UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                  SCHEDULE 13D

                               (Amendment No. 2)*


                   Bassett Furniture Industries, Incorporated
             -------------------------------------------------------
                                (Name of Issuer)


                          Common Stock, $5.00 par value
             -------------------------------------------------------
                         (Title of Class of Securities)


                                    070203104
             -------------------------------------------------------
                                 (CUSIP Number)


                                    COPY TO:
                                                    Jeffrey R. Katz, Esq.
   Costa Brava Partnership III L.P.                 Ropes & Gray LLP
   420 Boylston Street                              One International Place
   Boston, MA 02116                                 Boston, MA 02110
   (617) 595-4400                                   (617) 951-7000

                  (Name, Address and Telephone Number of Person
                Authorized to Receive Notices and Communications)


                                October 10, 2008
             -------------------------------------------------------
             (Date of Event Which Requires Filing of This Statement)


If the filing person has previously filed a statement on Schedule 13G to report
the acquisition which is the subject of this Schedule 13D, and is filing this
schedule because of Rule 13d-1(e), 13d-1(f) or 13d-1(g), check the following
box: [ ]

Note: Schedules filed in paper format shall include a signed original and five
copies of the schedule, including all exhibits. See ss.240.13d-7 for other
parties to whom copies are to be sent.

* The remainder of this cover page shall be filled out for a reporting person's
initial filing on this form with respect to the subject class of securities, and
for any subsequent amendment containing information which would alter
disclosures provided in a prior cover page.

The information required on the remainder of this cover page shall not be deemed
to be "filed" for the purpose of Section 18 of the Securities Exchange Act of
1934 ("Act") or otherwise subject to the liabilities of that section of the Act
but shall be subject to all other provisions of the Act (however, see the
Notes).

                                Page 1 of 6 Pages


                                  SCHEDULE 13D

------------------------                                   ---------------------
CUSIP No. 070203104                                          Page 2 of 6 Pages
------------------------                                   ---------------------

--------------------------------------------------------------------------------
1.   NAME OF REPORTING PERSON:    Costa Brava Partnership III L.P.
     S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON: 04-3387028
--------------------------------------------------------------------------------
2.   CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*
                                                                         (a) [ ]
                                                                         (b) [ ]
--------------------------------------------------------------------------------
3.   SEC USE ONLY
--------------------------------------------------------------------------------
4.   SOURCE OF FUNDS*

         WC
--------------------------------------------------------------------------------
5.   CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS
     2(d) OR 2(e) [ ]
--------------------------------------------------------------------------------
6.   CITIZENSHIP OR PLACE OF ORGANIZATION

         A Delaware limited partnership
--------------------------------------------------------------------------------
                             7.    SOLE VOTING POWER
       NUMBER OF                         216,673
        SHARES               ---------------------------------------------------
      BENEFICIALLY           8.    SHARED VOTING POWER
        OWNED BY                         -0-
         EACH                ---------------------------------------------------
       REPORTING             9.    SOLE DISPOSITIVE POWER
        PERSON                           216,673
         WITH                ---------------------------------------------------
                             10.   SHARED DISPOSITIVE POWER
                                         -0-
--------------------------------------------------------------------------------
11.  AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON

         216,673
--------------------------------------------------------------------------------
12.  CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (9) EXCLUDES CERTAIN SHARES* [ ]
--------------------------------------------------------------------------------
13.  PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (9)

         1.88%(1)
--------------------------------------------------------------------------------
14.  TYPE OF REPORTING PERSON*

         PN
--------------------------------------------------------------------------------

                      *SEE INSTRUCTIONS BEFORE FILLING OUT!

---------------------
(1)  The percentage ownership of the Reporting Persons in the Issuer's Common
     Stock, $5.00 par value is based upon 11,521,282 issued and outstanding
     shares as of August 30, 2008, as reported by the Issuer in its filing on
     Form 10-Q for the fiscal quarter ended August 30, 2008.

                                Page 2 of 6 Pages


                                  SCHEDULE 13D

------------------------                                   ---------------------
CUSIP No. 070203104                                          Page 3 of 6 Pages
------------------------                                   ---------------------

--------------------------------------------------------------------------------
1.   NAME OF REPORTING PERSON:    Roark, Rearden & Hamot, LLC
     S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON: 10-0000708
--------------------------------------------------------------------------------
2.   CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*
                                                                         (a) [ ]
                                                                         (b) [ ]
--------------------------------------------------------------------------------
3.   SEC USE ONLY
--------------------------------------------------------------------------------
4.   SOURCE OF FUNDS*

         WC
--------------------------------------------------------------------------------
5.   CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS
     2(d) OR 2(e) [ ]
--------------------------------------------------------------------------------
6.   CITIZENSHIP OR PLACE OF ORGANIZATION

         A Delaware limited liability company
--------------------------------------------------------------------------------
                             7.    SOLE VOTING POWER
       NUMBER OF                        216,673
        SHARES               ---------------------------------------------------
     BENEFICIALLY            8.    SHARED VOTING POWER
       OWNED BY                          -0-
         EACH                ---------------------------------------------------
       REPORTING             9.    SOLE DISPOSITIVE POWER
        PERSON                           216,673
         WITH                ---------------------------------------------------
                             10.   SHARED DISPOSITIVE POWER
                                         -0-
--------------------------------------------------------------------------------
11.  AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON

         216,673
--------------------------------------------------------------------------------
12.  CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (9) EXCLUDES CERTAIN SHARES* [ ]
--------------------------------------------------------------------------------
13.  PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (9)

         1.88%(1)
--------------------------------------------------------------------------------
14.  TYPE OF REPORTING PERSON*

         OO - Other
--------------------------------------------------------------------------------

                      *SEE INSTRUCTIONS BEFORE FILLING OUT!

---------------------
(1)  The percentage ownership of the Reporting Persons in the Issuer's Common
     Stock, $5.00 par value is based upon 11,521,282 issued and outstanding
     shares as of August 30, 2008, as reported by the Issuer in its filing on
     Form 10-Q for the fiscal quarter ended August 30, 2008.

                               Page 3 of 6 Pages


                                  SCHEDULE 13D

------------------------                                   ---------------------
CUSIP No. 070203104                                          Page 4 of 6 Pages
------------------------                                   ---------------------

--------------------------------------------------------------------------------
1.   NAME OF REPORTING PERSON:    Seth W. Hamot

--------------------------------------------------------------------------------
2.   CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*
                                                                         (a) [ ]
                                                                         (b) [ ]
--------------------------------------------------------------------------------
3.   SEC USE ONLY
--------------------------------------------------------------------------------
4.   SOURCE OF FUNDS*

         WC
--------------------------------------------------------------------------------
5.   CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEMS
     2(d) OR 2(e) [ ]
--------------------------------------------------------------------------------
6.   CITIZENSHIP OR PLACE OF ORGANIZATION

         A United States citizen
--------------------------------------------------------------------------------
                             7.    SOLE VOTING POWER
       NUMBER OF                        216,673
        SHARES               ---------------------------------------------------
     BENEFICIALLY            8.    SHARED VOTING POWER
       OWNED BY                          -0-
         EACH                ---------------------------------------------------
       REPORTING             9.    SOLE DISPOSITIVE POWER
        PERSON                           216,673
         WITH                ---------------------------------------------------
                             10.   SHARED DISPOSITIVE POWER
                                         -0-
--------------------------------------------------------------------------------
11.  AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON

         216,673
--------------------------------------------------------------------------------
12.  CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (9) EXCLUDES CERTAIN SHARES* [ ]
--------------------------------------------------------------------------------
13.  PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (9)

         1.88%(1)
--------------------------------------------------------------------------------
14.  TYPE OF REPORTING PERSON*

         IN, HC
--------------------------------------------------------------------------------

                      *SEE INSTRUCTIONS BEFORE FILLING OUT!

---------------------
(1)  The percentage ownership of the Reporting Persons in the Issuer's Common
     Stock, $5.00 par value is based upon 11,521,282 issued and outstanding
     shares as of August 30, 2008, as reported by the Issuer in its filing on
     Form 10-Q for the fiscal quarter ended August 30, 2008.

                               Page 4 of 6 Pages


                         AMENDMENT NO. 2 TO SCHEDULE 13D
                         -------------------------------

         This amendment ("Amendment No. 2") amends the Schedule 13D filed on
January 28, 2008 by Costa Brava Partnership III L.P. ("Costa Brava"), Roark,
Rearden and Hamot, LLC ("RRH"), and Seth W. Hamot, with the United States
Securities and Exchange Commission with respect to the shares of common stock,
$5.00 par value (the "Common Stock"), of Bassett Furniture Industries, Inc., a
Virginia corporation (the "Issuer"), as amended by Amendment No. 1 to Schedule
13D filed on April 10, 2008. Each of Costa Brava, RRH, and Seth W. Hamot is
referred to herein individually as a "Filer" and collectively as the "Filers."

Item 5.  Interest in Securities of the Issuer.
         ------------------------------------

         (a), (b) The Filers are the beneficial owners of 216,673 shares of
Common Stock (approximately 1.88% of the shares of Common Stock outstanding as
reported in the Issuer's filing on Form 10-Q on October 9, 2008).

         (c)      In the last 60 days, the Filers have purchased the shares of
Common Stock of the Issuer set forth on Exhibit C hereto. The transaction date,
number of shares bought, price per share and type of transaction for each
purchase during that period are set forth on Exhibit C hereto.

         (e)      The Filers ceased to be the beneficial owners of more than 5%
of the Common Stock on May 6, 2008.

Item 7.  Material to be Filed as Exhibits.
         --------------------------------

Exhibit A - Agreement Regarding the Joint Filing of Schedule 13D.

Exhibit B - Information concerning the Filers' transactions in the Common Stock
            of the Issuer in the last 60 days.


                                Page 5 of 6 Pages


                                    Signature
                                    ---------


         After reasonable inquiry and to the best of its knowledge and belief,
the undersigned certifies that the information set forth in this statement is
true, complete and correct.

DATED: October 17, 2008

                                       COSTA BRAVA PARTNERSHIP III L.P.

                                       By: Roark, Rearden & Hamot, LLC, its
                                           General Partner

                                       By: /s/ Seth W. Hamot
                                           -------------------------------------
                                           Name:  Seth W. Hamot
                                           Title: President


                                       SETH W. HAMOT

                                       By: /s/ Seth W. Hamot
                                           -------------------------------------
                                           Name: Seth W. Hamot


                                       ROARK, REARDEN & HAMOT, LLC

                                       By: /s/ Seth W. Hamot
                                           -------------------------------------
                                           Name:  Seth W. Hamot
                                           Title: President


Attention: Intentional misstatements or omissions of fact constitute Federal
criminal violations (See 18 U.S.C. 1001)


                                Page 6 of 6 Pages


                                  EXHIBIT INDEX
                                  -------------

Exhibit     Description
-------     -----------

A           Agreement Regarding the Joint Filing of Schedule 13D.

B           Information concerning the Filers' transactions in the Common Stock
            of the Issuer in the last 60 days.




                                                                       EXHIBIT A

                               AGREEMENT REGARDING
                        THE JOINT FILING OF SCHEDULE 13D

The undersigned hereby agree as follows:

(i)      Each of them is individually eligible to use the Schedule 13D to which
this Exhibit is attached, and such Schedule 13D is filed on behalf of each of
them; and

(ii)     Each of them is responsible for the timely filing of such Schedule 13D
and any amendments thereto, and for the completeness and accuracy of the
information concerning such person contained therein; but none of them is
responsible for the completeness or accuracy of the information concerning the
other persons making the filing, unless such person knows or has reason to
believe that such information is inaccurate.

Dated: October 17, 2008

                                       COSTA BRAVA PARTNERSHIP III L.P.

                                       By: Roark, Rearden & Hamot, LLC, its
                                           General Partner

                                       By: /s/ Seth W. Hamot
                                           -------------------------------------
                                           Name:  Seth W. Hamot
                                           Title: President


                                       SETH W. HAMOT

                                       By: /s/ Seth W. Hamot
                                           -------------------------------------
                                           Name: Seth W. Hamot


                                       ROARK, REARDEN & HAMOT, LLC

                                       By: /s/ Seth W. Hamot
                                           -------------------------------------
                                           Name: Seth W. Hamot
                                           Title: President



                                                                       EXHIBIT B

                    FILERS' TRANSACTIONS IN THE LAST 60 DAYS

---------------------------------------------------------------------------
   Date of      Shares of Common Stock  Price Per Share ($)     Type of
  Transaction         Bought (Sold)                            Transaction
--------------- ------------------------ ------------------- --------------
  10/10/2008             28,000                  6.60          Open Market
--------------- ------------------------ ------------------- --------------
  10/13/2008             91,700                  6.61          Open Market
--------------- ------------------------ ------------------- --------------
  10/14/2008             56,200                  6.64          Open Market
--------------- ------------------------ ------------------- --------------
  10/15/2008             35,000                  6.53          Open Market
--------------- ------------------------ ------------------- --------------
  10/16/2008             22,900                  6.29          Open Market
--------------- ------------------------ ------------------- --------------
  10/17/2008             54,230                  5.96          Open Market
--------------- ------------------------ ------------------- --------------