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April 1, 2017 Staff

Should You Invest in the Stock of a Food Truck?

Want to invest in a piece of a growing food truck franchise? The Grilled Cheese Truck is now seeking investors for their mobile grilled cheese concept that is extremely popular in Southern California. The Grilled Cheese Truck, founded in by Dave Danhi in 2009 has been featured across major media outlets from the Cooking Channel to Fox News and built a hungry following of over 100,000 across Twitter and Facebook along the way.

According to a press release from the company, The Grilled Cheese Truck wants to use their investment capital to expand the business nationally and internationally with new food trucks, kiosks, pop-ups, and even retail locations. This expansion would be happen through a combination company owned locations and the franchise marketing model. A preference would be given to veterans to enroll in the franchise opportunity.

You can learn more about this investment opportunity here: https://app.microventures.com/crowdfunding/the-grilled-cheese-truck. Investors can stake their claim for as little as $100 and receive a variety of perks including t-shirts and of course grilled cheese sandwiches from one of the trucks.

Taking Stock of This Investment

One distinction that we want to make is that you can’t buy a piece of stock through this company in a traditional sense at this time. When you purchase the stock of The Coca-Cola Company (NYSE: KO), you can quickly convert that piece of stock into cash on the open market. This is not the case when investing in The Grilled Cheese Truck since you are not buying a share of stock, you are investing in a convertible note.

Here is the definition of a convertible note from FundersClub.com

A convertible note is an investment vehicle often used by seed investors investing in startups who wish to delay establishing a valuation for that startup until a later round of funding or milestone. Convertible notes are structured as loans with the intention of converting to equity. The outstanding balance of the loan is automatically converted to equity at a specific milestone, often at the valuation of a later funding round. In order to compensate the angel investor for the additional risk of investing in the earlier round, convertible notes will sometimes have additional clauses, such as caps, and or discounts.

In case you didn’t already know, we here at M&R Specialty Trailers and Trucks do not have MBA’s in finance. But when you retain a convertible note as an investment there is no available “marketplace” to sell the note as there would be with a stock. As a result, there is increased risk to the investor since this is a very early-stage company. Be sure to check out the terms and conditions of this note here. As with any type of investment, you need to conduct own due diligence before making a major investment and determine if it’s the right choice for your risk profile.

Is the Food Truck Industry Growing Up?

Could this round of fundraising signal a further maturation of the food truck industry as a whole? Maybe. The Grilled Cheese Truck has certainly proven over the last the past eight years that they have both a product that consumers crave and a business that has a track record of operating profitably on a smaller scale. At the time of writing, the company has already exceeded their $50,000 fundraising goal. It will be fascinating to watch how the Grilled Cheese Truck story continues to develop and we wish the business and investors continued success in the coming months and years.

Do you think this is the beginning of a larger trend of established food truck brands expanding nationally through franchise opportunities? Do you think other food truck brands will seek to raise money from investors in 2017?

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