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CORRESP
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  DENVER

  April 1,
  2005

  BOULDER

  Ms. Linda Cvrkel

  Branch Chief

  Division of Corporation Finance

  Securities and Exchange Commission

  Washington, D.C. 20549-0305

  COLORADO SPRINGS

  Re:

  New World Restaurant Group, Inc.

  Form 10-K for the fiscal year ended December 28, 2004

  File No. 0-27148

  Dear
  Ms. Cvrkel:

  LONDON

  On behalf of New World Restaurant Group, Inc. (the
  “Company”), please find the responses and the supplemental information
  requested by the Staff of the Securities and Exchange Commission (the “Staff”)
  in its letter dated March 23, 2005 to Richard Dutkiewicz, Chief
  Financial Officer of the Company (the “Comment Letter”), with respect to the
  above-referenced Annual Report on Form 10-K of the Company.  The responses and supplemental information provided
  herein in response to the Comment Letter are based upon conferences with
  representatives of the Company and other information supplied by its
  advisors.  We have not independently
  verified the accuracy and completeness of such information

  LOS ANGELES

  MUNICH

  Each numbered comment of the Comment Letter has
  been reproduced below, followed by the Company’s response.

  Form 10-K for the fiscal year ended December 28,
  2004

  SALT LAKE CITY

  Item 7 – Management’s Discussion and Analysis

  Results of Operations for Fiscal Years 2004, 2003 and 2002

  — Gross Profit, page 22

  SAN FRANCISCO

1.                                       Please
revise future filings to describe the significant components of costs of
sales.  Specifically, tell us and
describe the types of costs that comprise retail or manufacturing costs (e.g.,
rent, employee salaries, etc.) as presented on the face of your consolidated
income statement.  Also, we note that you
state in the second sentence of the first paragraph of your gross profit
discussion that store-level operating expenses other than depreciation,
amortization and taxes impact your retail margins.  Please tell us and disclose how “store-level
operating expenses” differ from or

Mashenka Lundberg  303.866.0616  mashenka.lundberg@hro.com

1700 Lincoln Street, Suite 4100  Denver, Colorado 80203-4541  tel  303.861.7000
fax
303.866.0200

compare to
retail and manufacturing costs of sales as it is unclear from your current
disclosures.

Response:                 In response
to the Staff’s comment, the Company will add substantially the following
language in future filings to clarify the types of costs that comprise retail
and manufacturing costs, as well as clarify how store-level or
manufacturing-level operating expenses compare to costs of sales:

“Our retail margins are impacted by
various store-level operating expenses, classified in retail costs, such as the
cost of products sold, salaries and benefits, insurance, supplies, repair and
maintenance expenses, advertising, rent, utilities and property taxes.  Similarly, our manufacturing margins are
impacted by various manufacturing-level operating expenses, classified in
manufacturing costs, such as the cost of products sold, salaries and benefits,
insurance, supplies, repair and maintenance expenses, rent, utilities and property
taxes.  Depreciation, amortization and
income taxes do not impact our retail or manufacturing margins.”

Contractual Obligations,
page 26

2.                                       We
note that in connection with your sale of Willoughby’s Coffee and Tea you
executed a two-year supply agreement to purchase coffee from the buyer;
however, it does not appear that the purchase obligations under this agreement
have been included in your table.  Please
clarify for us and revise the table in future filings as necessary.

Response:                 The
Company respectfully submits that the
two-year supply agreement has no fixed or minimum purchase commitments and only
provides for agreed-upon pricing at the cost of the coffee at the time of
purchase plus a minimal mark-up.  The
supply agreement is not a “purchase obligation” as defined in Item 303(a)(5) of Regulation S-K, and accordingly, the Company has
excluded any estimates of payments due under the supply agreement in the
contractual obligations table.

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Non-GAAP Measures, page 26

3.                                       Reference
is made to your presentation of EBITDA.
From your disclosure, you define this non-GAAP measure as earnings
before:  (1) interest,
(2) taxes, (3) depreciation and amortization, (4) integration
and reorganization charges, (5) cumulative change in fair value of
derivatives, (6) gain/loss on the investment, sale, disposal or exchange
of assets, (7) impairment and other related charges and (8) other
income, which you used as a basis to measure financial performance and liquidity.  Please note this is not appropriate, as you
should only adjust net loss by interest, taxes and depreciation and
amortization in reconciling to EBITDA.
Please revise your presentation and disclosure of the non-GAAP measure
EBITDA to comply with Item 10(e) of the Regulation S-K and Section I
of FR-65 which describes EBITDA as “earnings before interest, taxes,
depreciation and amortization.”  Please
also similarly revise your reference to EBITDA in the business section of
your filing (page 3).

Response:                 The
Company supplementally informs the Staff that the intent of the disclosure was
to present non-GAAP liquidity measures that relate to material covenants in its
$160 Million Notes and the AmSouth credit agreement.  Management believes that the presentation
about the non-GAAP liquidity measures, including EBITDA, is material to
investors’, particularly the Company’s bondholders’ understanding of the
Company’s financial condition, liquidity and compliance with its covenants.  Accordingly, the Company will apply the
guidance provided under FAQ No. 10 in “Frequently Asked Questions Regarding the
Use of Non-GAAP Financial Measures” and will discuss (i) the materiality of the
credit agreements and covenants, (ii) the amount or limit required for
compliance with such covenants and (iii) the effect of noncompliance with the
covenants on the Company’s financial condition and liquidity in its future
filings.

The Company is currently in discussions
with Bear Stearns regarding the refinancing of its $160 Million Notes and its
AmSouth credit agreement.  In the event
that the Company’s debt is refinanced and the covenants change, the Company
will ensure the presentation of non-GAAP financial measures in future filings
(to the extent disclosed) complies with

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Item 10(e)
of the Regulation S-K, Section I of FR-65 and, if applicable, FAQ No. 10.

4.                                       Also,
to the extent that these items from your calculation of EBITDA are considered
non-recurring, Item 10(e) of Regulation S-K prohibits adjusting for items
which are reasonably likely to recur within two years or a similar charge or
gain was recognized within the prior two years.
While there is no prohibition against removing
recurring items, registrants must demonstrate the usefulness of any measure
that excludes recurring items, especially if the non-GAAP financial measure is
used to evaluate operating performance.
In this regard, for each item that is excluded, registrants are required
to disclose:

•                  the
manner in which management uses the non-GAAP measure to conduct or evaluate its
business;

•                  the
economic substance behind management’s decision to use such a measure;

•                  the
material limitations associated with use of the non-GAAP financial measure as
compared to the use of the most directly comparable GAAP financial measure;

•                  the
manner in which management compensates for these limitations when using the
non-GAAP financial measure; and

•                  the
substantive reasons why management believes the non-GAAP financial measure provides
useful information to investors.

Refer to the guidance in FR-65 and “Frequently Asked Questions
Regarding the Use of the Non-GAAP Financial Measures” maintained on the
Commission’s website at www.sec.gov.

Response:                 The
Company supplementally informs the Staff that the intent of the disclosure of
EBITDA as presented in the Company’s Form 10-K is to relate to material
covenants in the Company’s $160 Million Notes and the AmSouth credit
agreement.  EBITDA, as defined in those
agreements, excludes recurring and non-recurring items and the Company’s

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presentation of
EBITDA, consistent with such definition, also excludes recurring and
non-recurring items.  As stated above in
response to Comment #3, management believes that such EBITDA presentation is
material to investors’, particularly the Company’s bondholders’, understanding
of the Company’s financial condition, liquidity and compliance with its
covenants.  Accordingly, the Company will
apply the guidance provided under FAQ No. 10 in “Frequently Asked Questions
Regarding the Use of Non-GAAP Financial Measures” and will discuss (i) the
materiality of the credit agreements and covenants, (ii) the amount or limit
required for compliance with such covenants and (iii) the effect of
noncompliance with the covenants on the Company’s financial condition and
liquidity in its future filings.

Consolidated Statements of
Operations, page 38

5.                                       We
note that you have classified the “loss (gain) on sale, disposal or abandonment
of assets, net” under other expenses (income) on the face of your consolidated
income statement.  Pursuant to footnote 68
of Staff Accounting Bulletin No. 104 (Topic 13) and paragraph 25
and 45 of SFAS No. 144, gain (loss) on sale of assets should be reported
in operating income (loss).  In this
regard, please revise your presentation to include the gain (loss) on sale,
disposal or abandonment of assets, net within operating expenses.  Similarly revise your presentation of the
selected financial data on page 16.

Response:                 The
Company hereby confirms to the Staff that in future filings,
it will revise its consolidated statements of operations to include the “loss
(gain) on sale, disposal or abandonment of assets, net” within operating
expenses rather than other expense (income). Similarly, the Company will revise
its presentation of selected financial data in future filings.

Consolidated Statements of
Cash Flows, page 40

6.                                       We
note that you present activity associated with proceeds (repayments) of your
line credit on a “net” rather than gross basis in your consolidated statements
of cash flows.  Please tell us why you
believe it is appropriate to reflect the activity associated with your line of
credit on a net basis in your consolidated statements of cash flows pursuant to
paragraphs 11 and

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13 of SFAS
No. 95.
Alternatively, you may revise future filings accordingly.

Response:                 The
Company hereby confirms to the Staff that in future filings, it will revise its
consolidated statements of cash flows to present activity associated with
proceeds (repayments) of its line of credit on a gross basis, unless net
presentation is required pursuant to paragraphs 11 and 13 of SFAS No. 95.

Note 2 – Summary of Significant
Accounting Policies

— Goodwill, Trademarks and
Other Intangibles, page 45

7.                                       We
note the disclosure in Note 2 indicating that the Company completed a
longevity analysis of certain brands and determined that certain trademarks had
an estimated remaining useful life of 4 years.
We also note that these trademarks were previously treated as a
non-amortizing intangible and accordingly, were reclassified as an amortizing
intangible at June 29, 2004.  Please
tell us when these trademarks were initially acquired and why the Company
previously concluded that these trademarks should be treated as an indefinite
lived intangible at the time they were acquired.  Also, tell us the nature and specific timing
of the events or circumstances that resulted in the Company’s determination
that the remaining useful life of these trademarks was much more limited than
the Company had previously assumed and explain how the Company estimated or
determined the revised useful life for these assets of four years.  In addition, please explain in detail how the
Company determined that these trademarks were not impaired at December 31,
2004, given their significantly reduced useful life.  Your response should explain the methods and
significant assumptions used to determine that the assets were not
impaired.  We may have further comment
upon receipt of your response.

Response:                 The
Company respectfully submits the following supplemental information in response
to the Staff’s inquiries regarding non-amortizing intangibles subsequently
reclassified as amortizing:

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In 1999, the Company acquired the Chesapeake Bagel
Bakery assets from AFC Enterprises.  Chesapeake
Bagel Bakery (Chesapeake) was a franchise operation and the assets acquired primarily
consisted of the trademarks.  At
acquisition, the Company’s plan was to operate Chesapeake as a unique brand and
to grow the brand by selling new franchises.

Upon adoption of SFAS 142 in 2002, the Company
considered the legal, regulatory and contractual provisions under the
Chesapeake trademarks and determined that the provisions enabled renewal and/or
extension of the asset’s life without substantial cost or material modification
to the existing agreement.  The Company
also reviewed the effects of obsolescence, demand, competition and other
economic factors and determined that these factors were immaterial in relation
to the business plan for Chesapeake and could be overcome.  In light of the expected use in relation to
the business plan for Chesapeake, the Company concluded that the useful life
was considered indefinite and that these trademarks should be accounted for
accordingly.

In June 2004, the Company
conducted a strategic review of all brands and the likelihood of providing
additional capital and other resources to grow each independent brand.  At that time, the Company determined that
growing the Chesapeake brand was not part of the long term growth prospects of
the Company’s business as a whole.  The
Company decided to continue to operate the Chesapeake brand as a unique brand
and to provide sufficient resources to fulfill the Company’s obligations under
the current franchise agreements.  The
Company also determined it that would not offer any new franchise agreements
related to the Chesapeake brand.  As a
result of this change in operational philosophy, the Company performed an interim
impairment analysis of the Chesapeake brand.  The interim impairment analysis did not
indicate that any impairment existed.  The
discounted cash flow analysis used assumptions regarding future profits and operating
cash flow stream (4 years), expected run-off rates, terminal values (based on a
multiple of cash flows consistent with similar third party transactions) and
other factors.  Based
upon the remaining term of the existing franchise agreements and the related
franchise revenues from the brand, it was determined that a four year life was
appropriate for the Chesapeake trademarks and that the trademarks should be
treated as an amortizing asset.  The
Company is currently in the process of identifying

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alternatives for
this brand which could include the sale of the brand to either the franchisees
or an independent third party.  Until a
determination has been made with respect to the ultimate strategy for the
Chesapeake brand, the Company will continue to review the carrying value of the
asset in relation to the franchise fees, and other factors, to determine if
there are any events or circumstances that would require an impairment analysis
under SFAS No. 144. There were no such triggering events between June 2004
and December 28, 2004. Cons