BAB Holdings Reports Fourth Quarter and Fiscal 1997 Results.

CHICAGO--(BUSINESS WIRE)--March 2, 1998--BAB Holdings Inc. (NASDAQ:BAGL), the Chicago-based operator of Big Apple Bagels, My Favorite Muffin, and Brewster's Coffee concept stores reported strong growth in revenues for both fourth quarter and fiscal 1997.

However, the company reported losses for both periods due, in part, to a fourth quarter charge related to the closure of seven under-performing company-owned units.

Total revenues for the fourth quarter were $4.0 million, a 67 percent increase over 1996 fourth quarter revenues of $2.4 million. Sales from company-owned stores increased 93 percent from the fourth quarter of 1996 due to the increased number of units in operation. Royalty fees from franchise stores increased approximately 78 percent to $703,000 for the quarter.

The May 1997 acquisition of My Favorite Muffin Inc., operator of five company-owned and 60 franchised My Favorite Muffin stores, contributed more than $728,000 to fourth quarter revenues.

Despite achieving its revenue goals, the company recorded a net loss for the fourth quarter of $3,098,000 or 40 cents per share, including the $1,837,000 provision for the store closures or 24 cents per share. Approximately 73 percent, or $1,333,000, of this charge is a non-cash transaction to write-down property, plant and equipment and other intangible assets associated with the closed stores.

"We made some difficult decisions which resulted in the write offs in the fourth quarter," said Michael W. Evans, president and chief executive officer. "Having now executed those decisions, however, we are a stronger company with a solid nucleus of 27 company-owned stores and a franchise system strengthened by the addition of My Favorite Muffin's outstanding line of products. While 1997 was a difficult year across the board for the bagel industry, here at BAB we have positioned ourselves to capitalize upon our expanded product lines and increased efficiencies."

For the twelve-month period ended Nov. 30, 1997, total revenues increased 124 percent to $14.2 million. Company-owned store revenues increased 183 percent over the comparable prior year period to $9.8 million and royalty fees from franchise stores increased 69 percent to $2.4 million for fiscal 1997. Licensing fees and other revenues for the twelve-month period increased 130 percent to $948,000 as the company entered several licensing arrangements for the non-traditional distribution of its branded products.

The company continued to leverage its selling, general and administrative expenses over its increased revenue streams. Selling, general and administrative expenses, net of amortization and depreciation, continued to decline as a percent of total revenues, from 94 percent in 1995 to 46 percent in 1996 to 36 percent in 1997. The company is seeing the operating efficiencies of its growth and expansion.

Earnings before interest, taxes, depreciation and amortization ("EBITDA") were a loss of $2,530,000 for the fourth quarter versus a loss in the comparable prior year quarter of $497,000. For the twelve months ended Nov. 30, 1997, EBITDA was a loss of $1,912,000 (which includes a reserve for closures and impairment of $1,837,000) versus a loss of $254,000 in the comparable 1996 period. Without the reserve, EBITDA for the twelve months ended Nov. 30, 1997 was a loss of $75,000 versus a loss of $254,000 in the comparable 1996 period.

Net loss attributable to common shareholders was $4,050,000 or 55 cents per share for the twelve-month period ended Nov. 30, 1997, including $648,000 in non-cash preferred dividends accumulated during the period.

System-wide revenues for the fourth quarter were $18.5 million, a 83 percent increase over last year's fourth quarter. For the twelve months ended Nov. 30, 1997, system-wide revenues were $62.3 million, a 87 percent increase over the prior year.

"Our acquisition of My Favorite Muffin has added a positive synergy to our franchise and company-owned Big Apple Bagels units," said Evans. "The initial testing of the My Favorite Muffin program in company-owned Big Apple Bagels stores has proven to be successful. The program rollout is proceeding as expected and the results are extremely encouraging, for both existing and new, tri-branded stores. We expect to see the benefits of increased system-wide sales beginning in the second quarter of 1998."

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 possible future acquisitions, and other statements contained herein regarding matters that are not historical facts, are forward-looking statements (as such terms are 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 effect of competition on franchisee and company-owned store results, and consumer acceptance of the company's products in new and existing markets. Readers are cautioned not to place undue reliance upon 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.

BAB Holdings Inc. operates, franchises and licenses Big Apple Bagels, My Favorite Muffin and Brewster's Coffee retail stores, and currently has 264 units in operation in 30 states and two Canadian provinces, 27 of which are company-owned. The company is in the coffee business through its Brewster's Coffee division and has licensing agreements with Host Marriott, Mrs. Fields Cookies, Oberweis Dairy, and Choice Picks Food Courts. The company's stock is traded on the Nasdaq Small-Cap Market under the symbol "BAGL." -0-

                          BAB Holdings Inc.
            Condensed Consolidated Statement of Operations
        (in thousands except per-share and percentage amounts)

                         Quarter Ended            Year Ended
                            Nov. 30,               Nov. 30,
                      _____________________    _____________________
                                        %                      %
                       1997    1996  Change    1997    1996   Change
                      _____________________    _____________________
REVENUES
Net sales by Company-
 owned stores        $ 2,928 $ 1,518  92.89% $ 9,846 $ 3,484  182.61%
Royalty fees from
 franchised stores       703     395  77.97%   2,367   1,403   68.71%
Franchise and area
 development fees        232     216   7.41%   1,005   1,024   -1.86%
Licensing fees and
 other income            156     288 -45.83%     948     413  129.54%
                      ____________________    _____________________
                       4,019   2,417  66.28%  14,166   6,324  124.00%

OPERATING COSTS AND
 EXPENSES
Food, beverage and
 paper costs             986     536  83.96%   3,310   1,222  170.87%
Store payroll and
 other operating
  expenses             1,888     790 138.99%   5,859   1,753  234.23%
Reserve for impairments
 and store closures    1,837      --  N/M      1,837      --    N/M
Costs of uncompleted
 acquisition              --     651 -100.00%     --     651 -100.00%
Depreciation and
 amortization            501     171  192.98%  1,490     379  293.14%
Selling, general
 and administrative
  expenses             1,842     924   99.35%  5,076   2,939   72.71%
                      ____________________    _____________________
                       7,054   3,072  129.62% 17,572   6,944  153.05%
                      ____________________    _____________________
Income (loss) before
 interest and other   (3,035)   (655) 363.36% (3,406)   (620) 449.35%
Interest expense          43       1 4200.00%     75       5 1400.00%
Interest income           26      56  -53.57%     75     317  -76.34%
Other income (expense)     4     (13)   N/M        4     (13)   N/M
                      ____________________    _____________________
Net income (loss)     (3,048)   (613) 397.23% (3,402)   (321)

Preferred stock
 divided accumulated      50      --    N/M      648      --    N/M
                      ____________________    _____________________
Net income (loss)
 attributable to
  common shareholders $(3,098) $(613) 405.38% $(4,050) $(321)  1161.68%
                      ____________________    _____________________
                      ____________________    _____________________
Earnings (loss) per
 common shares        $(0.40)  $(0.08) 400.00% $(0.55) $(0.04) 1275.00%
                      _______________         _______________
                      _______________         _______________
Average number of
 shares outstanding   $7,700   $7,245    6.28% $7,421  $7,367     0.73%
                      _______________         _______________
                      _______________         _______________
EBITDA               $(2,530)  $(497)  409.05% $(1,912) $(254)  652.76%
                      _____________________   _____________________
                      _____________________   _____________________
System-wide revenues  $18,501 $10,126   82.71% $62,322 $33,309    87.10%
                      _____________________   _____________________
                      _____________________   _____________________

CONTACT: BAB Holdings Inc., Chicago

Michael K. Murtaugh, 773/380-6100

Fax: [phone]