to
the pro forma amounts indicated below as of December 31,

2000 1999 1998
---------- ----------- -----------

Net income, as reported. . . . . . . . . . . . . . . $1,944,254 $ 390,473 $ 84,583
Net income (loss), pro forma . . . . . . . . . . . . $1,681,657 ($155,878) ($155,515)
Basic and diluted income per share,
As reported . . . . . . . . . . . . . . . . . . $ 0.25 $ 0.05 $ 0.01
Basic and diluted income (loss) per share,
pro forma . . . . . . . . . . . . . . . . . . . . . $ 0.22 ($0.02) ($0.02)

The fair value of each option grant issued is estimated at the date of grant
using the Black-Scholes option-pricing model with the following weighted average
assumptions: (a) no dividend yield on the Company's stock, (b) expected
volatility of the Company's stock ranging from 49.0% to 78.9%, (c) a risk-free
interest rate ranging from 4.88% to 6.74% and (d) expected option life of five
years.

13. Restaurant Closing Expense:

During the year ended December 31, 2000, the Company incurred costs of $114,000
due to the closure of the Pietro's restaurant in Washington and the abandonment
of a site in Aloha, Oregon. The Company also identified four additional
restaurants in the Northwest that it intends to either sell, if possible, or
close during 2001. These stores have historically not been profitable and are
not considered essential to the Company's future plans. A reserve of $1,403,000
was established to cover probable costs associated with closing these
restaurants. The amount of this reserve was determined by evaluating the
remaining length of the leases and monthly rent, related costs such as common
area charges and property taxes net of the likelihood of potential sub-lease
rental or lease buy-out costs, the net book value of the equipment and
improvements and the probability of any proceeds.

During the year ended December 31, 1999, the Company incurred non-cash charges
of $116,300, due primarily to the abandonment of leasehold improvements, for the
closure of two restaurants in Oregon and paid an additional $28,700 for the
settlement of claims made by the landlord at one of these locations.

14. Related Party:

In connection with the sale of shares by ASSI, Inc. to Jacmar in December 2000,
the Company agreed to issue an option to ASSI, Inc. in exchange for a release of
any claims of ASSI, Inc., including any rights it might have had to purchase
additional shares from the Company under an agreement that was pending
immediately prior to the Jacmar transaction. The option is exercisable for
200,000 shares at an exercise price of $4.00 per share, and is exercisable until
December 31, 2005.

The Company also entered into an agreement on February 22, 2001 to sell an
aggregate of 800,000 shares of common stock to Jacmar at $2.50 per share on or

CHICAGO PIZZA & BREWERY, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, Continued
-----------------------------------------------------

14. Related Party (continued):

before April 30, 2001. Upon the closing of that transaction, Jacmar will own
57.4% of the Company's outstanding stock. In addition, the Company has agreed
to sell Jacmar up to an additional 3.2 million shares at $2.50 on or before
August 15, 2001. The exact amount of shares to be purchased of the 3.2 million
shares the Company has made available and the date of purchase are to be
determined by Jacmar, provided that the Company's obligation to sell the shares
expires on August 15, 2001. The sale of the up to 3.2 million shares is subject
to a shareholder vote and the receipt of a favorable fairness opinion. The
Company agreed to grant registration rights on the shares purchased by Jacmar
under this agreement.The sale of the 800,000 shares to Jacmar enabled the
Company to obtain an $8 million loan facility, including a $4 million term loan
to replace its existing debt and an additional $4 million line of credit to fund
expansion on an as-needed basis.
The Company has almost eight million warrants outstanding, which, before the
sale of additional shares to Jacmar , have an exercise price of $5.50 per share.
The sale of the 800,000 shares of common stock to Jacmar in April 2001 will
trigger the anti-dilution provision of the warrant agreement, resulting in an
adjustment of the exercise price of the warrants to $5.35 per share. If the
entire 3.2 million additional shares are purchased by Jacmar pursuant to the
agreement, the warrant exercise price would be adjusted to $4.89 per share.
Jacmar, through its specialty wholesale food distributorship, is the Company's
largest supplier of product and paper goods. Jacmar supplied the Company with
approximately $6,647,000, $4,200,000 and $2,671,000 worth of food and beverage
products for the years ended December 31, 2000, 1999 and 1998, respectively. As
of December 31, 2000 and 1999, the Company had payables to Jacmar of
approximately $1,562,000 and $380,000, respectively, for merchandise. The
Company is charged 1.0% per month on product invoices more than thirty days old.

CHICAGO PIZZA & BREWERY, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS, Continued
-----------------------------------------------------

15. Selected Quarterly Financial Data (Unaudited):

Summarized unaudited quarterly financial data for the Company is as follows:

March 31, June 30, September 30, December 31
- - 2000 2000 2000 , 2000 (1)
----------- ----------- -------------- -------------

Total revenues. . . . . . . . $10,178,645 $12,346,798 $ 14,790,790 $ 15,030,026
Gross profit. . . . . . . . . $ 7,376,890 $ 8,944,701 $ 10,670,808 $ 10,898,183
Income (loss) from operations $ 262,743 $ 340,333 $ 1,046,283 ($595,781)
Net income. . . . . . . . . . $ 172,909 $ 198,737 $ 784,067 $ 788,541
Basic and dilutive net income
Per share. . . . . . . $ 0.02 $ 0.03 $ 0.10 $ 0.10

(1) Includes a charge of $1.4 million for store closing reserves and a $1.7
million tax benefit for the elimination of the valuation allowance.

March 31, June 30, September 30, December 31
1999 (2) 1999 1999 1999
----------- ---------- -------------- -------------

Total revenues . . . . . . . . . $8,092,403 $9,947,282 $ 10,039,105 $ 9,314,003
Gross profit . . . . . . . . . . $5,868,007 $7,157,045 $ 7,177,145 $ 6,700,267
Income (loss) from operations. . $ 60,290 $ 420,865 $ 444,215 ($124,499)
Net income (loss) before effect
Of accounting change. . . . ($7,545) $ 343,909 $ 330,876 ($170,592)
Effect of accounting change. . . ($106,175)
Net income (loss). . . . . . . . ($113,720) $ 343,909 $ 330,876 ($170,592)
Basic and diluted net income
(loss) per share before
accounting change. . . . . $ 0.00 $ 0.04 $ 0.04 ($0.01)
Basic and diluted net income
(loss) per share. . . . . . ($0.02) $ 0.04 $ 0.04 ($0.01)

(2) Includes cumulative effect of change in accounting principle.