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                                                                    EXHIBIT 99.1

RISK FACTORS

RISKS RELATED TO OUR BUSINESS

WE HAVE A HISTORY OF LOSSES AND ANTICIPATE CONTINUED LOSSES IN THE FUTURE, WHICH
MAY HAVE A MATERIAL ADVERSE EFFECT ON OUR BUSINESS, OUR ABILITY TO IMPLEMENT OUR
BUSINESS STRATEGY AND OUR STOCK PRICE.

We incurred losses of $5.1 million during the fiscal year ended December 28,
1997, $12.5 million during the fiscal year ended December 27, 1998, $15.4
million during the fiscal year ended December 26, 1999, $6.3 million during the
fiscal year ended December 31, 2000, $6.8 million during the fiscal year ended
December 30, 2001 and $9.5 million during the 39 weeks ended September 29, 2002.
Since inception, we had accumulated net losses of $57.6 million as of September
29, 2002. These matters raise substantial doubt about our ability to continue as
a going concern. Our ability to continue as a going concern is dependant upon
numerous factors, including our ability to obtain additional financing, our
ability to increase our level of future revenues or our ability to reduce
operating expenses. Failure to achieve profitability, or maintain profitability
if achieved, may have a material adverse effect on our business, our ability to
implement our business strategy and our stock price.


There can be no assurance that we will be able to obtain additional financing,
reduce expenses or successfully complete other steps to continue as a going
concern. If we are unable to obtain sufficient funds to satisfy our cash
requirements, we may be forced to curtail operations, dispose of assets, or seek
extended payment terms from our vendors. Such events would materially and
adversely affect our financial position and results of operations.


WE HAVE DEFERRED RENT PAYMENTS ON CERTAIN OF OUR LEASES AND PAYMENTS TO CERTAIN
OF OUR SUPPLIERS. IF WE ARE UNABLE TO MEET OUR OBLIGATIONS TO THIRD PARTIES, WE
MAY BE REQUIRED TO DISCONTINUE OUR OPERATIONS.

Due to limitations on capital, we have deferred rent payments on certain of our
leases. We have also deferred payments to certain of our suppliers. If our
landlords or our suppliers require payments in excess of our available capital,
we may be required to close cafes, discontinue use of suppliers, limit our
product offerings or cease operations altogether. Any such action by our
landlords or suppliers may also cause an event of default under the terms of our
debt financings or our other contractual relationships, or adversely affect our
relationships with other third parties, all of which would adversely affect our
operations.

IF WE ARE UNABLE TO COMPLETE OUR ANNOUNCED FINANCINGS IN THE IMMEDIATE FUTURE,
ON TERMS FAVORABLE TO US, WE MAY BE REQUIRED TO DISCONTINUE OUR OPERATIONS.

We have announced that Flying Food Group or its affiliates (FFG) have purchased
and may continue to purchase demand notes to fund our immediate capital needs
and that we are seeking additional financing of up to a total of $5 to $6
million. The demand notes purchased to date have not been sufficient to meet our
immediate capital needs. FFG has no contractual commitment to purchase
additional demand notes and may require payment on the demand notes at any time.
In addition, we may be unable to obtain additional financing on terms favorable
to us, or at all. If we are unable to secure sufficient additional financing in
the immediate future, through demand notes or otherwise, if FFG requires payment
on the demand notes, or if other creditors require payments in excess of our
available capital, we may be unable to make required payments and we may be
required to cease operations.

IF WE ARE UNABLE TO COMPLETE OUR ANNOUNCED CENTRAL KITCHEN CLOSURES AND
OUTSOURCE OUR CENTRAL KITCHEN FUNCTIONS ON TERMS FAVORABLE TO US, WE MAY BE
UNABLE TO OBTAIN ADDITIONAL FINANCING AND OUR BUSINESS MAY BE HARMED.

We have announced that we intend to enter into a management services agreement
with FFG pursuant to which we will close our central kitchens and outsource to
FFG the production and assembly of substantially all of the food products
previously made in our central kitchens. The timing and benefits of this
transition will depend on a number of factors, many of which are outside our
control, including the negotiation of a definitive agreement addressing such
issues as menu, suppliers, price, production techniques, quality, safety, labor
and distribution, closing of the central kitchens, including the transfer or
sale of equipment, termination or transfer of staff and termination or sublease
of the space, and transfer of the central kitchen functions to FFG, including
hiring, training, production and assembly and coordination of functions. If we
are unable to negotiate a definitive agreement on terms favorable to us, we may
be unable to realize anticipated cost savings or to obtain additional financing
from FFG or other investors. If we are unable to complete a smooth and efficient
transition to outsourcing our kitchen functions, once an agreement has been
signed, our retail operations, our financial results and our business may be
harmed.

IF WE OUTSOURCE OUR CENTRAL KITCHEN FUNCTIONS, WE WILL BE SUBSTANTIALLY
DEPENDENT UPON FLYING FOOD GROUP FOR THE SUPPLY, QUALITY, SAFETY AND COST OF OUR
FOOD PRODUCTS.

If we complete the transition from central kitchens to outsourcing of food
production, we are substantially dependent on FFG for the production and
assembly of substantially all of our food products currently being produced by
our central kitchens,


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including our salads and sandwiches. Any failure or delay by FFG to manufacture
and assemble our food products, even for a short period of time, would impair
our ability to supply our cafes and could harm our business. We will have
limited control over FFG, and we cannot assure you that we will be able to
maintain satisfactory relationships with FFG on acceptable commercial terms. Nor
can we assure you that FFG will continue to provide food products that meet our
quality standards. Our agreement with FFG may permit FFG to terminate our
relationship on short notice. If this relationship were to terminate
unexpectedly, we may have difficulty obtaining manufacturing and assembling our
food products, or obtaining adequate quantities of products, at the same quality
at competitive prices in a timely fashion, which could limit our ability to
adequately supply our cafes and could adversely affect our operating results. If
we were unable to find another third party to product our food products on
acceptable terms, we might be required to reestablish central kitchens or to
discontinue our operations.

ANY DEFAULT IN THE REPAYMENT OF THE CONVERTIBLE NOTE HELD BY LAURUS MASTER FUND,
LTD. COULD HAVE A MATERIAL AND ADVERSE AFFECT ON OUR BUSINESS, PROSPECTS,
RESULTS OF OPERATIONS OR FINANCIAL CONDITION.

Unpaid principal and accrued and unpaid interest on our convertible note is
payable in 16 equal installments on the first business day of each calendar
month, beginning on September 1, 2002. Interest only payments were payable prior
to that date, monthly beginning July 18, 2002. Although the convertible note
provides us with the option of making such payments by issuing shares, we are
not permitted to make such payments in shares and are required to make such
payments in cash if any of the following events occurs: (i) there fails to exist
an effective resale registration statement with respect to the shares; (ii) such
conversion of the note would result in the issuance pursuant to the note and
associated warrants of more than 1,163,614 shares of common stock, or 19.9% of
the number of shares of common stock outstanding on June 18, 2002, unless the
issuance of the shares is approved by our shareholders; or (iii) there occurs
any event of default. The events of default under the convertible note are
similar to those customary for convertible debt securities, including breaches
of material terms, failure to pay amounts owed, delisting of our common stock
from the Nasdaq Stock Market (unless our common stock is subsequently listed on
the Nasdaq SmallCap Market, the OTC Bulletin Board or a national securities
exchange), or failure to comply with the reporting, filing or other obligations
of listing on such market. Assuming the note was converted on June 18, 2002 by
the holder at the conversion price of $1.20, 1,041,667 shares representing 17.8%
of the shares of common stock outstanding on June 18, 2002 would be issued. If
we default on our obligations under the convertible note, if we fail to have a
resale registration statement declared and maintained as effective with respect
to the shares, or if the convertible note becomes exercisable for more than
1,163,614 shares, due to changes in our stock price, anti-dilution adjustments
or otherwise, we may be required to immediately repay the outstanding principal
amount of the convertible note and any accrued and unpaid interest. We do not
currently have cash or cash equivalents or available debt or equity financing
sufficient to repay such amounts if such repayment is required. Accordingly, we
anticipate that additional financing would be required to repay such amounts. We
cannot guarantee that such financing would be available on terms favorable to
us, or at all. If we could not arrange for such financing on favorable terms,
our business and financial results would be materially adversely affected. In
the event of any sale or liquidation of our assets to repay such debt, the note
holder, as a secured party, would have priority over other creditors and over
our shareholders with respect to such assets and the proceeds of such assets.

WE MAY BE UNSUCCESSFUL IN DEVELOPING NEW PRODUCT LINES OR NEW DISTRIBUTION
CHANNELS FOR OUR PRODUCTS, WHICH MAY HARM OUR BUSINESS.

We frequently review and evaluate new product lines and new distribution
channels for our products. We may, however, be unable to successfully implement
any new product lines or distribution channels after having dedicated
considerable management time and financial resources to them. We are currently
testing the sale of our food products through Starbuck's and are testing the
sale of frozen panini sandwiches through Target. In the past, we distributed our
products through Safeway, Ralph's and Dominick's grocery stores. We also
developed a line of dinner foods for home meal replacement that was tested
through one of our Seattle cafes. These attempts were unsuccessful and have been
discontinued. Due to our decision to move our food preparation to FFG, we are
reevaluating our grocery business and will be withdrawing from our test through
Albertson's of fresh food with an extended shelf life. Inability to successfully
develop new product lines or new distribution channels in the future could slow
our growth and divert management's attention from other areas of our business.

OUR GROWTH STRATEGY REQUIRES US TO OPEN A SIGNIFICANT NUMBER OF NEW CAFES IN OUR
EXISTING MARKETS. IF WE ARE NOT ABLE TO ACHIEVE THIS PLANNED EXPANSION, OUR
BUSINESS MAY SUFFER AND WE MAY BE UNABLE TO ACHIEVE OR SUSTAIN PROFITABILITY.

The success of our growth strategy will depend in large part on our ability to
open new cafes and to operate our cafes profitably. We do not currently plan to
open additional cafes in 2002. In 2001 and 2002, we postponed certain cafe
openings due to lower than expected office occupancy rates and poor market
conditions in Seattle, San Francisco and Los Angeles. We cannot assure you that
we will be able to achieve our current expansion goals, that we will operate
profitably, or, if we do achieve profitability, that we will be able to sustain
or increase profitability on a quarterly or annual basis. Any inability to
achieve our expansion goals may adversely affect our financial results or stock
price.


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The success of our planned expansion will depend upon numerous other factors,
many of which are beyond our control, including our ability to:

        -       hire, train and retain qualified operating personnel;

        -       identify and obtain suitable cafe sites at favorable lease
                terms;

        -       timely develop new cafes, including our ability to obtain
                available construction materials and labor;

        -       manage construction and development costs of new cafes;

        -       develop sufficient sales volumes through our cafes and other
                distribution channels to support our central kitchens;

        -       secure required governmental approvals and permits, and comply
                with ongoing and changing regulatory requirements; and compete
                successfully in our markets.

In the past, we have closed cafes because they did not generate sufficient
revenues and we cannot assure you that additional cafes will not be closed. For
the past five quarters ended September 29, 2002, June 30, 2002, March 31, 2002,
December 30, 2001 and September 30, 2001, our same-store sales have decreased
compared to the quarterly periods for the prior year. If our same-store sales
continue to decline or fail to sufficiently improve, we may be required to close
additional cafes. The closing of a significant number of cafes or the failure to
increase same-store sales could have an adverse impact on our reputation,
operations and financial results.

WE MAY NOT BE SUCCESSFUL IN IMPLEMENTING OUR BUSINESS STRATEGY, WHICH WOULD
IMPEDE OUR GROWTH AND OPERATING RESULTS.

Our business strategy is to focus our retail expansion on cafes in amenity
locations (i.e., office buildings where the competition is limited or where we
are the only food supplier), maintain our current cafe locations, and expand our
box lunch and catering distribution capabilities to serve locations outside the
core metropolitan areas in which we operate. Our ability to implement this
business strategy depends on our ability to:

        -       identify and lease amenity locations suitable for new cafes;

        -       increase our brand recognition in our existing markets; and

        -       manage growth in administrative overhead and distribution costs
                likely to result from the planned expansion of our retail and
                non-retail distribution channels.

Any inability to implement our business strategy would have a material adverse
impact on our operating results.

Any inability to manage our growth effectively could adversely affect our
operating results.

Failure to manage our growth effectively could harm our business. We have grown
significantly since our inception and intend to grow substantially in the
future. We have increased the number of our cafes from two cafes as of December
31, 1996 to 46 cafes currently and, subject to available funding, we anticipate
opening new cafes in the future. Our existing cafe management systems, financial
and management controls and information systems may not be adequate to support
our planned expansion. Our ability to manage our growth effectively will require
us to continue to expend funds to improve these systems, procedures and
controls, which we expect will increase our operating expenses and capital
requirements. In addition, we must effectively expand, train and manage our work
force. We cannot assure you that we will be able to respond on a timely basis to
all of the changing demands that our planned expansion will impose on management
and on our existing systems, procedures and controls. In addition, we cannot
assure you that we will be able to continue to improve our information systems
and financial controls or to manage other factors necessary for us to achieve
our growth strategy. For any of these reasons, we could lose opportunities or
overextend our resources, which could adversely affect our operating results.

IF WE ARE UNABLE TO CONTINUE LEASING OUR RETAIL LOCATIONS OR OBTAIN ACCEPTABLE
LEASES FOR NEW CAFES, OUR BUSINESS MAY SUFFER.

All of our 46 cafe locations are on leased premises. If we are unable to renew
our leases on acceptable terms, or if we are subject to substantial rent
increases, our business could suffer. Because we compete with other retailers
for cafe sites and



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because some landlords may grant exclusive rights to locations to our
competitors, we may not be able to obtain new leases or renew existing leases on
acceptable terms. Any inability to renew or obtain leases could increase our
costs and adversely affect our operating results and brand-building strategy.

OUR RESTAURANT EXPANSION STRATEGY FOCUSES PRIMARILY ON FURTHER PENETRATION OF
EXISTING MARKETS. THIS STRATEGY COULD CAUSE SALES IN SOME OF OUR EXISTING CAFES
TO DECLINE.

In accordance with our expansion strategy, we intend to open new cafes primarily
in our existing markets. Many of our cafes are situated in concentrated downtown
areas. As a result, the presence of additional cafes in existing markets may
result in diminished sales performance and customer counts for cafes near the
area in which a new cafe opens, due to sales cannibalization.

TENANT TURNOVER AND VACANCIES IN OFFICE BUILDINGS WHERE OUR CAFES ARE LOCATED
COULD CAUSE OUR CAFE SALES TO DECLINE.

Our business could suffer as a result of tenant turnover and vacancies. Many of
our cafes are located in office buildings, and office workers are our target
customers. Vacancies, tenant turnover or tenants with few office workers,
especially in San Francisco and Seattle, have negatively impacted the operations
of our cafes located in office buildings during the last five quarters due to
the reduction in the number of potential customers in the building, and could
continue to have a negative impact on our operations. The risk related to
vacancies and tenant turnover is greater in office buildings with larger
tenants, where the loss of a single tenant may have a greater impact on that
cafe's sales.

IF ANY OF OUR CENTRAL KITCHENS WERE TO CLOSE FOR ANY REASON, WE WILL BE UNABLE
TO SUPPLY OUR CAFES IN THAT GEOGRAPHIC MARKET AND OUR BUSINESS WILL SUFFER.

Our central kitchens produce or distribute substantially all of our food
products for the cafes and wholesale accounts in their geographic regions, as
well as all of the box lunches and catered platters in each region. If any of
our central kitchens were to close for any reason, such as fire, natural
disaster or failure to comply with government regulations, we would be unable to
provide our food products in the areas served by the affected central kitchen.
Our four existing central kitchens are geographically dispersed and none could
supply another market if a central kitchen were to close. Any closure of a
central kitchen, even for a short period of time, would have a material adverse
effect on our operating results. If we outsource our food production to FFG, we
will be subject to these same risks with respect to any closures of FFG's
central kitchens in our four geographic markets. We may have no control over any
such closures.

THE LOSS OF ONE OF OUR MAJOR WHOLESALE CUSTOMERS COULD NEGATIVELY IMPACT OUR
RESULTS.

For the fiscal year ended December 30, 2001, approximately 29.0% of our revenue
resulted from branded sales, which consists of box lunch, catering and vending,
and wholesale and grocery sales. Our wholesale and grocery sales are made to a
relatively small number of companies, including, for example, Quality Food
Centers, Inc., a regional grocery store chain, and Tully's Coffee Corporation, a
specialty coffee retailer. In 2001, Quality Food Centers accounted for 9% of our
total revenue. Until Kozmo.com, Inc., an Internet-based consumer delivery
service, ceased operations in April 2001, it was also a wholesale customer which
accounted for 1.8% of our total sales in 2000 and approximately 1.0% of our
total sales in the 13-week period ended April 1, 2001. We cannot assure you that
the remainder of our major wholesale and grocery customers will continue to
maintain accounts or that they will successfully maintain or expand their
product offerings. Furthermore, we cannot assure you that our major wholesale
customers will not exit our existing markets. The loss of any of our other major
wholesale customers could harm our business.

WE ARE SUBSTANTIALLY DEPENDENT ON THIRD-PARTY SUPPLIERS AND DISTRIBUTORS AND THE
LOSS OF ANY ONE OF THEM COULD HARM OUR OPERATING RESULTS.

We are substantially dependent on a small number of suppliers and distributors
for our products, including suppliers of meat, breads and soups, and Sysco
Distribution Services, which during June 2002 procured from our suppliers and
delivered to us approximately 32% of our ingredients and packaging products. As
of December 30, 2001, Pacific Coast Fruit Company provided approximately 6.6% of
our total cost of food and packaging, while Stockpot, Inc. provided
approximately 5.7%. Any failure or delay by any of these suppliers or
distributors to deliver products to our central kitchens, even for a short
period of time, would impair our ability to supply our cafes and could harm our
business. We have limited control over these third parties, and we cannot assure
you that we will be able to maintain satisfactory relationships with any of them
on acceptable commercial terms. Nor can we assure you that they will continue to
provide food products that meet our quality standards. Our relationships with
our suppliers are generally governed by short-term contracts. If any of these
relationships were to terminate unexpectedly, we may have difficulty obtaining
adequate quantities of products of the same quality at competitive prices in a
timely fashion,



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which could limit our product offerings or our ability to adequately supply our
cafes and could adversely affect our operating results.

IF WE FAIL TO FURTHER DEVELOP AND MAINTAIN OUR BRAND, OUR BUSINESS COULD SUFFER.

We believe that maintaining and developing our brand is critical to our success
and that the importance of brand recognition may increase as a result of
competitors offering products similar to ours. Subject to available funding, we
intend to increase our marketing expenditures to create and maintain brand
loyalty and increase awareness of our brand. If our brand-building strategy is
unsuccessful, these expenses may never be recovered, and we may be unable to
increase or maintain our revenues.

Our success in promoting and enhancing the BRIAZZ brand will also depend on our
ability to provide customers with high-quality products and customer service. We
cannot assure you that consumers will perceive our products as being of high
quality. If they do not, the value of our brand may be diminished and,
consequently, our ability to implement our business strategy may be adversely
affected.

IF OUR CUSTOMERS DO NOT PERCEIVE PRE-PACKAGED SANDWICHES AND SALADS AS FRESH AND
DESIRABLE, OR IF THEY WOULD PREFER MADE-TO-ORDER FOOD ITEMS, OUR OPERATING
RESULTS WILL SUFFER.

Our business strategy focuses on pre-packaged food items. All of our salads and
most of our sandwiches are prepared and assembled in our central kitchens and
sold as pre-packaged items. Unlike delicatessens, our cafes generally do not add
or omit specific ingredients to or from food items at the customer's request. If
customers prefer custom prepared items over pre-packaged items, or if they do
not perceive pre-packaged sandwiches and salads as fresh and desirable, we may
be unsuccessful in attracting and retaining customers, causing our operating
results to suffer.

OUR BUSINESS COULD BE HARMED BY LITIGATION OR PUBLICITY CONCERNING FOOD QUALITY,
HEALTH AND OTHER ISSUES, WHICH MAY CAUSE CUSTOMERS TO AVOID OUR PRODUCTS AND
RESULT IN LIABILITIES.

Our business could be harmed by litigation or complaints from customers or
government authorities relating to food quality, illness, injury or other health
concerns or operating issues. Because we prepare most of our food products for
each geographic market in a central kitchen, health concerns surrounding our
food products, if raised, may adversely affect sales in all of our cafes in that
market. Adverse publicity about such allegations may negatively affect our
business, regardless of whether the allegations are true, by discouraging
customers from buying our products. Because we emphasize the freshness and
quality of our products, adverse publicity relating to food quality or similar
concerns may affect us more than it would food service businesses that compete
primarily on other factors. Such adverse publicity could damage our reputation
and divert the attention of our management from other business concerns. We
could also incur significant liabilities if a lawsuit or claim resulted in an
adverse decision or in a settlement payment, and incur substantial litigation
costs regardless of the outcome of such litigation. If we outsource our food
production to FFG, we may be similarly affected by any litigation, complaints or
publicity relating to FFG.

OUR QUARTERLY OPERATING RESULTS MAY FLUCTUATE AND COULD FALL BELOW EXPECTATIONS
OF SECURITIES ANALYSTS AND INVESTORS, RESULTING IN A DECLINE IN OUR STOCK PRICE.

Our quarterly and yearly operating results have varied in the past, and we
believe that our operating results will continue to vary in the future. For this
reason, you should not rely on our operating results as indications of future
performance. In future periods, our operating results may fall below the
expectations of securities analysts and investors, causing the trading price of
our common stock to fall. In addition, most of our expenses, such as employee
compensation and lease payments for facilities and equipment, are relatively
fixed. Our expense levels are based, in part, on our expectations regarding
future sales. As a result, any shortfall in sales relative to our expectations
may cause significant decreases in our operating results from quarter to
quarter, cause us to fail to meet the expectations of securities analysts and
investors and result in a decline in our stock price.

OUR CAFES ARE CURRENTLY LOCATED IN FOUR GEOGRAPHIC MARKETS. AS A RESULT, WE ARE
HIGHLY VULNERABLE TO NEGATIVE OCCURRENCES IN THOSE MARKETS.

We currently operate our cafes in Seattle, San Francisco, Chicago and Los
Angeles. As a result, we are susceptible to adverse trends and economic
conditions in these markets. Additionally, given our geographic concentration,
negative publicity regarding any of our cafes, or other regional occurrences
such as local strikes, earthquakes or other natural disasters, in these markets,
may have a material adverse affect on our business and operations.

OUR FOOD PREPARATION AND PRESENTATION METHODS ARE NOT PROPRIETARY, AND THEREFORE
COMPETITORS MAY BE ABLE TO COPY THEM, WHICH MAY HARM OUR BUSINESS.



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We consider our food preparation and presentation methods, including our food
product packaging, box lunch packaging and design of the interior of our cafes,
essential to the appeal of our products and brand. Although we consider our
packaging and store design to be essential to our brand identity, we have not
applied to register all trademarks or trade dress in connection with these
features, and therefore cannot rely on the legal protections provided by
trademark registration. Because we do not hold any patents for our preparation
methods, it may be difficult for us to prevent competitors from copying our
methods. If our competitors copy our preparation and presentation methods, the
value of our brand may be diminished and our market share may decrease. In
addition, competitors may be able to develop food preparation and presentation
methods that are more appealing to consumers than our methods, which may also
harm our business.

WE DEPEND ON THE EXPERTISE OF KEY PERSONNEL. IF ANY OF THESE INDIVIDUALS WERE TO
LEAVE, OUR BUSINESS MAY SUFFER.

We are dependent to a large degree on the services of Victor D. Alhadeff, our
Chairman of the Board and Chief Executive Officer, and C. William Vivian, our
President and Chief Operating Officer and a director. Our operations may suffer
if we were to lose the services of either of these individuals, either of whom
could leave BRIAZZ at any time. In addition, competition for qualified
management in our industry is intense. Many of the companies with which we
compete for experienced management personnel have greater financial and other
resources than we do.

ONE OF OUR CUSTOMERS ACCOUNTS FOR A SIGNIFICANT PORTION OF OUR ACCOUNTS
RECEIVABLE BALANCE. THE FAILURE OF THIS CUSTOMER TO PAY ITS ACCOUNT MAY HARM OUR
OPERATING RESULTS.

One of our customers, QFC, accounted for an aggregate of approximately 42.4% of
our accounts receivable balance as of December 30, 2001. We anticipate that we
will continue to extend credit to QFC and other customers. The failure of any
one of these customers to pay its account, now or in the future, may harm our
operating results.

RISKS RELATING TO OUR INDUSTRY

OUR OPERATIONS ARE SUSCEPTIBLE TO CHANGES IN FOOD AND SUPPLY COSTS, WHICH COULD
ADVERSELY AFFECT OUR MARGINS.

Our profitability depends, in part, on our ability to anticipate and react to
changes in food and supply costs. Our purchasing staff negotiates prices for all
of our ingredients and supplies based upon current market prices. Various
factors beyond our control, including, for example, governmental regulations,
rising energy costs and adverse weather conditions, may cause our food and
supply costs to increase. We cannot assure you that we will be able to
anticipate and react to changing food and supply costs by adjusting our
purchasing practices. Any failure to do so may adversely affect our operating
results. If we outsource our food production to FFG, we may be reliant upon FFG
to react to and mitigate these risks, over which we may have limited control.

IF WE FACE INCREASED LABOR COSTS OR LABOR SHORTAGES, OUR GROWTH AND OPERATING
RESULTS MAY BE ADVERSELY AFFECTED.

Labor is a primary component in the cost of operating our business. As of
December 30, 2001, we employed 100 salaried and 350 hourly employees. We expend
significant resources in recruiting and training our managers and employees.
Employee turnover for fiscal 2001 was approximately 137% for hourly employees
and 39% for salaried employees. If we face increased labor costs because of
increases in competition for employees, the federal minimum wage or employee
benefits costs (including costs associated with health insurance coverage), or
unionization of our employees, our operating expenses will likely increase and
our growth may be adversely affected. Additionally, any increases in employee
turnover rates are likely to lead to additional recruiting and training costs.


Our success depends upon our ability to attract, motivate and retain a
sufficient number of qualified employees, including cafe managers and kitchen
staff, to keep pace with our growth strategy. Qualified persons to fill these
positions are in short supply in the markets in which we operate. Any inability
to recruit and retain sufficient numbers of employees may delay or prevent the
anticipated openings of new cafes or central kitchens.

COMPETITION IN OUR MARKETS MAY RESULT IN PRICE REDUCTIONS, REDUCED MARGINS OR
THE INABILITY TO ACHIEVE MARKET ACCEPTANCE FOR OUR PRODUCTS.

The market for lunch and breakfast foods in the geographic markets where we
operate is intensely competitive and constantly changing. We may be unable to
compete successfully against our current and future competitors, which may
result in pricing reductions, reduced margins and the inability to achieve
market acceptance for our products.

Many businesses provide services similar to ours. Our competitors include
sandwich shops, company cafeterias, delicatessens, pushcart vendors, fast food
chains and catering companies. Pret a Manger has successfully executed a concept
similar to ours in Great Britain and has opened 15 stores in New York City. In
addition, during 2001 Pret a Manger announced that it had



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received a significant equity investment from McDonald's Corporation. Pret a
Manger may expand its operations to markets in which we operate or expect to
enter and it may serve as a model for other competitors to enter into markets in
which we operate or expect to enter. Many of our competitors have significantly
more capital, research and development, manufacturing, distribution, marketing,
human and other resources than we do. As a result, they may be able to adapt
more quickly to market trends, devote greater resources to the promotion or sale
of their products, receive greater support and better pricing terms from
independent distributors, initiate or withstand substantial price competition,
or take advantage of acquisition or other opportunities more readily than we
can.

WE MAY BE SUBJECT TO PRODUCT LIABILITY CLAIMS, WHICH MAY ADVERSELY AFFECT OUR
OPERATIONS.

We may be held liable or incur costs to settle liability claims if any of the
food products we prepare or sell cause injury or are found unsuitable during
preparation, sale or use. Although we currently maintain product liability
insurance, we cannot assure you that this insurance is adequate, and, at any
time, it is possible that such insurance coverage may cease to be available on
commercially reasonable terms, or at all. A product liability claim could result
in liability to us greater than our total assets or insurance coverage.
Moreover, product liability claims could have an adverse impact on our business
even if we have adequate insurance coverage.

CHANGES IN CONSUMER PREFERENCES OR DISCRETIONARY CONSUMER SPENDING COULD
NEGATIVELY IMPACT OUR RESULTS.

Our success depends, in part, upon the popularity of our food products and our
ability to develop new menu items that appeal to consumers. Shifts in consumer
preferences away from our cafes or away from our cuisine, our inability to
develop new menu items that appeal to consumers, or changes in our menu that
eliminate items popular with some consumers could harm our business. Also, our
success depends to a significant extent on numerous factors affecting
discretionary consumer spending, including economic conditions, disposable
consumer income and consumer confidence. Adverse changes in these factors could
reduce customer traffic or impose practical limits on pricing, either of which
could harm our business.

INABILITY TO OBTAIN REGULATORY APPROVALS, OR TO COMPLY WITH ONGOING AND CHANGING
REGULATORY REQUIREMENTS, FOR OUR CENTRAL KITCHENS OR CAFES COULD RESTRICT OUR
BUSINESS AND OPERATIONS.

Our central kitchens and our cafes are subject to various local, state and
federal governmental regulations, standards and other requirements for food
storage, preparation facilities, food handling procedures, other good
manufacturing practices requirements and product labeling. We are also subject
to license and permit requirements relating to health and safety, building and
land use and environmental protection. If we encounter difficulties in obtaining
any necessary licenses or permits or complying with these ongoing and changing
regulatory requirements:

        -       the opening of new cafes or central kitchens could be delayed;

        -       existing cafes or central kitchens could be closed temporarily
                or permanently; or

        -       our product offerings could be limited.

The occurrence of any of these problems could harm our operating results.

RISKS RELATING TO OUR SECURITIES

OUR DIRECTORS, EXECUTIVE OFFICERS AND SIGNIFICANT SHAREHOLDERS HOLD A
SUBSTANTIAL PORTION OF OUR STOCK, WHICH MAY LEAD TO CONFLICTS WITH OTHER
SHAREHOLDERS OVER CORPORATE GOVERNANCE.

Our directors, executive officers and current holders of 5% or more of our
outstanding common stock, including the holder of our convertible note, hold a
substantial portion of our stock. These shareholders, acting together, and
Victor D. Alhadeff, acting alone, will be able to significantly influence all
matters requiring shareholder approval, including the election of directors and
significant corporate transactions, such as mergers or other business
combinations. This control may delay, deter or prevent a third party from
acquiring or merging with us, which in turn could reduce the market price of our
common stock.

CONVERSION OF OUR OUTSTANDING DEBT SECURITIES COULD SUBSTANTIALLY DILUTE YOUR
INVESTMENT BECAUSE THE CONVERSION PRICES OF THOSE SECURITIES AND/OR THE NUMBER
OF SHARES OF COMMON STOCK ISSUABLE UPON CONVERSION OF THOSE SECURITIES ARE
SUBJECT TO ADJUSTMENT.

We have issued and plan to issue in the future various securities that are
convertible or exercisable at prices that are subject to adjustment due to a
variety of factors, including fluctuations in the market price of our common
stock and the issuance of



                                       7
<PAGE>

securities at an exercise or conversion price less than the then-current
exercise or conversion price of those securities. As of November 8, 2002, the
closing price of a share of our common stock on the Nasdaq National Market was
$0.87. The number of shares of common stock that these adjustable securities
ultimately may be converted into or exercised for could prove to be greater than
this amount if the market price of our common stock declines. You could,
therefore, experience substantial dilution of your investment as a result of the
conversion or exercise of our outstanding derivative securities.

The applicable conversion price of the $1.25 million note issued to Laurus
Master Fund, Ltd. is variable and does not have a lower-limit; therefore the
dilutive effect to our existing security holders is theoretically limitless.
Conversely, because the variable conversion price of this note has an upper
limit, an increase in the trading price of a share of our common stock will
result in a limited benefit to existing security holders with respect to the
conversion of this note. The following table sets forth the number of shares
issuable upon conversion of the principal portion of the note based upon the
indicated hypothetical trading prices, based on the initial conversion price of
$1.20 per share and assuming that the note is converted at our election in
accordance with the regular payment schedule:

<TABLE>
<CAPTION>
                     HYPOTHETICAL
                     AVERAGE OF 5
                       LOWEST
  HYPOTHETICAL      CLOSING PRICES
AVERAGE VWAP FOR         FOR
LAST 11 TRADING     LAST 30 TRADING     CONVERSION          NUMBER OF SHARES     PERCENTAGE OF OUR
    DAYS(1)            DAYS(2)          PRICE(3)               ISSUABLE          COMMON STOCK(4)
    -------            -------          --------               --------          ---------------
<S>                 <C>                 <C>                 <C>                  <C>
     $2.00           $    1.80          $   1.20                1,041,667               15.1%
                     $    1.60          $   1.20                1,041,667               15.1%
     $1.50           $    1.30          $   1.20                1,041,667               15.1%
                     $    1.10          $   1.20                1,041,667               15.1%
     $1.00           $    0.80          $   0.68                1,838,236               23.9%
                     $    0.60          $   0.51                2,450,981               29.5%
     $0.50           $    0.40          $   0.34                3,676,471               38.6%
                     $    0.20          $   0.17                7,352,942               55.7%
</TABLE>

(1)     Hypothetical average daily volume weighted average (VWAP) of the common
        stock as reported by Bloomberg, L.P. on the Nasdaq National Market for
        the 11 trading days preceding a repayment date.

(2)     Hypothetical average of the five lowest closing prices during the 30
        trading days immediately preceding the conversion date.

(3)     The initial conversion price is $1.20 per share. However, if the average
        VWAP of the common stock as reported by Bloomberg, L.P. on the principal
        trading market for our common stock for the 11 trading days preceding a
        repayment date is less than 125% of the conversion price, and we have
        elected to pay the monthly repayment amount in shares of our common
        stock, then the holder is permitted to convert the repayment amount into
        our common stock at a conversion price of 85% of the average of the five
        lowest closing prices during the 30 trading days immediately preceding
        the conversion date.

(4)     Amounts are based on 5,847,310 shares of our common stock outstanding as
        of June 18, 2002, plus the corresponding number of shares issuable. The
        holder has contractually agreed to certain restrictions on the number of
        shares of common stock that may be issued upon conversion of the note.

In addition to the adjustments described in footnote (3) to the foregoing table,
the initial conversion price of $1.20 per share is subject to downward
adjustments:

        -       on a "fully weighted average" basis, to adjust for the dilutive
                effect of any additional issuances of our securities prior to
                the conversion of the note at prices lower than the conversion
                price then in effect (subject to customary exclusions); and

        -       in the event any event of default has occurred and is continuing
                under the note, in which case the conversion price shall be the
                lower of $1.20 or 70% of the average of the three lowest closing
                prices for the common stock as repost on the principal trading
                exchange of our common stock for the prior thirty trading days.

The foregoing adjustments to the conversion price of the note are cumulative.

As a result of conversions of the principal or interest portion of our
convertible note and related sales of our common stock by the holder, the market
price of our common stock could be depressed, thereby resulting in a significant
increase in the number of shares issuable upon conversion of the principal and
interest portions of the note. You could, therefore, experience



                                       8
<PAGE>

substantial dilution of your investment as a result of the conversion of the
principal or interest portions of our convertible debentures.

IF OUR SECURITY HOLDERS ENGAGE IN SHORT SALES OF OUR COMMON STOCK, INCLUDING
SALES OF SHARES TO BE ISSUED UPON CONVERSION OF DEBT SECURITIES, THE PRICE OF
OUR COMMON STOCK MAY DECLINE.

Selling short is a technique used by a shareholder to take advantage of an
anticipated decline in the price of a security. A significant number of short
sales or a large volume of other sales within a relatively short period of time
can create downward pressure on the market price of a security. The decrease in
market price would allow holders of our debt securities that have conversion
prices based upon a discount on the market price of our common stock to convert
their debt securities into or for an increased number of shares of our common
stock. Further sales of common stock issued upon conversion of our debt
securities could cause even greater declines in the price of our common stock
due to the number of additional shares available in the market, which could
encourage short sales that could further undermine the value of our common
stock. You could, therefore, experience a decline in the value of your
investment as a result of short sales of our common stock.

OUR CURRENT FINANCING ARRANGEMENTS COULD PREVENT OUR COMMON STOCK FROM BEING
LISTED ON NASDAQ OR OTHER PRINCIPAL MARKETS.

Nasdaq and other principal markets require that, to be eligible for inclusion in
the stock market, a company's common stock have a specified minimum bid price
per share. Convertible debt financings, especially those with variable
conversion prices with low or no low-price limits, characteristically exert
downward pressure on the market for a company's common stock. This pressure, if
applied against the market for our common stock, may cause our common stock from
to be delisted on Nasdaq or other principal markets due to low stock price.

THE AGGREGATE VALUE OF OUR PUBLIC FLOAT, OR THE SHARES OF OUR COMMON STOCK HELD
BY NON-INSIDERS, AND THE MINIMUM BID PRICE OF OUR COMMON STOCK HAS RECENTLY NOT
BEEN IN COMPLIANCE WITH NASDAQ'S CRITERIA FOR CONTINUED LISTING ON THE NASDAQ
NATIONAL MARKET, AND WE MAY BE TRANSFERRED TO THE NASDAQ SMALLCAP MARKET OR
DELISTED IF WE ARE UNABLE TO COMPLY.

Our common stock is quoted on the Nasdaq National Market. There are a number of
continuing requirements that must be met in order for our common stock to remain
eligible for quotation on the Nasdaq National Market or the Nasdaq SmallCap
Market. The failure to meet the maintenance criteria in the future could result
in the delisting of our common stock from Nasdaq. If our common stock were to be
delisted, trading, if any, in the common stock may then continue to be conducted
on the OTC Bulletin Board. As a result, an investor may find it more difficult
to sell our common stock or to obtain accurate quotations as to the market value
of our common stock. On August 6, 2002, we were notified by Nasdaq that we were
out of compliance with the Nasdaq National Market rule that requires a Nasdaq
National Market listed company maintain a $5.0 million minimum aggregate value
for its shares held in public float. Nasdaq informed us that, if we were unable
to regain compliance with the rule for a minimum of 10 consecutive trading days
prior to November 5, 2002, unless we had applied and were accepted for listing
on the Nasdaq Small Cap Market, we would be provided with written notification
that our shares would be delisted. On November 6, 2002, we were notified by
Nasdaq that we had not regained compliance with the rule and that our shares
would be delisted at the opening of business on November 14, 2002. We have
requested a hearing before a Nasdaq Listing Qualifications Panel to review
Nasdaq's determination. We will continue to trade on the Nasdaq National Market
pending the outcome of these proceedings. There can be no assurance that we will
be able to regain compliance with Nasdaq's continued listing requirements, that
the panel will grant our request for continued listing on the National Market.
If we are unable to maintain our National Market position, we expect to apply
for quotation on the Nasdaq SmallCap Market. We do not currently meet the
SmallCap Market requirement that a company maintain a minimum bid price of
$1.00; however, Nasdaq will as a matter of policy permit a company that has been
delisted from the National Market to take advantage of the 180-day grace period
provided by the SmallCap Market for regaining compliance with this rule,
provided that the company meets the other requirements for continued listing on
the SmallCap Market. On August 20, 2002, Nasdaq notified us that we did not
comply with the minimum bid price requirement of $1.00. Nasdaq has informed us
that if we began quotation on the SmallCap Market, we would have until February
18, 2003 to regain compliance with the rule unless a further grace period was
available. There can be no assurance that we will be able to regain compliance
with this requirement, or that any application made by us for quotation on the
SmallCap Market will be accepted. If we are delisted from the National Market
and are not accepted for quotation on the SmallCap Market, our shares may
continue to trade on the Over-the-Counter Bulletin Board.

OUR STOCK PRICE MAY BE VOLATILE BECAUSE OF FACTORS BEYOND OUR CONTROL, AND YOU
MAY LOSE ALL OR A PART OF YOUR INVESTMENT.

The market price of our common stock may fluctuate significantly in response to
a number of factors, most of which are beyond our control, including:



                                       9
<PAGE>

        -       changes in securities analysts' recommendations or estimates of
                our financial performance;

        -       changes in market valuations of similar companies; and

        -       announcements by us or our competitors of significant contracts,
                new products, acquisitions, commercial relationships, joint
                ventures or capital commitments.

In the past, companies that have experienced volatility in the market price of
their stock have been subject to securities class action litigation. A
securities class action lawsuit against us, regardless of its merit, could
result in substantial costs and divert the attention of our management from
other business concerns, which in turn could have a materially adverse impact on
our financial results.

OUR ARTICLES OF INCORPORATION, BYLAWS AND THE WASHINGTON BUSINESS CORPORATION
ACT CONTAIN ANTI-TAKEOVER PROVISIONS WHICH COULD DISCOURAGE OR PREVENT A
TAKEOVER, EVEN IF AN ACQUISITION WOULD BE BENEFICIAL TO OUR SHAREHOLDERS.

Provisions of our amended and restated articles of incorporation and bylaws
could make it more difficult for a third party to acquire us, even if doing so
would be beneficial to our shareholders. These provisions include:

        -       authorizing the issuance of "blank check" preferred stock that
                could be issued by our board of directors, without shareholder
                approval, to increase the number of outstanding shares or change
                the balance of voting control and thwart a takeover attempt;

        -       prohibiting cumulative voting in the election of directors,
                which would otherwise allow less than a majority of shareholders
                to elect directors;

        -       limiting the ability of shareholders to call special meetings of
                shareholders; and

        -       prohibiting shareholder action by non-unanimous written consent
                and requiring all shareholder actions to be taken at a meeting
                of our shareholders.

In addition, Chapter 23B.19 of the Washington Business Corporation Act and the
terms of our stock option plan may discourage, delay or prevent a change in
control which you may favor.




                                       10