Risks Specific to Grit Grocery
1. Government Regulations: Grit Grocery is currently permitted by the City of Houston’s Mobile Food Unit Division. As such, future regulation changes could affect the communities in which we are allowed to serve. The same is true for the packaging and handling of products. Food Truck permitting is City/County specific, so as the business expands and begin to serve other major cities, the permitting requirements will change.
2. Health of the Economy: The strength of the grocery industry depends heavily on per capita disposable income. Therefore, if the economy weakens, customers will be more willing to forgo the benefit of higher priced healthy/fresh food options.
3. Weather: Changes in weather affect most retail business, but especially the mobile food industry. An unforeseeable weather phenomenon (flooding, freezing, hurricanes, etc.) will negatively impact sales.
4. Security: A street/open air sales model removes real estate costs but also increases the chances of theft/vandalism. Our trucks will often only be operated by 1 or 2 people and the open air aspect will make it easier to access our products and register. Therefore, keeping both our employees and products safe & secure will be more challenging than in a conventional brick and mortar setting.
5. Food Safety: Most Grit goods contain zero preservatives, which equates to a highly perishable product line (1-5 days). Highly perishable goods, if handled improperly, can lead to a variety of health risks. The care with which our products move through the supply chain will play a critical role in minimizing and mitigating risk to both consumer and purveyor.
6. Supplier Performance: Product quality and consistency is critical to success. Most of our producers/suppliers will be small, regional/fragmented producers that have limited staff and resources. This type of operation often brings with it quality control challenges that we will have to shoulder in order to maintain quality and consistency.
7. Data Protection: Every transaction will bring with it data and customer information that is both valuable and highly sensitive. It is imperative that we maintain the highest standard of data security and protection in order to safeguard both our customers and our brand’s reputation.
8. The Company may never receive a future equity financing or elect to convert the Securities upon such future financing. In addition, the Company may never undergo a liquidity event such as a sale of the Company or an IPO. If neither the conversion of the Securities nor a liquidity event occurs, the Purchasers could be left holding the Securities in perpetuity. The Securities have numerous transfer restrictions and will likely be highly illiquid, with no secondary market on which to sell them. The Securities are not equity interests, have no ownership rights, have no rights to the Company’s assets or profits and have no voting rights or ability to direct the Company or its actions.