BAB Holdings, Inc. Expects to Post Record Earnings for Fiscal 1998.

CHICAGO--(BUSINESS WIRE)--Dec. 29, 1998--BAB Holdings, Inc. (Nasdaq:BAGL), the Chicago-based operator and franchisor of Big Apple Bagels, My Favorite Muffin, and Brewster's Coffee concept stores, expects to report earnings in the range of $.04 to $.05 per share for the year ending November 30, 1998, compared to a loss of $.53 per share for the year ended November 30, 1997. The fourth quarter will be the third consecutive profitable quarter for the Company.

The Company opened 41 new stores during the 1998 fiscal year which ended November 30, exceeding earlier projections. In addition to its new tri-branded units, which integrate the Big Apple Bagels, My Favorite Muffin, and Brewster's Coffee brands under one roof, BAB and Miami Subs Corporation recently opened their first co-branded restaurant under a licensing agreement that provides for Miami Subs to offer the three BAB concepts in its restaurants.

The 1998 fiscal year was a year of expansion for BAB Holdings, exemplified by new product development, brand integration, and international Master Franchising. In addition, with the introduction of its new web site, located at www.babholdings.com, BAB is taking advantage of Internet business opportunities, including My Favorite Muffin gift basket sales for the holiday season and year-round, franchise sales, and investor communication. Profitability is expected to continue in 1999 with increased focus in these areas.

"While we're proud that we've continued our consistent history of growth, we're even more encouraged that our improved operating results have lead to three straight quarters of profitability," said Michael W. Evans, President and Chief Executive Officer of BAB Holdings. "Clearly this should differentiate us from our competition and establish BAB as the true growth company in the industry. The continued improvement of our core business and the further expansion of our rapidly growing licensing and international agreements, both of which contribute significantly to profitability, should ensure that we maintain our earnings momentum."

BAB Holdings, Inc. operates, franchises, and licenses Big Apple Bagels, My Favorite Muffin, and Brewster's Coffee concept stores, and currently has 299 units in operation in 32 states, two Canadian provinces, and Peru, 22 of which are company-owned. The Company has licensing agreements with Host Marriott, Mrs. Fields Cookies, Oberweis Dairy, Miami Subs Corporation, and Choice Picks Food Courts. The Company's stock is traded on the Nasdaq Small-Cap Market under the symbol "BAGL" and its web site can be visited at www.babholdings.com.

Certain statements contained in this press release, including statements regarding the development of the company's business, the markets for the company's products, anticipated capital expenditures, and the effects of completed and proposed acquisitions, and other statements contained herein regarding matters that are not historical facts, are forward-looking statements (as such term is defined in the Private Securities Litigation Reform Act of 1995). Because such statements include risks and uncertainties, actual results may differ materially from those expressed or implied by such forward-looking statements. Certain risks and uncertainties are outside the control of the company and its management, including its ability to attract new franchisees; the continued success of current franchisees; the effects of competition on franchisee and company-owned store results; consumer acceptance of the company's products in new and existing markets; fluctuation in development and operating costs; brand awareness; availability and terms of capital; adverse publicity; acceptance of new product offerings; availability of locations and terms of sites for store development; food, labor and employee benefit costs; changes in government regulation (including increases in the minimum wage law); regional economic and weather conditions; the hiring, training, and retention of skilled corporate and restaurant management; and the integration and assimilation of acquired concepts. Some of these risks and uncertainties are wholly outside of the control of the company. Accordingly, readers are cautioned not to place undue reliance on these forward-looking statements, which reflect management's analysis only as of the date hereof. The company undertakes no obligation to publicly release the results of any revision to these forward-looking statements which may be made to reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events.