content: SECURITIES AND EXCHANGE COMMISSION
  
                               Washington, D.C. 20549
  
                                      FORM 8-K
  
                                   CURRENT REPORT
  
       PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934
  
  
  
  
            Date of Report (Date of Earliest Event Reported) May 31, 2002
  --------------------------------------------------------------------------------
  
  
                          New World Restaurant Group, Inc.
  --------------------------------------------------------------------------------
               (Exact Name of Registrant as Specified in its Charter)
  
  
  
  
  Delaware                           0-27148                            13-3690261
  --------------------------------------------------------------------------------
  (State or Other                 (Commission                     (I.R.S. Employer
  Jurisdiction of                 File Number)                      Identification
  Incorporation)                                                              No.)
  
  
  
  
  
                               246 Industrial Way West
                            Eatontown, New Jersey 07724
  --------------------------------------------------------------------------------
                 (Address of Principal Executive Offices) (Zip Code)
  
  
                                   (732) 544-0155
  --------------------------------------------------------------------------------
                (Registrant's Telephone Number, Including Area Code)
  
  
  --------------------------------------------------------------------------------
           (Former Name or Former Address, If Changed Since Last Report.)
  
  
  <PAGE>
  
  
  ITEM 5.  OTHER EVENTS AND REGULATION FD DISCLOSURE.
  
                    Reference  is made to the New  World  Restaurant  Group,  Inc.
  press release  attached  hereto as Exhibit 99.1, and  incorporated  by reference
  herein  (including,  without  limitation,  the  information  set  forth  in  the
  cautionary statement contained in the press release),  relating to the Company's
  announcement of its audited results for the fiscal year ended January 1, 2002.
  
  
  
  ITEM 7.  FINANCIAL STATEMENTS AND EXHIBITS.
  
  (c)  EXHIBITS.
  
  Exhibit           Description
  -------           -----------
  
  99.1              Press Release issued May 31, 2002
  
  
  
  <PAGE>
  
  
                                     SIGNATURES
  
           Pursuant to the  requirements  of the Securities  Exchange Act of 1934,
  the  Registrant  has duly  caused  this report to be signed on its behalf by the
  undersigned hereunto duly authorized.
  
  
  
                                              NEW WORLD RESTAURANT GROUP, INC.
  
  
  
  
  
                                              BY:  /s/ Anthony Wedo
                                                  ------------------------------
                                                  Name:  Anthony Wedo
                                                  Title: Chief Executive Officer
  
  
  
  Date:  May 31, 2002
  
  
  
  <PAGE>
  
  
                                                                      Exhibit 99.1
  
                      NEW WORLD REPORTS RESULTS FOR FISCAL 2001
  
  O 4TH QUARTER EBITDA FOR COMBINED  COMPANY  SURPASSED  GUIDANCE,  REACHING $10.7
  MILLION ON $99.9 MILLION IN REVENUES
  O FULL-YEAR  PRO-FORMA  EBITDA OF $31.7  MILLION ON $405.6  MILLION IN REVENUES;
  COMPANY-OWNED EINSTEIN/NOAH COMPARABLE STORE SALES UP 2.5%
  O COMPANY DISCLOSES UNAUTHORIZED BONUS PAYMENTS TO CERTAIN FORMER EXECUTIVES AND
  OTHER ACCOUNTING ADJUSTMENTS
  O COMPANY  FILED  AMENDED FORM 10-QS FOR  QUARTERS 1, 2 AND 3 OF 2001,  AND FORM
  10-K FOR 2001
  
           EATONTOWN, NJ (5/31/02)--New World Restaurant Group (Pink Sheets: NWCI)
  today  announced  audited  results  for the fiscal  year ended  January 1, 2002.
  Results for fiscal 2001 include the  operations  of  company-owned  and licensed
  Einstein  Bros.  and Noah's NY Bagels stores and related  production and support
  facilities from June 19, 2001, the date of New World's acquisition of the assets
  of Einstein/Noah  Bagel Corp. and its majority owned  subsidiary,  Einstein/Noah
  Bagel  Partners,  L.P. The company also  reported  selected  unaudited pro forma
  results  for the  year,  which  assume  that the  combination  of New  World and
  Einstein occurred from the beginning of fiscal 2000.
  
           On a reported  basis,  total revenues for the fiscal year ended January
  1, 2002 rose to $236.0  million  from  $45.7  million in fiscal  2000,  with the
  increase driven by the June 2001  acquisition of Einstein.  The growth in retail
  sales was partially offset by decreases in manufacturing  and franchise  related
  revenues.  Manufacturing  revenues  were  primarily  impacted  by the  company's
  decision to  outsource  its  low-margin  distribution  business  (which had been
  included in  manufacturing  revenues in fiscal  2000),  while  franchise-related
  revenues were affected by a lower average  franchise  store base in fiscal 2001,
  due, in part, to management's  decision to terminate  certain  franchisees whose
  operations did not comply with the company's policies.
  
           EBITDA (earnings before interest, taxes, depreciation and amortization,
  integration  and  reorganization  costs,  non-cash  charge  in  connection  with
  realization  of  assets,  gain/loss  on the sale of  investments,  and  minority
  interest) for the year increased  151.3% to $20.1 million,  or 8.5% of revenues,
  from $8.0  million,  or 17.5% of  revenues  in 2000.  The decline in EBITDA as a
  percent of revenues reflects the shift in the company's business to one in which
  87.3% of 2001 revenues  were derived from retail  sales,  compared with 26.2% in
  2000.  EBITDA for the fourth quarter of 2001 reached $10.7 million,  or 10.7% of
  revenues of $99.9 million.
  
           The company reported a $36.3 million net loss for 2001, compared to net
  income of $6.0  million in 2000.  The loss for the most  recent  year  reflected
  $14.6 million in non-cash  charges.  Items recorded in fiscal 2001 included $5.8
  million  in  non-cash  charges  for  impairment  in the  value  of  investments,
  reflecting  management's  estimate of the proceeds the company will receive from
  the  bankruptcy  estate of Einstein  Noah Bagel  Corp.  from its  investment  in
  certain Einstein  debentures;  a $2.8 million non-cash charge in connection with
  the realization of assets,  resulting from management's evaluation of long lived
  assets  in  accordance  with  SFAS  121;  a $4.4  million  provision  for  costs
  associated with the  reorganization  and integration of existing  facilities and
  operations with those acquired in the Einstein transaction; and $1.6 million for
  allocation of earnings to the minority interest.  No such items were recorded in
  2000.
  
  <PAGE>
  
  
           Earnings  for the year were also  adversely  affected by an increase in
  net interest  expense to $28.5  million in 2001 from $2.0  million in 2000,  due
  primarily to interest and related  costs  incurred on debt  associated  with the
  Einstein  acquisition.  Interest  expense  for  fiscal  2001  was  comprised  of
  approximately  $12.7  million of  interest  paid or payable in cash,  as well as
  approximately $15.8 million in non-cash interest resulting from the
  amortization of debt discount,  debt issuance costs and the amortization
  of warrants issued in connection with debt financings.
  
           Additionally,  New World had a $167,000  income tax  provision in 2001,
  compared with a $3.1 million  income tax benefit the prior year  resulting  from
  the recognition of deferred tax assets.
  
           After  deducting $18.5 million for dividends and accretion on preferred
  stock, both of which are non-cash accounting adjustments, the company reported a
  net loss  attributable  to common  stockholders  of $54.8 million,  or $3.24 per
  common share,  in 2001.  This  compared to income of $3.9 million,  or $0.32 per
  common share in 2000, which reflected $2.1 million in dividends and accretion on
  preferred stock.
  
                                  PRO FORMA RESULTS
  
           New World also reported pro forma comparative results for the year. The
  pro forma  results have been  prepared in order to assist in the  evaluation  of
  changes and trends in the company's business, are for comparative purposes only,
  do not purport to be  indicative of what  operating  results would have been had
  the Einstein acquisition actually taken place at the end of 1999, and may not be
  indicative of future operating results.  Moreover, the pro forma results are not
  directly  comparable  because  Einstein  operated on a  16/12/12/12-week  fiscal
  quarter basis prior to the acquisition, compared to New World, which operates on
  a 13-week calendar quarter basis.
  
           For fiscal 2001,  pro forma  revenues  decreased 3.7% to $405.6 million
  from $421.4 million in fiscal 2000. The decline is predominantly attributable to
  a decrease  in the pro forma  store  base (to a combined  770 at the end of 2001
  from 814 the prior year) as well as the fiscal calendar differences.  The fiscal
  2000 calendar  included  nine  additional  operating  days for Einstein and five
  additional days from New World. In the core Einstein segment, revenues increased
  approximately  2.5% when measured on an equal-week  basis, with comparable store
  sales for company-owned locations also increasing 2.5%.
  
           Full-year pro forma EBITDA decreased 11.2% to $31.7 million, or 7.8% of
  revenues,  from $35.7 million, or 8.5% of revenues,  in fiscal 2000. The company
  attributed the decline to the impact of the nine additional days in fiscal 2000,
  as well as increased general and  administrative  expenses during 2001 primarily
  as a result of the unauthorized  bonus payments at New World,  executive bonuses
  at Einstein and other expenses associated with the Einstein  restructuring.  The
  latter items (all recorded during the first three quarters of the year) included
  approximately  $2.8  million in Einstein  restructuring  charges  and  retention
  bonuses; $1.4 million in one-time legal fees related to franchisee  settlements;
  $1.3 million in one-time bonuses  associated with former officers;  $1.2 million
  in unauthorized  compensation;  and $0.8 million in lease  settlements for store
  closures. Excluding those items, pro forma EBITDA for 2001 would have been $39.2
  million, or 9.7% of revenues.
  
           "As  expected,  our bottom  line  results  for the 2001 year  reflect a
  substantial loss and were unacceptable.  However, we were pleased to report that
  fourth  quarter  EBITDA  exceeded our guidance of $10.5  million,"  said Anthony
  Wedo, New World Chairman and Chief Executive Officer. "The improvement in EBITDA
  reflects  strong  operations  as well as some of the  initial  savings  from the
  consolidation of the New World and Einstein  businesses.  During fiscal 2002, we
  expect to realize  the full  benefit of  programs  being  implemented  to attain
  savings through the  integration of production,
  
  
  <PAGE>
  
  distribution,  purchasing,  and general  administrative  functions.  At the same
  time, we are working to build sales through the expansion of our lunch  day-part
  as well as by new location growth primarily through franchising and licensing.
  
           "We will continue to build on our operating  success as we  rationalize
  our capital  structure," he continued.  "Now that our 2001 10-K is filed, we are
  focused on immediately evaluating the company's refinancing alternatives.  These
  efforts will include refinancing the company's increasing rate notes."
  
           Mr.  Wedo,  who  joined  New  World  as CEO  in  August  2001,  assumed
  responsibility  for the company's  finance and accounting  functions on April 2,
  2002,  when he was appointed to the additional  post of Chairman by the Board of
  Directors  following the  resignation  of Chairman and founder Ramin Kamfar.  On
  that same date, Chief Financial Officer Jerold Novack was dismissed by the Board
  with cause.  Under the company's former structure,  the CFO reported directly to
  the  Chairman.  Mr. Wedo added that the company is in the process of  finalizing
  agreements with a new CFO and several other key members of its senior  executive
  team.
  
                              OPERATING RESULTS REVISED
  
           The company also  disclosed that it has revised  operating  results for
  the first three quarters of fiscal 2001 and, accordingly, has filed amended Form
  10-Qs  for the  applicable  quarters.  The  revisions  reflect  adjustments  for
  unauthorized  bonus  payments to certain  former  executive  officers and former
  employees,  as well as the  reclassification  of certain operating and financing
  related expenses previously  recorded as part of the Einstein  acquisition costs
  and restructuring  charges.  The aggregate net effect of these adjustments was a
  $4.7 million reduction in EBITDA for the first nine months of 2001 to a restated
  total  of  $9.4  million  from  the  $14.1  million  originally  reported.   The
  unauthorized  bonus payments  totaling $3.5 million were made in connection with
  the Einstein acquisition. Approximately $1.0 million of those payments were made
  in the third  quarter of fiscal  2001 and the  balance  in the first  quarter of
  fiscal 2002,  ended April 2. All of these payments were  originally  recorded in
  the company's  financial  statements in the second and third  quarters of fiscal
  2001 as part of the acquisition  costs associated with the Einstein  transaction
  and as a  restructuring  charge.  Results  for those  quarters  have  since been
  revised to reverse that  treatment.  The aggregate of those payments  (including
  $1.0  million in the third  quarter of fiscal 2001 and $2.5 million in the first
  quarter  of 2002) has been or will be  recorded  as general  and  administrative
  expense  in the  respective  quarters.  An  aggregate  of $2.5  million of those
  payments  was  offset  against  payments  to be  made  in  connection  with  the
  separation  of certain  officers and employees  from the company.  The remaining
  portion of the  unauthorized  bonus payments that has not been repaid or offset,
  plus certain other  unauthorized  payments  that have not been  recovered in the
  amount of $0.2 million (an  aggregate of $1.2  million),  has been recorded as a
  receivable  from the former  officer.  Based on  management's  evaluation of the
  collectability  of this  amount,  the company  has  recorded  an  allowance  for
  uncollectable  receivable with a corresponding charge to bad debt expense in the
  quarters in which the payments occurred.
  
           In addition to the unauthorized  bonuses, an aggregate of approximately
  $3.4 million, primarily relating to previously discussed operating expenses, was
  originally  recorded during the second and third quarters of 2001 as acquisition
  costs and  restructuring  charges.  The  company has revised its results for the
  first, second and third quarters of 2001 to appropriately  record these items in
  the respective quarters in which they were incurred.
  
  
  <PAGE>
  
           "We are highly  confident in the integrity of our fiscal 2001 financial
  statements  and in the process that was  undertaken to present  these  results,"
  said Mr.  Wedo.  "We  sincerely  regret the delays in filing our 10-K for fiscal
  2001, and appreciate our stakeholders'  patience in waiting for this document to
  be filed. By definition,  an audit is a comprehensive process. Though the delays
  encountered  were of  great  concern  to me, I  believe  that  this  painstaking
  process--including  close scrutiny of accounting  for the Einstein  acquisition,
  restructuring   charges  and  related   party   transactions--   fulfilled   our
  objectives."
  
           New World is a leading company in the quick casual  sandwich  industry.
  The company  operates  stores  primarily  under the Einstein Bros and Noah's New
  York Bagels brands and primarily franchises stores under the Manhattan Bagel and
  Chesapeake Bagel Bakery brands.  As of May 14, 2002, the company's retail system
  consisted of 468 company-owned  stores and 293 franchised and licensed stores in
  34 states.  The company also operates three dough production  facilities and one
  coffee roasting plant.
  
                                        *****
  
  Certain statements in this press release constitute  forward-looking  statements
  or statements which may be deemed or construed to be forward-looking  statements
  within the meaning of the Private Securities  Litigation Reform Act of 1995. The
  words "forecast,"  "estimate," "project," "intend," "expect," "should," "would,"
  "believe" and similar  expressions  and all statements  which are not historical
  facts are intended to identify forward-looking statements. These forward-looking
  statements involve and are subject to known and unknown risks, uncertainties and
  other  factors  which  could cause the  company's  actual  results,  performance
  (financial or operating),  or  achievements  to differ from the future  results,
  performance  (financial or operating),  or achievements  expressed or implied by
  such forward-looking  statements.  The above factors are more fully discussed in
  the company's SEC filings.
  
                                        #####
  CONTACT:
  Media/investors:   Bill   Parness,   Parness  &  Associates,   (732)   290-0121;
  parnespr@optonline.net
  
                  NEW WORLD RESTAURANT GROUP, INC. AND SUBSIDIARIES
                        CONSOLIDATED STATEMENTS OF OPERATIONS
               FOR THE YEARS ENDED JANUARY 1, 2002, DECEMBER 31, 2000
               (IN THOUSANDS, EXCEPT SHARE AND PER SHARE INFORMATION)
  
  
  <TABLE>
  <CAPTION>
  
                                                                     Fiscal Years Ended
                                                                     -------------------
  
                                                                 January 1,    December 31,
                                                                    2002           2000
                                                                 ----------    ------------
  <S>                                                              <C>             <C>
  Revenues:
  Manufacturing revenues.................................          $ 23,975        $ 26,011
  
  <PAGE>
  
  Franchise related revenues.............................             5,859           7,715
  Retail sales...........................................           206,186          11,997
                                                                 ----------    ------------
  Total revenues.........................................           236,020          45,723
  
  Cost of sales..........................................           190,530          31,045
  General and administrative expenses....................            25,386           6,694
  Depreciation and amortization..........................            13,442           2,774
  Provision for integration and reorganization costs.....             4,391               -
  Noncash charge in connection with realization of assets             2,800               -
                                                                 ----------    ------------
  
  Income (loss) from operations..........................             (529)           5,210
  
  Interest expense, net..................................            28,490           1,960
  Gain (loss) from sale of investments...................               241           (339)
  Permanent impairment in the value of investments.......             5,806               -
                                                                 ----------    ------------
  
  Income (loss) before income taxes and minority interest          (34,584)           2,911
  
  Provision (benefit) for income taxes...................               167         (3,100)
  
  Minority interest                                                   1,578               -
  
  Net (loss) income......................................          (36,329)           6,011
  
  Dividends and accretion on preferred stock.............            18,480           2,128
                                                                 ----------    ------------
  Net (loss) income available to common stockholders.....        ($ 54,809)         $ 3,883
                                                                 ==========    ============
  
  Net (loss) income per common share - Basic:............           ($3.24)           $0.32
                                                                 ==========    ============
  
  Net (loss) income per common share - Diluted:..........           ($3.24)           $0.29
                                                                 ==========    ============
  
  Weighted average number of common shares outstanding...        16,923,168      12,074,356
  Basic..........                                                ==========    ============
  
  Diluted..............                                          16,923,168      13,374,975
                                                                 ==========    ============
  </TABLE>
  
                                       -more-
  
  
  
  
  
  
  
               The  following  unaudited  pro forma  financial  data for the years
  ended  January 1, 2002 and  December  31,  2000,  gives  effect to the  Einstein
  Acquisition  as if it had occurred as of the beginning of each period  reported.
  All of the following unaudited pro forma financial data gives effect to purchase
  accounting  adjustments  necessary to complete the acquisition.  These pro forma
  results have been prepared for the purpose of supplementary analysis only and do
  not purport to be indicative of what  operating  results would have been had the
  acquisitions  actually
  
  
  <PAGE>
  
  taken  place  as of the  beginning  of  each  period  reported,  and  may not be
  indicative of future operating results.
  
  
  <TABLE>
  <CAPTION>
                                                                 January 1,    December 31,
                                                                    2002           2000
                                                                 ----------    ------------
                                                               (AMOUNTS IN THOUSANDS, UNLESS
                                                                     OTHERWISE INDICATED
  Revenues:
  
  <S>                                                            <C>           <C>
  Einstein                                                          365,619         375,703
  
  New World                                                          40,003          45,723
                                                                 ----------    ------------
  Total Revenues                                                    405,622         421,426
  
  
  Cost of sales                                                     334,676         347,326
  
  General and administrative expenses                                39,252          38,423
                                                                 ----------    ------------
  EBITDA                                                             31,694          35,677
  
  OTHER INFORMATION:
  
  Number of Operating Days included in fiscal period:
  
  Einstein                                                              365             374
  
  New World                                                             367             372
  
  STORE COUNTS:
  
  EINSTEIN AND NOAH BRANDS:
  
  Company-operated stores:
  
  Store count - beginning of period                                     458             539
  
  Opened during the period                                                3               3
  
  Closed during the period                                               (8)            (84)
                                                                 ----------    ------------
  Store count - end of period                                           453             458
                                                                 ==========    ============
  
  Licensed stores:
  
  Store count - beginning of period                                       5               2
  
  Opened during the period                                                4               3
  
  Closed during the period                                                -               -
                                                                 ----------    ------------
  Store count - end of period                                             9               5
                                                                 ==========    ============
  
  
  NEW WORLD BRANDS:
  
  Company-operated stores:
  
  Store count - beginning of period                                      44              14
  
  Opened during the period                                               -               30
  
  Closed during the period                                              (14)             -
                                                                 ----------    ------------
  Store count - end of period                                            30              44
                                                                 ==========    ============
  
  Franchised stores:
  
  Store count - beginning of period                                     307             363
  
  Opened during the period                                               18              10
  
  Closed during the period                                              (47)            (66)
                                                                 ----------    ------------
  Store count - end of period                                           278             307
                                                                 ==========    ============
  </TABLE>
metadata_documents: [{"type": "8-K", "sequence": "1", "filename": "e925400.txt", "secsgml_size_bytes": 25644}]
metadata_filer: {"company-data": {"conformed-name": "NEW WORLD RESTAURANT GROUP INC", "cik": "0000949373", "assigned-sic": "5812", "irs-number": "133690261", "state-of-incorporation": "DE", "fiscal-year-end": "1228"}, "filing-values": {"form-type": "8-K", "act": "34", "file-number": "000-27148", "film-number": "02669146"}, "business-address": {"street1": "246 INDUSTRIAL WAY WEST", "street2": "C/O NEW WORLD HOLDINGS", "city": "EATONTOWN", "state": "NJ", "zip": "07724", "phone": "7325440155"}, "mail-address": {"street1": "246 INDUSTRIAL WAY WEST", "street2": "C/O NEW WORLD HOLDINGS", "city": "EATONTOWN", "state": "NJ", "zip": "07724"}, "former-company": [{"former-conformed-name": "NEW WORLD COFFEE INC", "date-changed": "19950815"}, {"former-conformed-name": "NEW WORLD COFFEE & BAGELS INC /", "date-changed": "19981007"}, {"former-conformed-name": "NEW WORLD COFFEE MANHATTAN BAGEL INC", "date-changed": "19990413"}]}
text: SECURITIES AND EXCHANGE COMMISSION
  
                               Washington, D.C. 20549
  
                                      FORM 8-K
  
                                   CURRENT REPORT
  
       PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934
  
            Date of Report (Date of Earliest Event Reported) May 31, 2002
  --------------------------------------------------------------------------------
  
                          New World Restaurant Group, Inc.
  --------------------------------------------------------------------------------
               (Exact Name of Registrant as Specified in its Charter)
  
  Delaware                           0-27148                            13-3690261
  --------------------------------------------------------------------------------
  (State or Other                 (Commission                     (I.R.S. Employer
  Jurisdiction of                 File Number)                      Identification
  Incorporation)                                                              No.)
  
                               246 Industrial Way West
                            Eatontown, New Jersey 07724
  --------------------------------------------------------------------------------
                 (Address of Principal Executive Offices) (Zip Code)
  
                                   (732) 544-0155
  --------------------------------------------------------------------------------
                (Registrant's Telephone Number, Including Area Code)
  
  --------------------------------------------------------------------------------
           (Former Name or Former Address, If Changed Since Last Report.)
  ITEM 5.  OTHER EVENTS AND REGULATION FD DISCLOSURE.
  
                    Reference  is made to the New  World  Restaurant  Group,  Inc.
  press release  attached  hereto as Exhibit 99.1, and  incorporated  by reference
  herein  (including,  without  limitation,  the  information  set  forth  in  the
  cautionary statement contained in the press release),  relating to the Company's
  announcement of its audited results for the fiscal year ended January 1, 2002.
  
  ITEM 7.  FINANCIAL STATEMENTS AND EXHIBITS.
  
  (c)  EXHIBITS.
  
  Exhibit           Description
  -------           -----------
  
  99.1              Press Release issued May 31, 2002
  SIGNATURES
  
           Pursuant to the  requirements  of the Securities  Exchange Act of 1934,
  the  Registrant  has duly  caused  this report to be signed on its behalf by the
  undersigned hereunto duly authorized.
  
                                              NEW WORLD RESTAURANT GROUP, INC.
  
                                              BY:  /s/ Anthony Wedo
                                                  ------------------------------
                                                  Name:  Anthony Wedo
                                                  Title: Chief Executive Officer
  
  Date:  May 31, 2002
  Exhibit 99.1
  
                      NEW WORLD REPORTS RESULTS FOR FISCAL 2001
  
  O 4TH QUARTER EBITDA FOR COMBINED  COMPANY  SURPASSED  GUIDANCE,  REACHING $10.7
  MILLION ON $99.9 MILLION IN REVENUES
  O FULL-YEAR  PRO-FORMA  EBITDA OF $31.7  MILLION ON $405.6  MILLION IN REVENUES;
  COMPANY-OWNED EINSTEIN/NOAH COMPARABLE STORE SALES UP 2.5%
  O COMPANY DISCLOSES UNAUTHORIZED BONUS PAYMENTS TO CERTAIN FORMER EXECUTIVES AND
  OTHER ACCOUNTING ADJUSTMENTS
  O COMPANY  FILED  AMENDED FORM 10-QS FOR  QUARTERS 1, 2 AND 3 OF 2001,  AND FORM
  10-K FOR 2001
  
           EATONTOWN, NJ (5/31/02)--New World Restaurant Group (Pink Sheets: NWCI)
  today  announced  audited  results  for the fiscal  year ended  January 1, 2002.
  Results for fiscal 2001 include the  operations  of  company-owned  and licensed
  Einstein  Bros.  and Noah's NY Bagels stores and related  production and support
  facilities from June 19, 2001, the date of New World's acquisition of the assets
  of Einstein/Noah  Bagel Corp. and its majority owned  subsidiary,  Einstein/Noah
  Bagel  Partners,  L.P. The company also  reported  selected  unaudited pro forma
  results  for the  year,  which  assume  that the  combination  of New  World and
  Einstein occurred from the beginning of fiscal 2000.
  
           On a reported  basis,  total revenues for the fiscal year ended January
  1, 2002 rose to $236.0  million  from  $45.7  million in fiscal  2000,  with the
  increase driven by the June 2001  acquisition of Einstein.  The growth in retail
  sales was partially offset by decreases in manufacturing  and franchise  related
  revenues.  Manufacturing  revenues  were  primarily  impacted  by the  company's
  decision to  outsource  its  low-margin  distribution  business  (which had been
  included in  manufacturing  revenues in fiscal  2000),  while  franchise-related
  revenues were affected by a lower average  franchise  store base in fiscal 2001,
  due, in part, to management's  decision to terminate  certain  franchisees whose
  operations did not comply with the company's policies.
  
           EBITDA (earnings before interest, taxes, depreciation and amortization,
  integration  and  reorganization  costs,  non-cash  charge  in  connection  with
  realization  of  assets,  gain/loss  on the sale of  investments,  and  minority
  interest) for the year increased  151.3% to $20.1 million,  or 8.5% of revenues,
  from $8.0  million,  or 17.5% of  revenues  in 2000.  The decline in EBITDA as a
  percent of revenues reflects the shift in the company's business to one in which
  87.3% of 2001 revenues  were derived from retail  sales,  compared with 26.2% in
  2000.  EBITDA for the fourth quarter of 2001 reached $10.7 million,  or 10.7% of
  revenues of $99.9 million.
  
           The company reported a $36.3 million net loss for 2001, compared to net
  income of $6.0  million in 2000.  The loss for the most  recent  year  reflected
  $14.6 million in non-cash  charges.  Items recorded in fiscal 2001 included $5.8
  million  in  non-cash  charges  for  impairment  in the  value  of  investments,
  reflecting  management's  estimate of the proceeds the company will receive from
  the  bankruptcy  estate of Einstein  Noah Bagel  Corp.  from its  investment  in
  certain Einstein  debentures;  a $2.8 million non-cash charge in connection with
  the realization of assets,  resulting from management's evaluation of long lived
  assets  in  accordance  with  SFAS  121;  a $4.4  million  provision  for  costs
  associated with the  reorganization  and integration of existing  facilities and
  operations with those acquired in the Einstein transaction; and $1.6 million for
  allocation of earnings to the minority interest.  No such items were recorded in
  2000.
  Earnings  for the year were also  adversely  affected by an increase in
  net interest  expense to $28.5  million in 2001 from $2.0  million in 2000,  due
  primarily to interest and related  costs  incurred on debt  associated  with the
  Einstein  acquisition.  Interest  expense  for  fiscal  2001  was  comprised  of
  approximately  $12.7  million of  interest  paid or payable in cash,  as well as
  approximately $15.8 million in non-cash interest resulting from the
  amortization of debt discount,  debt issuance costs and the amortization
  of warrants issued in connection with debt financings.
  
           Additionally,  New World had a $167,000  income tax  provision in 2001,
  compared with a $3.1 million  income tax benefit the prior year  resulting  from
  the recognition of deferred tax assets.
  
           After  deducting $18.5 million for dividends and accretion on preferred
  stock, both of which are non-cash accounting adjustments, the company reported a
  net loss  attributable  to common  stockholders  of $54.8 million,  or $3.24 per
  common share,  in 2001.  This  compared to income of $3.9 million,  or $0.32 per
  common share in 2000, which reflected $2.1 million in dividends and accretion on
  preferred stock.
  
                                  PRO FORMA RESULTS
  
           New World also reported pro forma comparative results for the year. The
  pro forma  results have been  prepared in order to assist in the  evaluation  of
  changes and trends in the company's business, are for comparative purposes only,
  do not purport to be  indicative of what  operating  results would have been had
  the Einstein acquisition actually taken place at the end of 1999, and may not be
  indicative of future operating results.  Moreover, the pro forma results are not
  directly  comparable  because  Einstein  operated on a  16/12/12/12-week  fiscal
  quarter basis prior to the acquisition, compared to New World, which operates on
  a 13-week calendar quarter basis.
  
           For fiscal 2001,  pro forma  revenues  decreased 3.7% to $405.6 million
  from $421.4 million in fiscal 2000. The decline is predominantly attributable to
  a decrease  in the pro forma  store  base (to a combined  770 at the end of 2001
  from 814 the prior year) as well as the fiscal calendar differences.  The fiscal
  2000 calendar  included  nine  additional  operating  days for Einstein and five
  additional days from New World. In the core Einstein segment, revenues increased
  approximately  2.5% when measured on an equal-week  basis, with comparable store
  sales for company-owned locations also increasing 2.5%.
  
           Full-year pro forma EBITDA decreased 11.2% to $31.7 million, or 7.8% of
  revenues,  from $35.7 million, or 8.5% of revenues,  in fiscal 2000. The company
  attributed the decline to the impact of the nine additional days in fiscal 2000,
  as well as increased general and  administrative  expenses during 2001 primarily
  as a result of the unauthorized  bonus payments at New World,  executive bonuses
  at Einstein and other expenses associated with the Einstein  restructuring.  The
  latter items (all recorded during the first three quarters of the year) included
  approximately  $2.8  million in Einstein  restructuring  charges  and  retention
  bonuses; $1.4 million in one-time legal fees related to franchisee  settlements;
  $1.3 million in one-time bonuses  associated with former officers;  $1.2 million
  in unauthorized  compensation;  and $0.8 million in lease  settlements for store
  closures. Excluding those items, pro forma EBITDA for 2001 would have been $39.2
  million, or 9.7% of revenues.
  
           "As  expected,  our bottom  line  results  for the 2001 year  reflect a
  substantial loss and were unacceptable.  However, we were pleased to report that
  fourth  quarter  EBITDA  exceeded our guidance of $10.5  million,"  said Anthony
  Wedo, New World Chairman and Chief Executive Officer. "The improvement in EBITDA
  reflects  strong  operations  as well as some of the  initial  savings  from the
  consolidation of the New World and Einstein  businesses.  During fiscal 2002, we
  expect to realize  the full  benefit of  programs  being  implemented  to attain
  savings through the  integration of production,
  distribution,  purchasing,  and general  administrative  functions.  At the same
  time, we are working to build sales through the expansion of our lunch  day-part
  as well as by new location growth primarily through franchising and licensing.
  
           "We will continue to build on our operating  success as we  rationalize
  our capital  structure," he continued.  "Now that our 2001 10-K is filed, we are
  focused on immediately evaluating the company's refinancing alternatives.  These
  efforts will include refinancing the company's increasing rate notes."
  
           Mr.  Wedo,  who  joined  New  World  as CEO  in  August  2001,  assumed
  responsibility  for the company's  finance and accounting  functions on April 2,
  2002,  when he was appointed to the additional  post of Chairman by the Board of
  Directors  following the  resignation  of Chairman and founder Ramin Kamfar.  On
  that same date, Chief Financial Officer Jerold Novack was dismissed by the Board
  with cause.  Under the company's former structure,  the CFO reported directly to
  the  Chairman.  Mr. Wedo added that the company is in the process of  finalizing
  agreements with a new CFO and several other key members of its senior  executive
  team.
  
                              OPERATING RESULTS REVISED
  
           The company also  disclosed that it has revised  operating  results for
  the first three quarters of fiscal 2001 and, accordingly, has filed amended Form
  10-Qs  for the  applicable  quarters.  The  revisions  reflect  adjustments  for
  unauthorized  bonus  payments to certain  former  executive  officers and former
  employees,  as well as the  reclassification  of certain operating and financing
  related expenses previously  recorded as part of the Einstein  acquisition costs
  and restructuring  charges.  The aggregate net effect of these adjustments was a
  $4.7 million reduction in EBITDA for the first nine months of 2001 to a restated
  total  of  $9.4  million  from  the  $14.1  million  originally  reported.   The
  unauthorized  bonus payments  totaling $3.5 million were made in connection with
  the Einstein acquisition. Approximately $1.0 million of those payments were made
  in the third  quarter of fiscal  2001 and the  balance  in the first  quarter of
  fiscal 2002,  ended April 2. All of these payments were  originally  recorded in
  the company's  financial  statements in the second and third  quarters of fiscal
  2001 as part of the acquisition  costs associated with the Einstein  transaction
  and as a  restructuring  charge.  Results  for those  quarters  have  since been
  revised to reverse that  treatment.  The aggregate of those payments  (including
  $1.0  million in the third  quarter of fiscal 2001 and $2.5 million in the first
  quarter  of 2002) has been or will be  recorded  as general  and  administrative
  expense  in the  respective  quarters.  An  aggregate  of $2.5  million of those
  payments  was  offset  against  payments  to be  made  in  connection  with  the
  separation  of certain  officers and employees  from the company.  The remaining
  portion of the  unauthorized  bonus payments that has not been repaid or offset,
  plus certain other  unauthorized  payments  that have not been  recovered in the
  amount of $0.2 million (an  aggregate of $1.2  million),  has been recorded as a
  receivable  from the former  officer.  Based on  management's  evaluation of the
  collectability  of this  amount,  the company  has  recorded  an  allowance  for
  uncollectable  receivable with a corresponding charge to bad debt expense in the
  quarters in which the payments occurred.
  
           In addition to the unauthorized  bonuses, an aggregate of approximately
  $3.4 million, primarily relating to previously discussed operating expenses, was
  originally  recorded during the second and third quarters of 2001 as acquisition
  costs and  restructuring  charges.  The  company has revised its results for the
  first, second and third quarters of 2001 to appropriately  record these items in
  the respective quarters in which they were incurred.
  "We are highly  confident in the integrity of our fiscal 2001 financial
  statements  and in the process that was  undertaken to present  these  results,"
  said Mr.  Wedo.  "We  sincerely  regret the delays in filing our 10-K for fiscal
  2001, and appreciate our stakeholders'  patience in waiting for this document to
  be filed. By definition,  an audit is a comprehensive process. Though the delays
  encountered  were of  great  concern  to me, I  believe  that  this  painstaking
  process--including  close scrutiny of accounting  for the Einstein  acquisition,
  restructuring   charges  and  related   party   transactions--   fulfilled   our
  objectives."
  
           New World is a leading company in the quick casual  sandwich  industry.
  The company  operates  stores  primarily  under the Einstein Bros and Noah's New
  York Bagels brands and primarily franchises stores under the Manhattan Bagel and
  Chesapeake Bagel Bakery brands.  As of May 14, 2002, the company's retail system
  consisted of 468 company-owned  stores and 293 franchised and licensed stores in
  34 states.  The company also operates three dough production  facilities and one
  coffee roasting plant.
  
                                        *****
  
  Certain statements in this press release constitute  forward-looking  statements
  or statements which may be deemed or construed to be forward-looking  statements
  within the meaning of the Private Securities  Litigation Reform Act of 1995. The
  words "forecast,"  "estimate," "project," "intend," "expect," "should," "would,"
  "believe" and similar  expressions  and all statements  which are not historical
  facts are intended to identify forward-looking statements. These forward-looking
  statements involve and are subject to known and unknown risks, uncertainties and
  other  factors  which  could cause the  company's  actual  results,  performance
  (financial or operating),  or  achievements  to differ from the future  results,
  performance  (financial or operating),  or achievements  expressed or implied by
  such forward-looking  statements.  The above factors are more fully discussed in
  the company's SEC filings.
  
                                        #####
  CONTACT:
  Media/investors:   Bill   Parness,   Parness  &  Associates,   (732)   290-0121;
  parnespr@optonline.net
  
                  NEW WORLD RESTAURANT GROUP, INC. AND SUBSIDIARIES
                        CONSOLIDATED STATEMENTS OF OPERATIONS
               FOR THE YEARS ENDED JANUARY 1, 2002, DECEMBER 31, 2000
               (IN THOUSANDS, EXCEPT SHARE AND PER SHARE INFORMATION)
  Fiscal Years Ended
                                                                     -------------------
  
                                                                 January 1,    December 31,
                                                                    2002           2000
                                                                 ----------    ------------
  Revenues:
  Manufacturing revenues.................................          $ 23,975        $ 26,011
  Franchise related revenues.............................             5,859           7,715
  Retail sales...........................................           206,186          11,997
                                                                 ----------    ------------
  Total revenues.........................................           236,020          45,723
  
  Cost of sales..........................................           190,530          31,045
  General and administrative expenses....................            25,386           6,694
  Depreciation and amortization..........................            13,442           2,774
  Provision for integration and reorganization costs.....             4,391               -
  Noncash charge in connection with realization of assets             2,800               -
                                                                 ----------    ------------
  
  Income (loss) from operations..........................             (529)           5,210
  
  Interest expense, net..................................            28,490           1,960
  Gain (loss) from sale of investments...................               241           (339)
  Permanent impairment in the value of investments.......             5,806               -
                                                                 ----------    ------------
  
  Income (loss) before income taxes and minority interest          (34,584)           2,911
  
  Provision (benefit) for income taxes...................               167         (3,100)
  
  Minority interest                                                   1,578               -
  
  Net (loss) income......................................          (36,329)           6,011
  
  Dividends and accretion on preferred stock.............            18,480           2,128
                                                                 ----------    ------------
  Net (loss) income available to common stockholders.....        ($ 54,809)         $ 3,883
                                                                 ==========    ============
  
  Net (loss) income per common share - Basic:............           ($3.24)           $0.32
                                                                 ==========    ============
  
  Net (loss) income per common share - Diluted:..........           ($3.24)           $0.29
                                                                 ==========    ============
  
  Weighted average number of common shares outstanding...        16,923,168      12,074,356
  Basic..........                                                ==========    ============
  
  Diluted..............                                          16,923,168      13,374,975
                                                                 ==========    ============
  -more-
  
               The  following  unaudited  pro forma  financial  data for the years
  ended  January 1, 2002 and  December  31,  2000,  gives  effect to the  Einstein
  Acquisition  as if it had occurred as of the beginning of each period  reported.
  All of the following unaudited pro forma financial data gives effect to purchase
  accounting  adjustments  necessary to complete the acquisition.  These pro forma
  results have been prepared for the purpose of supplementary analysis only and do
  not purport to be indicative of what  operating  results would have been had the
  acquisitions  actually
  taken  place  as of the  beginning  of  each  period  reported,  and  may not be
  indicative of future operating results.
  January 1,    December 31,
                                                                    2002           2000
                                                                 ----------    ------------
                                                               (AMOUNTS IN THOUSANDS, UNLESS
                                                                     OTHERWISE INDICATED
  Revenues:
  Einstein                                                          365,619         375,703
  
  New World                                                          40,003          45,723
                                                                 ----------    ------------
  Total Revenues                                                    405,622         421,426
  
  Cost of sales                                                     334,676         347,326
  
  General and administrative expenses                                39,252          38,423
                                                                 ----------    ------------
  EBITDA                                                             31,694          35,677
  
  OTHER INFORMATION:
  
  Number of Operating Days included in fiscal period:
  
  Einstein                                                              365             374
  
  New World                                                             367             372
  
  STORE COUNTS:
  
  EINSTEIN AND NOAH BRANDS:
  
  Company-operated stores:
  
  Store count - beginning of period                                     458             539
  
  Opened during the period                                                3               3
  
  Closed during the period                                               (8)            (84)
                                                                 ----------    ------------
  Store count - end of period                                           453             458
                                                                 ==========    ============
  
  Licensed stores:
  
  Store count - beginning of period                                       5               2
  
  Opened during the period                                                4               3
  
  Closed during the period                                                -               -
                                                                 ----------    ------------
  Store count - end of period                                             9               5
                                                                 ==========    ============
  
  NEW WORLD BRANDS:
  
  Company-operated stores:
  
  Store count - beginning of period                                      44              14
  
  Opened during the period                                               -               30
  
  Closed during the period                                              (14)             -
                                                                 ----------    ------------
  Store count - end of period                                            30              44
                                                                 ==========    ============
  
  Franchised stores:
  
  Store count - beginning of period                                     307             363
  
  Opened during the period                                               18              10
  
  Closed during the period                                              (47)            (66)
                                                                 ----------    ------------
  Store count - end of period                                           278             307
                                                                 ==========    ============