Filed Pursuant to Rule 424(b)(1)
Registration No. 333-276589

PROSPECTUS

33,660,589 Class A common shares

BBB Foods Inc.

(incorporated in the British Virgin Islands)

This is an initial public offering of the Class A common shares, no par value, of BBB Foods Inc. We are offering 28,050,491 of the Class A common shares being sold in this offering. The selling shareholders identified in this prospectus are offering an additional 5,610,098 Class A common shares. We will not receive any proceeds from the sale of Class A common shares by the selling shareholders.

Prior to this offering, there has been no public market for our Class A common shares. The initial public offering price for the Class A common shares in this offering is US$17.50 per Class A common share. Our Class A common shares have been approved for listing on the New York Stock Exchange under the symbol “TBBB.”

Upon consummation of this offering, we will have three classes of common shares: Class A common shares, Class B common shares and Class C common shares. The rights of the holders of each class of our common shares will be identical, except with respect to voting, conversion, preemptive rights and transfer restrictions applicable to the Class B common shares and conversion and transfer restrictions applicable to our Class C common shares. Each Class A common share will be entitled to one vote. Each Class B common share will be entitled to 15 votes and will be convertible into one Class A common share automatically upon transfer, subject to certain exceptions. Each Class C common share will be entitled to one vote and will be convertible into one Class A common share in certain circumstances, including automatically upon certain transfers and the expiry of the transfer restrictions that will apply to the Class C common shares. Class B common shares and Class C common shares will not be listed on any stock exchange and will not be publicly traded. Holders of Class A common shares, Class B common shares and Class C common shares will vote together as a single class on all matters unless otherwise required by law and subject to certain exceptions set forth in our memorandum and articles of association.

Following this offering, our issued and outstanding Class B common shares, will represent 42.2% of the combined voting power of our outstanding common shares and 4.6% of our total equity ownership, assuming no exercise of the underwriters’ option to purchase additional Class A common shares from the selling shareholders. For further information, see “Description of Share Capital.” Bolton Partners Ltd., a vehicle affiliated with our founder, Chairman and Chief Executive Officer, will, directly or indirectly, own all of our Class B common shares and a portion of our Class C common shares. As a result, Bolton Partners Ltd. will beneficially own approximately 46.4% of the combined voting power of our outstanding common shares following this offering, assuming no exercise of the underwriters’ option to purchase additional Class A common shares from the selling shareholders, and will therefore have significant influence over matters requiring shareholder approval.

We are a “foreign private issuer” under the U.S. federal securities laws and, as a result, have elected to comply with certain reduced public company disclosure and reporting requirements. See “Risk Factors—Risks Relating to this Offering and Our Class A Common Shares—Our status as a foreign private issuer exempts us from certain of the corporate governance standards of the New York Stock Exchange, limiting the protections afforded to investors” and “Risk Factors—Risks Relating to this Offering and Our Class A Common Shares—As a foreign private issuer, we will have different disclosure and other requirements from U.S. domestic registrants. We may take advantage of exemptions from certain corporate governance regulations of the New York Stock Exchange, and this may result in less protection for the holders of our Class A common shares.”

Investing in our Class  A common shares involves a high degree of risk. See “Risk Factors” beginning on page 28 of this prospectus.

	Per Class A Common Share		Total
Initial public offering price	US$	17.5000	US$	589,060,307.50
Underwriting discount and commissions(1)	US$	1.1375	US$	38,288,919.99
Proceeds to us (before expenses)(2)	US$	16.3625	US$	458,976,158.99
Proceeds to the selling shareholders (before expenses)(2) (3)	US$	16.3625	US$	91,795,228.53

(1) See “Underwriting” for a description of all compensation payable to the underwriters.

(2) See “Expenses of the Offering” for a description of all expenses (other than underwriting discounts and commissions) payable in connection with this offering.

(3) Assumes no exercise of the underwriters’ option to purchase additional Class A common shares from the selling shareholders.

The selling shareholders have granted the underwriters the right to purchase up to an aggregate of 5,049,088 additional Class A common shares from us and the selling shareholders within 30 days from the date of this prospectus, at the initial public offering price, less underwriting discounts and commissions. We will not receive any proceeds from the sale of Class A common shares by the selling shareholders.

One or more funds and/or accounts managed by Capital International Investors (collectively, the “Cornerstone Investors”) have, severally and not jointly, indicated an interest in purchasing up to an aggregate of US$118 million in Class A common shares in this offering at the initial public offering price. The Class A common shares to be purchased by the Cornerstone Investors will not be subject to a lock-up agreement with the underwriters. Because these indications of interest are not binding agreements or commitments to purchase, the Cornerstone Investors may determine to purchase more, less or no shares in this offering or the underwriters may determine to sell more, less or no shares to the Cornerstone Investors. The underwriters will receive the same discount on any of our Class A common shares purchased by the Cornerstone Investors as they will from any other Class A common shares sold to the public in this offering.

Neither the U.S. Securities and Exchange Commission (the “SEC”), nor any state securities commission has approved or disapproved of these securities or determined if this prospectus is truthful or complete. Any representation to the contrary is a criminal offense.

We expect to deliver the Class A common shares to purchasers against payment in New York, New York, on or about February 13, 2024, through the book-entry facilities of The Depository Trust Company.

Global Coordinators

J.P. Morgan Morgan Stanley

Joint Bookrunners

BofA Securities Scotiabank UBS Investment Bank

The date of this prospectus is February 8, 2024.

B BB Tiendas 3B

We are the pioneers and leaders of hard discount grocery retail in Mexico. Our name, 3B means: "Bueno, Bonito y Barato" or "good, nice and affordable". It summarizes our mission of offering irresistible value to budget savy consumers.

Simple yet disruptive business model that drives customer savings and improve our value proposition.

We

Private label products are core to our strategy. High-quality and low prices enhance our customer's value for money and allow us to maintain everyday low prices.

Our more than 2,250 stores are strategically located close to our customers' homes to provide a more efficient and cost-effective shopping experience.

TABLE OF CONTENTS

	Page
PRESENTATION OF FINANCIAL AND OTHER INFORMATION		iii
REFLECTIONS FROM OUR CEO		vi
PROSPECTUS SUMMARY		1
RISK FACTORS		28
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS		55
USE OF PROCEEDS		57
DIVIDENDS AND DIVIDEND POLICY		58
CAPITALIZATION		59
DILUTION		61
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS		63
BUSINESS AND INDUSTRY		82
MANAGEMENT		113
PRINCIPAL AND SELLING SHAREHOLDERS		123
CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS		127
DESCRIPTION OF SHARE CAPITAL		129
CLASS A COMMON SHARES ELIGIBLE FOR FUTURE SALE		146
CERTAIN TAX CONSIDERATIONS		149
UNDERWRITING		154
EXPENSES OF THE OFFERING		168
LEGAL MATTERS		169
EXPERTS		170
ENFORCEABILITY OF CIVIL LIABILITIES		171
WHERE YOU CAN FIND MORE INFORMATION		173
INDEX TO FINANCIAL STATEMENTS		F-1

None of we, the selling shareholders, the underwriters, nor any of our or their respective agents have authorized anyone to give any information or make any representation about this offering that is different from, or in addition to that contained in the prospectus, the related registration statement, any free writing prospectus prepared by or on behalf of us or we may refer to you. None of we, the selling shareholders, the underwriters, nor any of our or their respective agents will have or take responsibility and can provide no assurance as to the reliability of any other information that others may give you.

This prospectus is being used in connection with this offering of the Class A common shares in the United States and, to the extent described below, elsewhere. This offering is being made in the United States and elsewhere based solely on the information contained in this prospectus. You should assume that the information appearing in this prospectus is accurate only as of the date on the front cover of this prospectus, regardless of the time of delivery of this prospectus or of any sale of the Class A common shares. Our business, financial condition, results of operations, cash flows and prospects may have changed since the date on the front cover of this prospectus.

None of we, the selling shareholders, the underwriters, nor any of our or their respective agents are offering or seeking offers to purchase the Class A common shares in any jurisdiction where such offers or sales are not permitted. We have not undertaken any efforts to qualify this offering for offers and sales to the public in any jurisdiction outside the United States, and we do not expect to make offers and sales to the public in jurisdictions located outside the United States (including Mexico). However, we may make offers and sales outside the United States in circumstances that do not constitute a public offer or distribution under applicable laws and regulations.

This offering is being made in the United States and elsewhere based solely on the information contained in this prospectus.

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Notice to Investors Outside the United States. None of we, the selling shareholders, the underwriters, nor any of our or their respective agents have done anything that would permit this offering or possession or distribution of this prospectus or any free writing prospectus in connection with this offering in any jurisdiction, other than the United States, where action for that purpose is required. Persons outside the United States who come into possession of this prospectus or any such free writing prospectus must inform themselves about, and observe any restrictions relating to, this offering of our Class A common shares and the distribution of this prospectus and any such free writing prospectus outside the United States.

Notice to Mexican Investors. The Class A common shares have not been and will not be registered with the Mexican National Securities Registry (Registro Nacional de Valores, or the “RNV”) maintained by the Mexican National Banking and Securities Commission (Comisión Nacional Bancaria y de Valores, or the “CNBV”), and therefore, the Class A common shares may not be offered or sold publicly in Mexico or otherwise be subject to brokerage activities in Mexico, the Class A common shares may be offered and sold in Mexico, on a private placement basis, solely to investors that qualify as institutional or qualified investors pursuant to the private placement exemption set forth in Article 8 of the Mexican Securities Market Law (Ley del Mercado de Valores) and regulations thereunder. The information contained in this prospectus is solely our responsibility and has not been reviewed or authorized by the CNBV and may not be publicly distributed in Mexico. In making an investment decision, all investors, including any Mexican investor, who may acquire Class A common shares from time to time, must rely on their own examination of the Issuer and the terms of this offering, including the merits and risks involved.

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PRESENTATION OF FINANCIAL AND OTHER INFORMATION

Certain Definitions

Unless the context otherwise requires, references in this prospectus to “Tiendas 3B,” the “Company,” “we,” “our,” “us” and similar terms are to BBB Foods Inc., together with its consolidated subsidiaries; references to the “Issuer” are to BBB Foods Inc., the company whose Class A common shares are being offered by this prospectus, and not to any of its subsidiaries; references to our “principal shareholder” are to Bolton Partners Ltd., a vehicle affiliated with Mr. K. Anthony Hatoum, our founder, Chairman and Chief Executive Officer; and references to the “selling shareholders” are to those shareholders listed as selling shareholders under “Principal and Selling Shareholders.”

The term “Companies Act” refers to the BVI Business Companies Act, 2004 (as amended) of the British Virgin Islands.

The term “sales” refers to our Revenue from sales of merchandise.

Currency Information

The term “Mexican peso” and the symbol “Ps.” refer to the legal currency of Mexico, and the term “U.S. dollar” and the symbol “US$” refer to the legal currency of the United States.

This prospectus contains translations of certain Mexican peso amounts into U.S. dollars at specified rates solely for the convenience of the reader. These translations should not be construed as representations that the Mexican peso amounts actually represent such U.S. dollar amounts or could be converted into U.S. dollars at the rate indicated as of the dates mentioned herein or at any other rate. Unless otherwise indicated, we have translated Mexican peso amounts into U.S. dollars at the rate of Ps.17.62 per US$1.00, the exchange rate to pay foreign currency denominated obligations due on September 30, 2023 published by the Mexican Central Bank in the Mexican Federal Official Gazette (Diario Oficial de la Federación, or the “Official Gazette”). In addition, we have translated the the U.S. dollar amounts outstanding on the Promissory Notes and the Convertible Notes as of September 30, 2023 into Mexican pesos at the rate of Ps.17.62 per US$1.00 (the exchange rate to pay foreign currency denominated obligations due on September 30, 2023, published by the Mexican Central Bank in the Official Gazette) and as of December 31, 2022 at the rate of Ps.19.36 per US$1.00 (the exchange rate to pay foreign currency denominated obligations due on December 31, 2022 published by the Mexican Central Bank in the Official Gazette).

Financial Statement Presentation

The Issuer, the company whose Class A common shares are being offered in this prospectus, was incorporated on July 9, 2004 in the British Virgin Islands with company number 605635.

The financial information presented herein has been derived from our audited consolidated financial statements as of December 31, 2022 and 2021 and for the years ended December 31, 2022, 2021 and 2020, together with the notes thereto, and our unaudited interim condensed consolidated financial statements as of September 30, 2023 and for the nine months ended September 30, 2023 and 2022, together with the notes thereto, prepared in accordance with International Financial Reporting Standards (“IFRS”) as issued by the International Accounting Standards Board (“IASB”), and included elsewhere in this prospectus.

The summary consolidated historical financial data should be read in conjunction with “Special Note Regarding Non-IFRS Financial Measures,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” our audited consolidated financial statements as of December 31, 2022 and 2021 and for the years ended December 31, 2022, 2021 and 2020, together with the notes thereto, and our unaudited interim condensed consolidated financial statements as of September 30, 2023 and for the nine months ended September 30, 2023 and 2022, together with the notes thereto, included elsewhere in this prospectus.

iii

Special Note Regarding Non-IFRS Financial Measures

For convenience of investors, this prospectus presents certain non-IFRS financial measures, which are not recognized under IFRS. A non-IFRS financial measure is generally defined as one that purports to measure financial performance but excludes or includes amounts that would not be so adjusted in the most comparable IFRS measure. Specifically we present:

• EBITDA

• EBITDA Margin

For a discussion on the use of these measures and a reconciliation of the most directly comparable IFRS measures, see “Summary Financial and Other Information —Non-IFRS Financial Measures and Key Operating Metrics—Non-IFRS Financial Measures.”

Non-IFRS financial measures do not have standardized meanings and may not be directly comparable to similarly-titled measures adopted by other companies. These non-IFRS financial measures are used by our management for decision-making purposes and to assess our financial and operating performance, generate future operating plans and make strategic decisions regarding the allocation of capital. The non-IFRS measures presented herein have limitations as analytical tools, and you should not consider them in isolation or as substitutes for analysis of our results of operations presented in accordance with IFRS. Additionally, our calculations of non-IFRS measures may be different from the calculations used by other companies, including our competitors, and therefore, our measures may not be comparable to those of other companies.

Rounding Adjustments

We have made rounding adjustments to certain numbers presented in this prospectus. As a result, numerical figures presented as totals may not always be the exact arithmetic results of their components. Percentage figures included in this prospectus have not, in all cases, been calculated on the basis of such rounded figures but on the basis of such amounts prior to rounding. For this reason, certain percentage amounts in this prospectus may vary from those obtained by performing the same calculations using the figures in our audited consolidated financial statements as of December 31, 2022 and 2021 and for the years ended December 31, 2022, 2021 and 2020, together with the notes thereto, and our unaudited interim condensed consolidated financial statements as of September 30, 2023 and for the nine months ended September 30, 2023 and 2022, together with the notes thereto, included elsewhere in this prospectus.

Market and Industry Data

This prospectus contains data related to economic conditions in the market in which we operate. The information contained in this prospectus concerning economic conditions is based on publicly available information from third-party sources that we believe to be reliable. Market data and certain industry forecast data used in this prospectus were derived from our management’s knowledge and our experience in the industry, internal reports and studies, where appropriate, as well as estimates, market research, publicly available information and industry publications. We obtained the information included in this prospectus relating to the industry in which we operate, as well as the estimates concerning market shares, through internal research, public information and publications on the industry prepared by official public sources, such as: the Mexican Central Bank (Banco de México), the World Bank, the National Minimum Wage Commission (Comisión Nacional de Salarios Mínimos), the Mexican Statistic and National Geography Institute (Instituto Nacional de Estadística y Geografía, or “INEGI”), the Central Intelligence Agency World Factbook, Euromonitor International Passport: Retail, 2023 edition, and NielsenIQ México Services.

Industry publications, governmental publications, and other market sources, including those referred to above, generally state that the information they include has been obtained from sources believed to be reliable, but that the accuracy and completeness of such information is not guaranteed. We have no reason to believe any of this information or these reports are inaccurate in any material respect and believe and act as if they are reliable. Neither we, the underwriters, nor their respective agents have independently verified it and they are subject to change based on various factors, including those discussed in the section entitled “Risk Factors.” Estimates of market and industry data are based on statistical models, key assumptions and limited data

iv

sampling, and actual market and industry data may differ significantly from estimated industry data. In addition, the data that we compile internally, and our estimates have not been verified by an independent source. Information derived from management’s knowledge and our experience is presented on a reasonable, good faith basis. Except as disclosed in this prospectus, none of the publications, reports or other published industry sources referred to in this prospectus were commissioned by us or prepared at our request. Except as disclosed in this prospectus, we have not sought or obtained the consent of any of these sources to include such market data in this prospectus.

Information in this prospectus mentioning “Euromonitor” as a source is from independent market research carried out by Euromonitor International Limited but should not be relied upon in making, or refraining from making, any investment decision. Euromonitor’s forecasted compounded annual growth rate of the Mexican formal grocery market presented in this prospectus is based on Euromonitor’s forecasted growth of the offline grocery retail value, which is estimated by Euromonitor with retail selling prices to consumers, excluding value added tax, in U.S. dollars at year-on-year exchange rates and at current prices for the year.

Trademarks and Trade Names

We own or have rights to trademarks, service marks and trade names that we use in connection with the operation of our business, including our corporate name, logos, and website names. Other trademarks, service marks and trade names appearing in this prospectus are the property of their respective owners. Solely for convenience, some of the trademarks, service marks and trade names referred to in this prospectus are listed without the ^® and ^™ symbols, but we will assert, to the fullest extent under applicable law, our rights to our trademarks, service marks and trade names.

v

REFLECTIONS FROM OUR CEO

Intro

In 2004, out of the many countries I evaluated, I chose Mexico to start a Hard Discount grocery business. Whatever the metric I considered important for the business to thrive, Mexico always placed in the top three. So Mexico won. Having raised the funds to get started, I moved with my family to Mexico City in September 2004. At the time, I barely spoke Spanish and only knew a handful of people.

It helped to come in fresh and not assume you knew much. I asked a lot of questions to try to understand the Mexican consumer. I went to many neighborhoods in Mexico City, stood in the street with a clipboard and stopped anyone carrying shopping bags to ask them questions about their shopping habits and decisions. Surprisingly, most people talked to me (with my assistant translating), and when I asked, many agreed to host me in their homes for in-depth interviews. These talks with potential customers were invaluable. They allowed me to refine what we would ultimately offer in our first store, which opened in March of 2005. 2,200+ stores down the road, our customers are still telling us what is important to them and we are still listening.

My passion has always been to build things. I studied civil engineering. And I found that I love building businesses. From my previous startups, I have learned that: your business idea has to have at least one strong and sustainable competitive advantage, you have to pull together the strongest team that you can afford and that believes passionately in the idea, and you have to build a strong foundation from day one, one on which you can build that large business you are dreaming of. And that is what we did, our small initial team working out of a two-room office.

Our first store opening (Prohogar, March 2005). We all look much younger. Many of the faces in this photo are still with us. Eliza Zarraga, who started as a cashier, is now running her region. Javier Real, who started as a junior accountant, now runs the accounting department.

vi

A simple and powerful business model

My introduction to the world of hard discount grocery retail was by chance. I was working in private equity at the time, and our fund invested in a hard discount grocer in Turkey called BIM. I fell in love with this business. As a model, it resonated with a lot of my core beliefs about what makes an enterprise successful:

• It is simple and shuns complexity and bureaucracy

• It is laser focused on delivering value to the customer

• It is one that believes that the best decisions are made where the action is

• It empowers its people and rewards an entrepreneurial spirit

• It is a good citizen helping build a better society

I became convinced of its potential and that it was the right business model for Mexico, a growing retail market with favorable demographics. As such, I left the world of finance and decided to build yet another company. 3B is my most challenging and exciting build yet.

Our Customers

Our customers are what make our business possible.

Talking to our customers during my regular store visits is where I get my best insights. Almost all our good ideas have been sparked by talking to our customers. They are also the first ones to tell us what needs to be improved. And we listen intently.

We strive to give our customers every day the best value for their money in everything we carry. We will do everything to earn and keep their trust. This starts with only selling products of a quality we would gladly consume in our own homes. To that end, we back-up our products with our 100% money back guarantee—no questions asked.

Our Team and Culture

Preserving our can-do and scrappy startup culture has been and will continue to be top of my mind. With over 22,000 people today, our team is large and fast-growing.

Our challenge is to keep a nimble, efficient and cohesive organization while growing rapidly. I believed from day one and more so today that to meet this challenge one needs to:

• Instill a culture that despite distance and separation becomes the bond that holds everyone together.

• Hire the best people you can. Go for talent density. Invest the time to develop and retain this talent. It is an investment that takes time to pay off but one that is critical and becomes a formidable competitive advantage. We would not be where we are today without it.

• Trust that you have the right person for the job. Give them the resources and the power to get the job done. Delegate and let them thrive.

• Build a decentralized organization and keep it as flat as possible.

• Make information available to all and keep communications open at all levels. Anyone at any level at 3B can reach out to me directly.

Our team and culture at 3B are the main driver of our success today and for the future.

vii

Our private label suppliers

We rely on our private label suppliers to produce the best possible products at the best possible price. And we expect them to improve over time. Our relationship, by nature, is a long-term one. As our demand continually increases, our suppliers benefit and also grow rapidly. As we satisfy demand, control quality and develop products, together we need to make sure that we are thinking of the next production line, the next factory, the next improvement.

Partnering with a private label supplier is a bit like getting married and raising a family. You court, pick carefully, make sure you share the same beliefs, get married, and together design, produce and get to market products that offer great value for money. Together you make sure your products are successful and gain share over time. You plan for future improvements of all types whether in sourcing, manufacturing, logistics, quality or marketing. All this with one goal: to offer the customer the best possible product for their money.

We are lucky and privileged to have found such partners. And look forward for a fruitful relationship for many years to come.

The road ahead

This public offering is a significant milestone for our team and for those who believed in us early on. I am honored and excited to share what we have built with new investors and the public markets.

The road ahead is exciting and full of promise. We have barely scratched the surface of the $124 billion-dollar Mexican grocery market. The more we grow, the more opportunities present themselves for us to do better.

Looking forward, we will keep things simple, we will focus on what we do best and we will continue to be obsessed with improving on everything we do and on offering a continuously improving product to our customers.

We want to help the Mexican consumer live better and be a catalyst for improvement in the neighborhoods in which our stores are located.

We want to help our private label suppliers be successful and become major players.

We want to enchant our clients when they visit us.

We want to help our teammates develop into better people and business people.

We can do it because we believe in what we do, have built a great team, found the right partners, developed the expertise, and are battle tested.

Thank you for considering us.

K. Anthony Hatoum

viii

PROSPECTUS SUMMARY

This summary highlights selected information contained elsewhere in this prospectus. This summary may not contain all the information that may be important or relevant to you in making your investment decision. Before you decide to invest in our Class A common shares, we urge you to read this entire prospectus carefully, including our audited consolidated financial statements as of December 31, 2022 and 2021 and for the years ended December 31, 2022, 2021 and 2020, together with the notes thereto, and our unaudited interim condensed consolidated financial statements as of September 30, 2023 and for the nine months ended September 30, 2023 and 2022, together with the notes thereto, included elsewhere in this prospectus and the information set forth under “Risk Factors,” “Business” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations.”

Overview

We are pioneers and leaders of the grocery hard discount model in Mexico and one of the fastest growing retailers in the country as measured by our sales and store growth rates. The 3B name, which references “Bueno, Bonito y Barato” – a Mexican saying which translates to “Good, Nice and Affordable”– summarizes our mission of offering irresistible value to budget savvy consumers through great quality products at bargain prices. From 2020 to 2022, our total revenue grew at a compounded annual growth rate (“CAGR”) of 34.4%, reaching Ps.32.6 billion (US$1.85 billion) for 2022, and our number of stores increased from 1,249 as of year-end 2020 to 2,288 as of year-end 2023, which represents a CAGR of 22.4%. Our total revenue for the 12-month period ended September 30, 2023 was Ps.41.2 billion (US$2.3 billion).

Our business model is simple yet disruptive: we offer a limited assortment of products that cover the daily grocery needs of our clients. We price our products to offer what is generally market-leading value for money: the lowest sustainable price in the market for a given quality. Our stores also offer convenience, since they are generally located within central neighborhoods that allow for daily visits and minimize transportation needs for our customers. Our customers visit us on average three to four times per week to fulfill one or two days of groceries.

The Tiendas 3B product range consists of approximately 800 stock keeping units (“SKUs”) of branded, private label and spot products.

• Branded products are well known national and international brand label goods that we offer at the lowest sustainable price in the market to attract customers and drive traffic. For 2022 and the nine months ended September 30, 2023, branded products represented 51.8% and 48.8% of our sales, respectively.

• Private label products are products that we have developed ourselves and which we believe are of comparable or better quality than the equivalent branded alternative offered at our stores. For 2022 and the nine months ended September 30, 2023, private label products represented 42.8% and 45.4% of our sales, respectively.

• Spot products are quality food and non-food products that we offer in addition to our regularly stocked products. These are offered in limited amounts and offer exceptional value. The selection changes every two weeks on average. For 2022 and the nine months ended September 30, 2023, our spot products represented 5.4% and 5.8% of our sales, respectively.

Our stores serve low-to-middle income households, which according to the National Survey of Household Income and Expenditure conducted by INEGI, spent US$219 billion in 2022, or 70.7% of the Mexican population’s total current monetary spend, defined by INEGI as a households’ expenditure on food, beverages

1

and tobacco, personal care, house cleaning products and over the counter healthcare products, among other categories other than rent and financial expenditures. We believe that our business model, which focuses on both value and convenience, allows us to serve our target market better than incumbent competitors and maintain real and sustainable competitive advantages.

Due to our low number of SKUs and focus on serving daily grocery needs, we have been able to achieve a high ratio of sales per SKU and a ratio of 3.0 Payable Days to Inventory Days during 2022, driving significant cash flow generation. We are also able to benefit from a virtuous cycle, where the ever-increasing scale of our purchases per SKU allows us to negotiate increasingly lower prices with our suppliers and, in turn, we are able to transfer those savings to our customers, therefore increasing customer loyalty and our sales.

The Tiendas 3B business model is highly efficient, allowing us to operate with gross margins that are lower than those of leading grocery retailers in Mexico, based on publicly available information. The strength of our model is underpinned by our limited product assortment, our decentralized organization, and our culture that values efficiency and simplicity. Efficiency translates into savings that can be passed on to our customers.

Our management is decentralized and organized into regions, each run by a regional director, and built around a distribution center that serves approximately 150 stores. Each region has sufficient functional resources to operate autonomously and efficiently. This structure, supported by nimble central headquarters, has enabled us to scale efficiently by allowing us to dynamically select new store locations in a constant pursuit of scale and expansion, while achieving positive gross and operating profit. Additionally, it enables suppliers to reach our decision makers quickly, fostering collaboration and accelerating the development of private label products.

Developing and retaining talent, as well as fostering a strong corporate culture, are key components of our business model and essential to sustaining our rapid growth rates and achieving efficiencies. We anticipate our personnel needs several years in advance and invest significant resources to ensure that we have the right talent at the right time.

We believe that the hard discount segment in Mexico has significant entry barriers for new participants, including: (i) the time and capital it takes to achieve scale and profitability given the inherent low gross margins of a hard discounter; (ii) the knowledge required to find competitive real estate and qualified personnel; (iii) the investment and know-how required to develop a meaningful private label product offering; and (iv) obtaining access to highly qualified senior management and experienced teams.

Our Business Model

Our business model is based on the following pillars:

• High rotation of products: By limiting our selection of products, we have been able to achieve a high turnover of sales per SKU, which makes us a relevant buyer of the products we sell, in turn allowing for favorable terms with suppliers. In 2022, we had 22 Inventory Days, 65 Payable Days and 0.1 Receivable Days, driving cash flow generation that supports our self-financed growth.

• Strong private label offering: We own 93 different private label brands representing over 385 SKUs, that cover an array of food and non-food products. We outsource the manufacturing of these products to over 100 carefully selected local manufacturers with tested supply reliability and quality controls. We are generally able to offer our private label products at a lower cost than that of the branded products they compete with. Further, our customer satisfaction studies and product analysis indicate that the quality of our private label products is comparable, if not better, than the competing branded products. Our enduring and long-term relationships with our suppliers have created a robust supplier ecosystem that underpins the strength of our private label product offering.

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• Value for money: By consistently delivering and improving value for money to our customers, including through our private label products, we have earned their trust, increased our wallet share and attracted new customers. As a result, we have achieved Same Store Sales growth of 21.9%, 12.3%, 18.3% during 2022, 2021 and 2020, respectively, well above Mexico’s inflation rates of 7.8%, 7.4% and 3.2% for the same periods.

• Low-cost operations and virtuous cycle of efficiency: We have built a business model that allows us to generate operating profit while operating at market-leading low gross profit margins, by limiting our SKUs, decentralizing operations, focusing on simplicity, maintaining low capital expenditures per store, having a nimble and agile decision-making process, a horizontal management structure, and promoting a strong culture of efficiency. This allows us to offer and sustain everyday low prices to our customers. Our gross profit margin for 2022 was 15.1%, compared to gross profit margins of 28.1% of La Comer, 23.4% of Walmart de México (“Walmex”), 22.9% of Chedraui and 22.1% of Soriana. For the nine months ended September 30, 2023, our gross profit margin was 15.8%.

• Rapid expansion: In 2023, we averaged a new store opening every 22 hours, which is faster than any other grocery retailer in Mexico. Our operations actively involve our regional personnel in the store opening process, with the goal of locating and securing the most attractive locations for new stores. Further, our low capital expenditure needed per new store which, combined with the attractive cash flow generation capacity of our stores, allows us to achieve attractive Payback Periods on average. In addition, our negative working capital dynamics allow us to self-fund these investments. We are systematic in our approach to opening stores, and our recent vintages are showing a faster sales ramp-up and higher profitability vis-à-vis our older vintages for the same comparable period. With an estimated white space for at least 12,000 additional Tiendas 3B stores in Mexico, we are constantly looking to increase our number of stores and expand into new regions.

The Grocery Retail Industry in Mexico

Large and growing market

The Mexican formal grocery market had approximately US$124 billion annual sales for 2022 and is projected to grow at a 7.6% compounded annual rate from 2022 to 2027, according to Euromonitor. The market is expected to reach US$179 billion in annual sales by 2027.

Fragmented market: One dominant player but otherwise highly fragmented

The grocery market in Mexico is best viewed in two channels: the Modern (or organized) channel, which is a sub-set of the formal grocery market and which we define to include discounters, hypermarkets, supermarkets, convenience stores and warehouse clubs, and the Traditional (or informal) channel, which we define to include, among others, local grocers and food, drink, and tobacco specialty stores. The Modern channel, which we calculate represented US$79 billion in annual sales for 2022 based on data from Euromonitor, can be further divided into full-price retailers and discounters (including soft discounters and hard discounters, such as Tiendas 3B). Discounters represented 30.5% of the Modern channel for the year ended December 31, 2022, according to data from Euromonitor.

Walmex is the dominant player in the Modern channel, representing 34.2% of that channel’s total sales for 2022 based on data from Euromonitor. Walmex’s most successful format is Bodega Aurrera, a discounter which represented 16.7% of sales in the Modern channel. Beyond that, the market is highly fragmented.

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The hard discount business model

Hard discount is still a nascent business model in Mexico within the Modern channel. According to NielsenIQ, hard discounters, such as Tiendas 3B and Tiendas Neto, only represented 2.3% of sales in the Mexican grocery market for 2022. Although large retail players, such as Walmex (through Bodega Aurrera Express) or FEMSA (through Tiendas BARA), have presence in discount formats, since inception, Tiendas 3B has successfully competed with those formats as well as with other established grocery players as shown by our growth track record.

Hard discount grocery retailers, like ourselves, are different from other retailers in the Modern channel. The hard discount model focuses on a limited assortment of high value for money, high rotation branded and private label products that address the consumer’s essential daily needs. A hard discounters operations seek to be highly efficient and simple, with streamlined logistics, distribution, storefront operations and standardized no-frill store layouts with flexible locations. As a result of the efficiencies in the business model, hard discounters who achieve scale tend to have low gross margins and yet can achieve high returns on invested capital.

Tiendas 3B’s addressable market

Our stores serve low-to-middle income households, which according to the National Survey of Household Income and Expenditure conducted by INEGI, spent US$219 billion in 2022, or 70.7% of the Mexican population’s total current monetary spend. According to data from INEGI, approximately 48.4% of annual average Mexican household total current monetary spend within the second to ninth income decile is destined to food (excluding fruits and vegetables), beverages and tobacco, personal care products, house cleaning products and over the counter medicines. Our product offering covers all of these categories. Further, approximately 35.1% of annual average Mexican household current monetary spend within the second to ninth income decile is destined to food (excluding fruits and vegetables) and beverage products alone, such as the ones we sell.

Notes:		Notes:
1. Considers an exchange rate of Ps$19.36 per USD 2. Each household has on average 3.43 members 3. Range considers average income by income decile	4. Excludes non-monetary expenses with an estimated value of US$84.9 Bn. Non-monetary expenses include self-consumption, payments in kind, gifts, and the estimated rent households would have had to pay if they did not own their house	1. Total current monetary spend for income deciles II to IX 2. Includes transportation & communications, education, housing, clothing, fruit and vegetables, and healthcare (excl. OTC products)

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Tiendas 3B’s whitespace opportunity

We believe that there is a large whitespace opportunity for Tiendas 3B. This opportunity will be driven by market expansion as a result of favorable demographic trends, the under-penetration of hard discount stores in the Mexican grocery market, and hard discount’s growing appeal with the Mexican consumers. Tiendas 3B’s addressable market is large and poised for continued growth.

Based on our estimates at December 31, 2022, we believe there is a potential to open at least 12,000 additional Tiendas 3B stores in Mexico at current population levels in urban areas alone. We have mapped out whitespace by identifying communities with over 10,000 inhabitants as our stores are designed to adequately serve that number of people in a trade area of 800 meters from each store. This would represent almost a six-fold increase over our 2,288 stores as of December 31, 2023.

Hard discount in Mexico has significant growth potential when compared to other countries

The hard discount retail market in Mexico appears to be underpenetrated when compared to other countries with more established hard discount retail markets.

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According to NielsenIQ, in 2022, the hard discount market in Mexico represented only 2.3% of NielsenIQ’s measurement of the Mexican grocery market. In contrast, grocery retailers which we consider hard discounters in Germany (i.e., Aldi and Lidl), in Poland (i.e., Biedronka, Aldi and Lidl), and in Turkey (i.e., BIM and A101), which are countries with succesful and mature hard-discount markets, represented 23.6%, 33.6% and 24.1%, respectively, of their corresponding grocery market’s annual sales in 2022 based on data from Euromonitor.

Source: Euromonitor, NielsenIQ, Company Information, INEGI, World Bank

Notes:

1. Considers Biedronka, Lidl and Aldi

2. Considers BIM and A101

3. Considers Aldi and Lidl

4. Information from NielsenIQ “Hard Discounters” report

Although the Mexican food retail market has other features that differentiates it from that of Germany, Poland and Turkey at the time the hard discount model was introduced in those countries, including having a highly developed and efficient food retailers, we believe that these markets exemplify how the hard discount model can prosper even as countries grow richer. Initially, similar to Mexico, German and Polish consumers were attracted to hard discount given the great value proposition. At the time hard discount was introduced in Germany (1946 following the Second World War), in Poland (1990 following the fall of the Soviet Union) and Turkey (in 1995), German real GDP per capita, adjusted for inflation to date and price differences between countries was US$7,195, Poland’s was US$8,150 and Turkey’s was US$9,963. Even as per capita income ramped up in those countries, hard discounter penetration continued to increase. Although there is no assurance that the Mexican market will develop in the same fashion, we believe Mexican consumers are increasingly attracted to the hard discount model’s value proposition.

Our Competitive Strengths

Since inception, we have successfully competed with well-established grocery retailers and our sustainable competitive advantages have allowed us to thrive. We believe that as we continue to grow, our advantages will become more pronounced:

Rapid store expansion capacity

We opened our first store in February 2005, and as of December 31, 2023, we had 2,288 stores and 14 distribution centers. As our sales have grown, the pace of our store openings has accelerated naturally, as

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illustrated in the chart below. We had 392 net new store openings during 2022 and 396 net new store openings during 2023, which translates into a new store opening every 22 hours.

We are the fastest growing retailer in Mexico in terms of sales, based on a comparison of our sales figures with Euromonitor’s analysis of sales growth for the fastest growing retail players in Mexico. As shown below, Tiendas 3B has significantly outpaced incumbent retailers, with a total revenue CAGR of 34.4% from 2020 to 2022.

Source: Based on a comparison of Tiendas 3B’s sales figures with Euromonitor’s analysis of sales growth for competitors

Notes:

1. Considers Tiendas 3B’s total revenue CAGR. CAGRs of incumbent retail players according to Euromonitor’s estimated offline grocery retail value estimated with retail selling prices to consumers, excluding value added tax, in Mexican pesos and at current prices for the year

2. Only includes Walmart Supercenter format in Mexico

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Sales growth underpinned by strong fundamentals

Our Same Store Sales growth and expansion are underpinned by strong store level fundamentals. Although growth through geographic expansion and store openings is a strong component of our expansion strategy, we believe our model is sustainable and scalable given the combined effect of growing average ticket size and a growing volume of transactions per store at our existing stores.

Notes:	Notes:
1. We calculate Average Ticket Size by dividing revenue from sales of merchandise by total number of transactions	1. Average transactions per store per month, only considering stores from vintages with five or more years of operations

High rotation of our inventory to generate significant negative working capital

By focusing on high rotation items and limiting them to one-brand one-size, curated to satisfy most grocery needs of the average Mexican family, we are able to keep low Inventory Days. In 2022, we had 22 Inventory Days.

Our supplier payment terms (65 Payable Days for 2022) and low Inventory Days (22 Inventory Days for 2022), create a favorable negative working capital cycle that has enabled us to self-fund our rapid expansion. Our working capital for 2021, 2022 and the nine months ended September 30, 2023 was Ps.(2,121,704) thousand, Ps.(3,205,200) thousand and Ps.(4,243,026) thousand, respectively. Cash flows provided by our operating activities were Ps.1,082,703 thousand, Ps.1,366,308 thousand, Ps.2,116,335 thousand and Ps.1,942,839 thousand for 2020, 2021, 2022 and the nine months ended September 30, 2023, respectively, compared to our capital expenditures of Ps.297,028 thousand, Ps.532,173 thousand, Ps.1,122,877 thousand and Ps.940,202 thousand for 2020, 2021, 2022 and the nine months ended September 30, 2023, respectively.

Notes:

1. We calculate working capital as total current assets minus total current liabilities.

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Lean operational model designed to maximize efficiency and minimize costs

Our limited assortment of products allows us to simplify and optimize operations leading to low sales expense as a percentage of total revenue, which was 10.6% for 2022 and 10.8% for the nine months ended September 30, 2023.

Every aspect of our operations has been carefully optimized for efficiency. We reduce working hours and operating costs by designing our products and packaging with efficiency in mind, choosing the right truck sizes and equipment, making judicious use of technology and efficiently distributing refrigerated goods, store orders, and managing our proprietary logistics infrastructure. For example, we reduce time and costs from stocking shelves by selling directly from the box (usually lidless) that arrives from our distribution centers. Our trucks and stores are designed to allow one driver to unload a store delivery single-handedly in 30 minutes or less and our distribution centers are strategically located to allow optimal re-stocking efficiency and route planning.

Standard supermarkets, with a larger number of SKUs are more complex and costly to run. They need higher gross margins to sustain their operations. By being able to operate at lower costs, we can achieve positive operating profit even with low gross margins, and can offer sustainable lower prices, which we believe is very hard to replicate for traditional grocery retailers.

Significant purchasing power

As our sales have grown, so has our purchasing power. We believe we can buy at very competitive prices since our sales are concentrated in a relatively lower number of SKUs. This allows us to continually lower our purchase costs, improve our payment terms and develop strong supplier relationships, which in turn enables us to transfer generated savings on to our customers. Further, we cooperate closely with our private label suppliers to help them negotiate better terms on their own supplies and raw materials, which also translates into savings for our customers.

Building and constantly reinforcing customer trust and loyalty

We have built enduring customer relationships based on trust in our pricing and quality. We believe that this trust is a cornerstone of our business, allowing us to accelerate our sales growth and eventually expand into higher ticket items and additional product categories (so long as they also deliver our characteristic value-for-money). We offer a no-questions-asked no-receipt-needed money-back return policy on all products we sell. This guarantee helps build trust and encourages our customers to try our private label products.

Decentralized and nimble organization that is close to the action

We have a decentralized and lean organizational structure built around autonomous regions each led by a regional director. As of December 31, 2023, we had 14 operating regions. Each region consists of approximately 150 stores supported by a single distribution center with functional support areas, such as human resources, real estate, logistics, IT and regional purchasing and accounting. For example, the regional directors decide which new stores to open (within company guidelines) without requiring headquarters’ approval. All regions are similarly sized and configured in terms of operations and the model is readily replicable. As each region increases the number of stores it operates beyond 150 and up to 200, a new region is formed in adjacent geographies and stores are shifted accordingly to optimize logistics.

We believe this approach has many benefits. Decisions are closer to the action and therefore nimble. There is less bureaucracy. Opening new regions is rapid, efficient, and cost effective. Benchmarking among similar regions makes managing the entire business efficient and allows us to maintain a small central office even at scale.

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We invest significantly in human resource development and our culture. We believe this is essential to maintaining sustainable profitable growth and managing a decentralized structure. We achieve these goals by: long-term planning, a belief in the concept of talent density, and investing in in-person training, which is supplemented by more than 100 training modules found in our online “Universidad 3B,” which is designed to foster a strong cultural affinity and operational excellence across the organization.

Founder-led management team with leading industry expertise

We are a founder-led company with a solid management team, the majority of which has been working together for more than 15 years, most since inception. Our management team has 130+ years of combined experience in the retail and hard discount industry, has extensive knowledge of the Mexican grocery market, and has held relevant positions within local and international players. The trajectory and continuity of our management team contributes to a strong and stable corporate culture that is both customer and employee-centric. Our management team has developed highly specialized know-how that we believe is hard to replicate and a key differentiating factor that has propelled our success.

Our Strategy

Unrelenting focus on lean operating model to support profitable growth

Our business model has proven to be sustainable and resilient through different economic cycles, which we expect to continue. We believe we still have room to continue to improve our operating margins through the scalability of our platform. We have sustainably low operating costs as a percentage of sales, driven by scale, rigorous cost discipline, the judicious use of technology, making our processes even more efficient, and better integrating with our private label suppliers. We believe our current operational structure will allow us to continue supporting our expansion efforts at marginal incremental costs.

Rapidly expanding number of stores in contiguous regions, while maintaining low investment requirements per new store

We aim to open stores in places that are convenient for our customers, most of which access our stores on foot. We follow a disciplined approach to our geographic expansion without compromising our supply and distribution capabilities. Our standardized format and requirements assure that our capital requirements for new stores remain low, an important component as we fund our rapid expansion.

As of December 31, 2023, our stores were concentrated in 15 states in the central region of Mexico, including: Mexico City, State of Mexico, Hidalgo, Puebla, Tlaxcala, Morelos, Queretaro, Guanajuato, Michoacán, Guerrero, Veracruz, Aguascalientes, Nayarit, Jalisco, and San Luis Potosí. This geographic footprint has resulted from progressive expansion as we add new distribution centers to support stores in new areas, in each case targeting critical density to support the efficiencies of our structure. Our store location map reflects our disciplined expansion approach.

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(*Mexico City Metropolitan Area has 7 DCs)

Illustrative DCs coverage areas

Developing new private label product lines

We intend to consolidate our private label leadership by continuing to develop new private label product lines that offer higher value for money than branded alternatives to our customers. We work closely with over 100 local suppliers of our private label products to develop new and innovative product lines. Our close relationship and integration allow us to adapt our offering to changing customer needs and preferences. As we increase our private label sales penetration going forward, we will drive greater value to our customers, which we expect will translate into sales growth, while also increasing control of our margins and improving our profitability.

Our frequent client interactions, extensive market studies, and ongoing testing of products, allow us to understand and anticipate customer preferences, and to meet their evolving needs. Our team of 30 purchasers as of September 30, 2023 work hand in hand with our suppliers to continuously innovate and improve our portfolio of products.

We help our suppliers grow alongside us by providing transparency of our growth plans, paying them on time and facilitating access to our wide network of other supplier relationships. We see suppliers as strategic partners because we often find opportunities to develop brands and product presentations, aiming to increase the quality and improve the price of our products. We also help suppliers by sharing best practices we see from suppliers of other of our products (for example access to better packaging and labeling alternatives), which creates efficiencies across our business. Our annual private label supplier fair assists this exchange of ideas and solidifies our supplier ecosystem.

Increasing our sales of “Los Irrepetibles”

We intend to increase the sales contribution of “Los Irrepetibles,” our spot product offering that includes grocery and non-grocery products such as, electronics, apparel, home goods, and others. We offer a changing selection of approximately 50 spot products every two weeks on average. These products offer notably high value for money and add a treasure hunt factor to the shopping experience. We call them “Los Irrepetibles” because they are offered at prices so low that they will not be “repeated” (replenished) once we sell out.

Part of our strategy is to selectively offer higher ticket spot items that still offer tremendous value for money. We are currently conducting tests on a limited scale to assess our customers’ acceptance of these price points and product price elasticity. Going forward, we plan to expand our spot product purchasing division to improve purchasing capacity and product sourcing.

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Introducing new categories of products and services

We plan to selectively introduce new product categories to meet our customers’ needs. At any moment we are actively testing several new product categories. As a result of these efforts, we recently introduced the beauty category in our stores. Additionally, we plan to expand our assortment in certain categories, including ice creams and fresh and frozen meats. Based on our internal analysis, we believe there is sufficient demand to introduce SKUs to our offering and drive additional sales and wallet penetration.

Additionally, we believe that our increasingly ubiquitous store footprint can be leveraged to increase the services we offer to our customers at our locations. Currently we offer utility and service payments, top-ups, amongst others. We see opportunities to expand our service offering given our customers’ frequent store visits each week.

Recent Developments

Our results for the year ended December 31, 2023 are not yet available as of the date of this prospectus. We expect to finalize our consolidated financial results as of and for the year ended December 31, 2023 after this offering is completed.

Based upon the preliminary information available to us as of the date of this prospectus, we expect our consolidated financial results as of and for the year ended December 31, 2023 to be substantially consistent with the trends and performance reflected in the historical financial information included in this prospectus.

The preceding statement is based on our reasonable estimates and preliminary unaudited information available as of the date of this prospectus. Internal reviews and procedures necessary to complete our consolidated financial results as of and for the year ended December 31, 2023 are ongoing as of the date of this prospectus and they have not been audited, reviewed, examined or compiled by PricewaterhouseCoopers, S.C. Management is responsible for the preparation and presentation of such preliminary information. PricewaterhouseCoopers, S.C. expresses no opinion or any other form of assurance on such preliminary information referred to above. Accordingly, we cannot provide any assurances that our consolidated financial results as of and for the year ended December 31, 2023 will be consistent with the trends and financial and operating performance shown in the financial information included in this prospectus, or that such results (or the market perception of such results) will not adversely affect the trading price of our Class A common shares.

Summary of Risk Factors

An investment in our Class A common shares is subject to a number of risks, including risks relating to our business and industry, risks related to Mexico and risks related to this offering and our Class A common shares. Please read the information under “Risk Factors” for a more thorough description of these and other risks. Below is a summary of the principal risks we face:

• economic factors reducing our customers’ spending, impairing our ability to execute our strategies and initiatives, and increasing our costs and expenses, resulting in materially decreased sales or profitability;

• failure to achieve or sustain our strategies and initiatives, including those relating to store openings, sourcing and supplier relationships, private label product development and cost initiatives, inventory management, supply chain, store operations, expense reduction and technology;

• risks associated with our private label products, including, but not limited to, our level of success in improving their margins;

• our ability to successfully identify, lease, obtain permits for and adapt real estate spaces for stores and distribution centers;

• our ability to renew our existing leases on terms that are not detrimental to us;

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• competitive pressures and changes in the business environment and the geographic and product markets where we operate, including, but not limited to, pricing, promotional activity, expanded availability of mobile, web-based and other digital technologies, and alliances or other business combinations;

• our failure to attract, train and retain qualified employees while controlling labor costs and other labor issues;

• our loss of key personnel, including regional management, or inability to hire additional qualified personnel;

• sustainability of negative levels of working capital;

• product liability, product recall or other product safety or labeling claims;

• risks and challenges associated with sourcing merchandise from suppliers, including, but not limited to, those related to international trade;

• failure to successfully manage inventory balances;

• a significant disruption to our distribution network, the capacity of our distribution centers or the timely receipt of inventory, or delays in constructing or opening new distribution centers;

• damage or interruption to our information systems as a result of external factors, staffing shortages or challenges in maintaining or updating our existing technology or developing or implementing new technology;

• failure to maintain the security of our business, customer, employee or vendor information or to comply with privacy laws;

• the impact of changes in or noncompliance with laws and governmental regulations and requirements (including, but not limited to, those relating to environmental compliance, product and food safety or labeling, information security and privacy, labor and employment, employee wages, and those governing the sale of products, as well as tax laws, the interpretation of existing tax laws, or our failure to sustain our reporting positions, in each case negatively affecting our tax rate) and developments in or outcomes of private actions, class actions, multi-district litigation, arbitrations, derivative actions, administrative proceedings, regulatory actions or other litigation;

• incurrence of material uninsured losses, excessive insurance costs or accident costs;

• deterioration in market conditions, including market disruptions, limited liquidity and interest rate fluctuations, or changes in our credit profile;

• risks related to public health crises such as the COVID-19 outbreak, including but not limited to, the effects on our supply chain, distribution network, store and distribution center growth or customers’ spending patterns;

• natural disasters, unusual weather conditions (whether or not caused by climate change), pandemic outbreaks or other health crises, acts of violence or terrorism, and global political events;

• changes to, or withdrawals from, free trade agreements, including the United States-Mexico-Canada Agreement (the “USMCA”) to which Mexico is a party; and

• difficulties you may experience because we are a British Virgin Islands company in obtaining or enforcing judgments against us or our executive officers and directors in the United States.

Our Corporate Structure

The Issuer is a holding company incorporated in the British Virgin Islands. The Issuer has no material operations of its own and substantially all of its operations are conducted through the Issuer’s Mexican subsidiaries. Investors in the Class A common shares are purchasing equity interests in the British Virgin Islands holding company, and not in such Mexican subsidiaries. We indirectly hold 100% equity interests in our Mexican subsidiaries.

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The following chart and the information set forth in the following paragraph presents our corporate structure, including our principal shareholder and principal subsidiaries immediately after the completion of this offering, assuming no exercise of the underwriters’ option to purchase additional Class A common shares.

Bolton Partners Ltd., our principal shareholder, will beneficially own approximately 46.4% of the combined voting power of our outstanding common shares following this offering, and will therefore have significant influence over matters requiring shareholder approval. However, the foregoing does not include Class C common shares that will be held by our principal shareholder and our directors and officers in respect of both unvested and vested (but currently unexercisable) stock options or delayed-delivery awards under the Liquidity Event Bonus Plan and the Founder Liquidity Bonus, as applicable. Taking into account such Class C common shares which our principal shareholder, directors and officers will be entitled to receive at later dates, and assuming net settlement at their respective strike prices, our principal shareholder would beneficially own approximately 45.0% of the combined voting power of our outstanding common shares following this offering. See “Principal and Selling Shareholders.”

Corporate Information

We were incorporated on July 9, 2004 under the laws of the British Virgin Islands with company number 605635. Our principal executive offices are located at Río Danubio 51, Col. Cuauhtémoc, Mexico City, Mexico 06500. Our registered office is located at Commerce House, Wickhams Cay 1, P.O. Box 3140, Road Town, Tortola VG1110, British Virgin Islands. Our website is www.tiendas3b.com. The information contained in, or accessible through, our website is not incorporated into this prospectus or the registration statement of which it forms a part and does not form part of, this prospectus, and you should not consider such information in deciding whether to invest in our Class A common shares.

Conventions that Apply to this Prospectus

Except as otherwise indicated or the context requires, all information in this prospectus assumes:

• the filing and amendment and restatement of our memorandum and articles of association and the redesignation of our existing shares into Class A common shares, Class B common shares and Class C common shares, each of which will occur immediately prior to the completion of this offering, and which we refer to as the “IPO Reorganization”;

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• the initial public offering price of US$17.50 per Class A common share; and

• a 3-for-1 forward share split of our common shares that will be effected immediately prior to the completion of this offering; and

• no exercise by the underwriters of their option to purchase up to 5,049,088 additional Class A common shares from the selling shareholders in connection with this offering.

In addition, except as otherwise indicated or the context requires, this prospectus does not reflect the issuance of any common shares issuable upon exercise of options granted under our 2004 Option Plan, any common shares reserved for issuance under our Equity Incentive Plan, or any Class C common shares awarded under the Liquidity Event Bonus Plan and the Founder Liquidity Bonus. As of the date of this prospectus, and after giving effect to the IPO Reorganization:

• 43,186,224 Class C common shares (or 14,395,408 Class C common shares before giving effect to the 3-for-1 share split) are issuable upon the exercise of options granted, 25,696,224 (or 8,565,408 before giving effect to the 3-for-1 share split) of which are subject to fully vested options;

• 8,400,000 Class A common shares have been reserved for issuance under our Equity Incentive Plan adopted in connection with this offering;

• 4,211,155 Class C common shares will be awarded under the Founder Liquidity Bonus to Bolton Partners Ltd.; and

• 7,500,000 Class C common will be awarded under the Liquidity Event Bonus Plan, 6,000,000 of which will be awarded to our principal shareholder and the remainder to the direct reports of the Chief Executive Officer.

All of such Class C common shares are subject to the restrictions on transfer of Class C common shares described under “Description of Our Share Capital—Class C Common Shares” or, in the case of vested options and Class C common shares awarded under the Founder Liquidity Bonus and Liquidity Event Bonus Plan, subject to restrictions on exercise and delayed delivery, respectively, for the same time frame as such restrictions on transfer (subject to certain exceptions). For additional information, see “Management—2004 Option Plan,” “Management—Liquidity Event Bonus Plan” and “Management—Founder Liquidity Bonus.”

If the underwriters exercise their option to purchase additional Class A common shares from the selling shareholders in connection with this offering, the Class C common shares held by the selling shareholders to be sold in this offering will automatically convert into Class A common shares on a share-for-share basis. As a result, purchasers of our common shares in this offering will only receive Class A common shares, and only Class A common shares are being offered by this prospectus. Class B common shares that are not sold by the selling shareholders, will remain Class B common shares unless otherwise converted into Class A common shares. Class C common shares that are not sold by the selling shareholders, including if the underwriters do not exercise their option to purchase additional Class A common shares from the selling shareholders in connection with this offering, will remain Class C common shares unless otherwise converted into Class A common shares. See “Description of Share Capital.”

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The Offering

This summary highlights information presented in greater detail elsewhere in this prospectus. This summary is not complete and does not contain all the information you should consider before investing in our Class A common shares. You should carefully read this entire prospectus before investing in our Class A common shares including “Risk Factors,” our audited consolidated financial statements as of December 31, 2022 and 2021 and for the years ended December 31, 2022, 2021 and 2020, together with the notes thereto, and our unaudited interim condensed consolidated financial statements as of September 30, 2023 and for the nine months ended September 30, 2023 and 2022, together with the notes thereto, included elsewhere in this prospectus.

Issuer BBB Foods Inc.

Class A common shares offered by us 28,050,491 Class A common shares.

Class A common shares offered by the selling shareholders 5,610,098 Class A common shares, if the underwriters do not exercise their option to purchase additional Class A common shares from the selling shareholders, or 10,659,186 Class A common shares if the underwriters exercise in full their option to purchase additional Class A common shares from the selling shareholders. We will not receive any proceeds from the sale of any Class A common shares by the selling shareholders.

Class A common shares, Class B common shares and Class C common shares outstanding before this offering Immediately prior to this offering, after giving effect to the IPO Reorganization but without giving effect to the issuance and sale of our Class A common shares pursuant to this offering, we will have no Class A common shares, 5,200,000 Class B common shares and 78,950,261 Class C common shares outstanding.

Class A common shares outstanding after this offering 33,660,589 Class A common shares, if the underwriters do not exercise their option to purchase additional Class A common shares from the selling shareholders, or 38,709,677 Class A common shares if the underwriters exercise in full their option to purchase additional Class A common shares from the selling shareholders.

Class B common shares outstanding after this offering 5,200,000 Class B common shares.

Class C common shares outstanding after this offering 73,340,163 Class C common shares, if the underwriters do not exercise their option to purchase additional Class A common shares from the selling shareholders, or 68,291,075 Class C common shares if the underwriters exercise in full their option to purchase additional Class A common shares from the selling shareholders.

Offering price US$17.50 per Class A common share.

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Voting rights The Class A common shares will be entitled to one vote per share, whereas the Class B common shares (which are not being sold in this offering) will be entitled to 15 votes per share. The Class C common shares (which are not being sold in this offering) will be entitled to one vote per share.

Each Class B common share may be converted into one Class A common share at the option of the holder.

If, at any time, the number of outstanding Class B common shares represents less than 1.0% of the aggregate common shares of the Issuer then outstanding, then each Class B common share will convert automatically into one Class A common share.

In addition, each Class B common share will convert automatically into one Class A common share upon any transfer, except for transfers to affiliates and others as described under “Description of Share Capital—Conversion.”

Each Class C common share will be converted into one Class A common share upon any transfer, except for transfers to affiliates and others as described under “Description of Share Capital—Conversion” and shall be converted automatically upon the expiry of certain transfer restrictions applicable to the Class C common shares.

Holders of Class A common shares, Class B common shares and Class C common shares will vote together as a single class on all matters unless otherwise required by law and subject to certain exceptions set forth in our memorandum and articles of association as described under “Description of Share Capital—Voting Rights.”

Upon consummation of this offering, assuming no exercise of the underwriters’ option to purchase additional Class A common shares from the selling shareholders, (1) holders of Class A common shares will hold approximately 18.2% of the combined voting power of our outstanding common shares and approximately 30.0% of our total equity ownership; (2) holders of Class B common shares will hold approximately 42.2% of the combined voting power of our outstanding common shares and approximately 4.6% of our total equity ownership; and (3) holders of Class C common shares will hold approximately 39.6% of the combined voting power of our outstanding common shares and approximately 65.4% of our total equity ownership.

If the underwriters exercise their option to purchase additional Class A common shares from the selling shareholders in full, (1) holders of Class A common shares will hold approximately 20.9% of the combined voting power of our outstanding common shares and approximately 34.5% of our total equity ownership; (2) holders of Class B common shares will hold approximately 42.2% of the combined voting power of our outstanding common shares and

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approximately 4.6% of our total equity ownership; and (3) holders of Class C common shares will hold approximately 36.9% of the combined voting power of our outstanding common shares and approximately 60.9% of our total equity ownership.

The rights of the holders of Class A common shares, Class B common shares and Class C common shares are identical, except with respect to voting, conversion, preemptive rights (as detailed below) and transfer restrictions applicable to the Class B common shares and conversion rights and transfer restrictions applicable to the Class C common shares. Holders of Class B common shares are entitled to preemptive rights to purchase additional Class B common shares in the event that additional Class A common shares are issued, upon the same economic terms and at the same price, in order to maintain such holder’s proportional ownership interest in the Issuer. See “Description of Share Capital” for a description of the material terms of our common shares and the difference between our Class A common shares, Class B common shares and Class C common shares.

Option to purchase additional Class A common shares The selling shareholders have granted the underwriters the option to purchase up to an additional 5,049,088 Class A common shares from the selling shareholders within 30 days of the date of this prospectus, at the public offering price, less underwriting discounts and commissions, on the same terms as set forth in this prospectus.

Listing Our Class A common shares have been approved for listing on the New York Stock Exchange under the symbol “TBBB.”

Indications of Interest The Cornerstone Investors have, severally and not jointly, indicated an interest in purchasing up to an aggregate of US$118 million in Class A common shares in this offering at the initial public offering price. The Class A common shares to be purchased by the Cornerstone Investors will not be subject to a lock-up agreement with the underwriters. Because these indications of interest are not binding agreements or commitments to purchase, the Cornerstone Investors may determine to purchase more, less or no shares in this offering or the underwriters may determine to sell more, less or no shares to the Cornerstone Investors. The underwriters will receive the same discount on any of our Class A common shares purchased by the Cornerstone Investors as they will from any other Class A common shares sold to the public in this offering.

Use of proceeds We estimate that the net proceeds to us from this offering will be approximately US$453.0 million, after deducting the estimated underwriting discounts and commissions and estimated offering expenses payable by us. We intend to use the net proceeds from this offering for the repayment of indebtedness, including all of the Promissory Notes and the Convertible Notes, and for general corporate purposes. We will have broad discretion in allocating the net proceeds to us from this offering that are not used to repay the Promissory Notes and the Convertible Notes. See “Use of Proceeds.”

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We will not receive any of the proceeds from Class A common shares sold by the selling shareholders.

Share capital before and after offering As of the date of this prospectus, we are authorized to issue an unlimited number of Class A common shares, an unlimited number of Class B common shares and an unlimited number of Class C common shares.

Immediately after this offering, the Issuer will have outstanding 33,660,589 Class A common shares, 5,200,000 Class B common shares and 73,340,163 Class C common shares, assuming no exercise of the underwriters’ option to purchase additional Class A common shares from the selling shareholders.

Dividend policy The amount of any distributions will depend on many factors, such as our results of operations, financial condition, cash requirements, prospects and other factors deemed relevant by our board of directors and shareholders. We currently intend to retain all available funds and future earnings, if any, to fund the development and expansion of our business and we do not anticipate paying any cash dividends in the foreseeable future. See “Dividends and Dividend Policy.”

Lock-ups Our memorandum and articles of association provide that, for a period of 180 days after the date of this prospectus, the holders of Class B common shares and Class C common shares, subject to certain exceptions, may not directly or indirectly offer, sell, contract to sell, pledge, grant any option to purchase, make any short sale or otherwise dispose of any Class A common shares, Class B common shares or Class C common shares, or any options or warrants to purchase any such shares, or any securities convertible into, exchangeable for or that represent the right to receive such shares. See “Class A Shares Subject to Future Sale—Lock-up Provisions of Our Memorandum and Articles of Association.”

In addition, after the lock-up referred to above, holders of our Class B common shares and Class C common shares are subject to further restrictions on transfer of such shares for a further 24 months. See “Description of Share Capital.”

Risk factors See “Risk Factors” and the other information included in this prospectus for a discussion of factors you should consider before deciding to invest in our Class A common shares.

Unless otherwise indicated, all information contained in this prospectus assumes no exercise of the option granted to the underwriters to purchase up to additional 5,049,088 Class A common shares from the selling shareholders in connection with this offering.

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Summary Financial and Other Information

The following tables set forth, for the periods and as of the dates indicated, our summary financial and operating data. The financial information presented herein has been derived from our audited consolidated financial statements as of December 31, 2022 and 2021 and for the years ended December 31, 2022, 2021 and 2020, together with the notes thereto, and our unaudited interim condensed consolidated financial statements as of September 30, 2023 and for the nine months ended September 30, 2023 and 2022, together with the notes thereto, each prepared in accordance with IFRS as issued by the IASB, and included elsewhere in this prospectus.

The summary consolidated historical financial data should be read in conjunction with “Presentation of Financial and Other Information,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” our audited consolidated financial statements as of December 31, 2022 and 2021 and for the years ended December 31, 2022, 2021 and 2020, together with the notes thereto, and our unaudited interim condensed consolidated financial statements as of September 30, 2023 and for the nine months ended September 30, 2023 and 2022, together with the notes thereto, included elsewhere in this prospectus.

Our consolidated financial statements are stated in Mexican pesos.

Summary Consolidated Statements of Comprehensive Income Data

	For the nine months ended September 30,									For the years ended December 31,
	2023			2023			2022			2022			2022			2021			2020
	(thousands of US$, except outstanding shares and per share amounts)(1)			(thousands of Ps., except outstanding shares and per share amounts)						(thousands of US$, except outstanding shares and per share amounts)(1)			(thousands of Ps., except outstanding shares and per share amounts)
Revenue from sales of merchandise	US$	1,798,784		Ps.	31,694,573		Ps.	23,081,400		US$	1,842,939		Ps.	32,472,577		Ps.	23,032,275		Ps.	18,017,491
Sales of recyclables		3,875			68,282			83,378			6,119			107,820			58,906			32,399
Total revenue		1,802,659			31,762,855			23,164,778			1,849,058			32,580,397			23,091,181			18,049,890
Cost of sales		(1,517,231	)		(26,733,603	)		(19,670,105	)		(1,569,560	)		(27,655,643	)		(19,655,090	)		(15,605,281	)
Gross profit		285,428			5,029,252			3,494,673			279,498			4,924,754			3,436,091			2,444,609
Sales expenses		(194,724	)		(3,431,030	)		(2,469,975	)		(196,415	)		(3,460,840	)		(2,422,688	)		(1,900,206	)
Administrative expenses		(58,635	)		(1,033,144	)		(720,272	)		(54,035	)		(952,090	)		(623,874	)		(365,538	)
Other income – net		39			692			1,015			479			8,445			4,524			2,554
Operating profit		32,108			565,770			305,441			29,527			520,269			394,053			181,419
Financial income		1,164			20,510			14,514			1,126			19,840			7,988			7,108
Financial costs		(57,200	)		(1,007,868	)		(828,350	)		(66,333	)		(1,168,786	)		(1,004,535	)		(826,848	)
Exchange rate fluctuation		22,924			403,922			53,522			15,036			264,930			(122,368	)		(128,040	)
Financial costs – net		(33,112	)		(583,436	)		(760,314	)		(50,171	)		(884,016	)		(1,118,915	)		(947,780	)
Loss before income tax		(1,004	)		(17,666	)		(454,873	)		(20,644	)		(363,747	)		(724,862	)		(766,361	)
Income tax expense		(10,869	)		(191,503	)		(129,327	)		(11,428	)		(201,363	)		(91,812	)		(3,310	)
Net loss for the period	US$	(11,873	)	Ps.	(209,169	)		(584,200	)	US$	(32,072	)	Ps.	(565,110)		Ps.	(816,674	)	Ps.	(769,671	)
Weighted average outstanding Class A common shares (pre-IPO Reorganization and pre-stock split)(2)		4,000,000			4,000,000			4,000,000			4,000,000			4,000,000			4,000,000			4,000,000
Basic and diluted loss per share(2)	US$	(2.97	)	Ps.	(52.29	)		(146.05	)	US$	(8.02	)	Ps.	(141.28	)	Ps.	(204.17	)	Ps.	(192.42	)

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(1) Translated into U.S. dollars for convenience only at the rate of Ps.17.62 per US$1.00, the exchange rate to pay foreign currency denominated obligations due on September 30, 2023 published by the Mexican Central Bank in the Official Gazette.

(2) On a pro forma basis, after reflecting the IPO Reorganization and the 3-for-1 forward share split of our common shares, the weighted average outstanding common shares would be 84,150,261 for each period presented in the table. Using such pro forma number of common shares, the basic and diluted loss per share would have been Ps.(2.49) (or US$(0.14)), Ps.(6.94), Ps.(6.72) (or US$(0.38)), Ps.(9.70) and Ps.(9.15) for the nine months ended September 30, 2023, the nine months ended September 30, 2022, the year ended December 30, 2022, the year ended December 30, 2021 and the year ended December 30, 2020, respectively.

Consolidated Statement of Financial Position Data

	As of September 30,				As of December 31,
	2023		2023		2022		2022		2021
	(thousands of US$) (1)		(thousands of Ps.)		(thousands of US$) (1)		(thousands of Ps.)
Assets
Current assets:
Cash and cash equivalents	US$	56,815	Ps.	1,001,083	US$	55,901	Ps.	984,976	Ps.	1,000,040
Sundry debtors		1,743		30,717		1,128		19,885		3,573
VAT receivable		41,590		732,813		34,596		609,581		425,741
Advanced payments		3,689		65,007		3,017		53,155		30,119
Inventories		124,355		2,191,130		109,626		1,931,605		1,403,242
Total current assets		228,192		4,020,750		204,268		3,599,202		2,862,715
Non-current assets:
Guarantee deposits		1,811		31,911		1,574		27,741		17,108
Property, furniture, equipment, and lease-hold improvements		240,123		4,230,973		179,580		3,164,204		1,900,585
Right-of-use assets – Net		297,093		5,234,783		266,541		4,696,459		3,047,966
Intangible assets – Net		400		7,050		468		8,241		7,831
Deferred income tax		22,789		401,533		16,973		299,060		213,114
Total non-current assets		562,216		9,906,250		465,136		8,195,705		5,186,604
Total assets	US$	790,408	Ps.	13,927,000	US$	669,404	Ps.	11,794,907	Ps.	8,049,319
Liabilities and Stockholders’ Equity
Current liabilities:
Suppliers	US$	363,433	Ps.	6,403,689	US$	305,913	Ps.	5,390,192	Ps.	3,893,382
Accounts payable and accrued expenses		21,065		371,164		18,023		317,565		271,155
Income tax payable		3,719		65,529		4,160		73,304		94,000
Short-term debt		44,155		778,011		27,880		491,236		271,079
Lease liabilities		29,400		518,027		23,684		417,307		386,354
Employees’ statutory profit sharing payable		7,228		127,356		6,515		114,798		68,449
Total current liabilities		469,000		8,263,776		386,175		6,804,402		4,984,419

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	As of September 30,						As of December 31,
	2023			2023			2022			2022			2021
	(thousands of US$) (1)			(thousands of Ps.)			(thousands of US$) (1)			(thousands of Ps.)
Non-current liabilities:
Debt with related parties		244,082			4,300,719			242,682			4,276,058			3,979,443
Bonus payable to related parties		2,502			44,092			2,527			44,528			31,449
Long-term debt		32,110			565,777			30,689			540,734			451,285
Lease liabilities		303,887			5,354,493			274,014			4,828,135			3,044,533
Employee benefits		1,029			18,135			812			14,311			10,130
Total non-current liabilities		583,610			10,283,216			550,724			9,703,766			7,516,840
Total liabilities		1,052,610			18,546,992			936,899			16,508,168			12,501,259
Stockholders’ equity:
Capital stock		26,747			471,282			26,747			471,282			471,282
Reserve for share-based payments		43,676			769,573			26,512			467,135			163,346
Cumulative losses		(332,625	)		(5,860,847	)		(320,754	)		(5,651,678	)		(5,086,568	)
Total stockholders’ equity		(262,202	)		(4,619,992	)		(267,495	)		(4,713,261	)		(4,451,940	)
Total liabilities and stockholders’ equity	US$	790,408			Ps. 13,927,000		US$	669,404		Ps.	11,794,907		Ps.	8,049,319

(1) Translated into U.S. dollars for convenience only at the rate of Ps.17.62 per US$1.00, the exchange rate to pay foreign currency denominated obligations due on September 30, 2023 published by the Mexican Central Bank in the Official Gazette.

Non-IFRS Financial Measures and Key Operating Metrics

Non-IFRS Financial Measures

For the convenience of investors, this prospectus presents certain non-IFRS financial measures, which are not recognized under IFRS. A non-IFRS financial measure is generally defined as one that purports to measure financial performance but excludes or includes amounts that would not be so adjusted in the most comparable IFRS measure.

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Non-IFRS financial measures do not have standardized meanings and may not be directly comparable to similarly titled measures adopted by other companies. These non-IFRS financial measures are used by our management for decision-making purposes and to assess our financial and operating performance, generate future operating plans and make strategic decisions regarding the allocation of capital. The non-IFRS measures presented herein have limitations as analytical tools, and you should not consider them in isolation or as substitutes for analysis of our results of operations presented in accordance with IFRS. Additionally, our calculations of non-IFRS measures may be different from the calculations used by other companies, including our competitors, and therefore, our measures may not be comparable to those of other companies.

	As of and for the nine months ended September 30,			As of and for the year ended December 31,
	2023			2022			2021			2020
Net loss for the period (Ps. thousands)	Ps.	(209,169	)	Ps.	(565,110	)	Ps.	(816,674	)	Ps.	(769,671	)
EBITDA (Ps. thousands)	Ps.	1,323,816		Ps.	1,305,323		Ps.	924,207		Ps.	603,920
Net loss for the period (US$ thousands)	US$	(11,873	)	US$	(32,072	)	US$	(46,349	)	US$	(43,681	)
EBITDA (US$ thousands)(1)	US$	75,131		US$	74,082		US$	52,452		US$	34,275
Net margin (%)		(0.7	)%		(1.7	)%		(3.5	)%		(4.3	)%
EBITDA Margin (%)		4.2	%		4.0	%		4.0	%		3.3	%

(1) Translated into U.S. dollars for convenience only at the rate of Ps.17.62 per US$1.00, the exchange rate to pay foreign currency denominated obligations due on September 30, 2023 published by the Mexican Central Bank in the Official Gazette.

The following is an explanation and, as applicable, reconciliations of our Non-IFRS financial measures.

EBITDA Calculations

Our management uses EBITDA and EBITDA Margin, to supplement IFRS measures of performance in the evaluation of the effectiveness of our business strategies, to make budgeting decisions and to compare our performance against that of other peer companies using similar measures. However, you should not consider these measures in isolation, as an alternative to net profit or loss, as an indicator of our operating or financial performance or as an indicator of cash provided by operating activities, or as a substitute for analysis of our results as reported under IFRS, since these measures do not reflect:

• our cash expenditures, future requirements for capital expenditures or contractual commitments;

• changes in, or cash requirements for, our working capital needs;

• our depreciation or amortization;

• our interest expense; and

• any cash income taxes we may be required to pay.

Since not all companies use identical calculations for these types of measures, the presentation of these measures may not be comparable to other similarly titled measures of other companies and can differ significantly from company to company

We calculate “EBITDA” as net income (loss) for the period, plus income tax expense, financial costs, net, and total depreciation and amortization. We calculate “EBITDA Margin” for a period by dividing EBITDA for the corresponding period by total revenue for such period.

Our management believes that EBITDA and EBITDA Margin are useful metrics to measure our operational efficiency and financial soundness relative to other peers, as it excludes the impact of certain accounting and financing decisions.

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Set forth below is a reconciliation of EBITDA to net loss for the period.

	For the nine months ended September 30,						For the years ended December 31,
	2023			2022			2022			2021			2020
	(thousands of Ps. unless indicated otherwise)
Net loss for the period		Ps. (209,169	)		Ps. (584,200	)		Ps. (565,110	)		Ps. (816,674	)		Ps. (769,671	)
Income tax expense		191,503			129,327			201,363			91,812			3,310
Financial costs—net		583,436			760,314			884,016			1,118,915			947,780
Total depreciation and amortization(1)		758,046			579,039			785,054			530,154			422,501
EBITDA		1,323,816			884,480			1,305,323			924,207			603,920
Total revenue		Ps.31,762,855			Ps.23,164,778			Ps.32,580,397			Ps.23,091,181			Ps.18,049,890
Net margin (%)(2)		(0.7	)%		(2.5	)%		(1.7	)%		(3.5	)%		(4.3	)%
EBITDA Margin (%)		4.2	%		3.8	%		4.0	%		4.0	%		3.3	%
Other financial data
Lease payments(3)		(859,684	)		(585,236	)		(826,730	)		(598,432	)		(471,807	)
IPO expenses		16,843			—			16,023			—			—
Share-based payment expense		302,438			227,842			303,789			142,123			19,696

(1) Consistent with lease accounting required under IFRS 16, total depreciation and amortization includes the depreciation expense of right-of-use-asset corresponding to long-term leases, which is a non-cash expense. Such amount, together with the interest expense on lease liabilities, is a proxy for but not equal to the Company’s actual cash expenditure incurred in connection with its leased properties.

(2) Net margin is calculated as net loss for the period divided by total revenue.

(3) Equals the actual cash expenditure of the Company in connection with its leases as reflected in its financial statements.

Key Operating Metrics

In addition, we present the following key operating metrics in this prospectus, which we believe serve as measures of our operations.

	As of and for the nine months ended September 30,			As of and for the year ended December 31,
	2023			2022			2021			2020
Same Store Sales Growth (%)		17.8	%		21.9	%		12.3	%		18.3	%
Inventory Days (days)		21			22			22			N/A
Payable Days (days)		64			65			69			N/A
Receivable Days (days)		0.2			0.1			0.1			N/A

The following are explanations of how we calculate the key operating metrics and target unit economics that we present here or elsewhere in this prospectus.

Same Store Sales

We measure “Same Store Sales” using revenue from sales of merchandise from stores that were operational for at least the full preceding 12 months for the periods under consideration. When calculating this measure, we exclude stores that were temporarily closed (for one month or more) or permanently closed during the periods in consideration.

We measure Same Store Sales growth by comparing the Same Store Sales of stores that were open during the measurement period. For example, if a store began operations on September 1, 2023, it would not be included

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in Same Store Sales growth for the years ending December 31, 2023 or 2024. However, such store would be included in Same Store Sales growth for the year ending December 31, 2025. Our calculation of Same Store Sales may differ from Same Store Sales or similar metrics reported by other retailers.

Our management believes that Same Stores Sales is a relevant measure of the sales performance of a portfolio of stores that have been operating during the period under consideration. It enables us to assess how our existing stores’ sales over a comparable period are performing year-over-year, excluding the impact of new store openings or closures, allowing us to measure the growth performance attributable to the existing store base.

Inventory Days

We calculate “Inventory Days” to be the average of beginning and end of period inventory balance, divided by cost of sales for the period and multiplied by the number of days during the period. Inventory Days measures the average number of days we keep inventory on hand before selling the product. This operating metric allows us to track our inventory management policies and observe how quickly we are able to rotate inventory, which is key to our cash conversion cycle.

Payable Days

We calculate “Payable Days” to be the sum of the average of beginning and end of period balance of suppliers and of accounts payable and accrued expenses, divided by cost of sales for the period and multiplied by the number of days during the period. Payable Days measures the average number of days that it takes us to pay suppliers after receiving goods or services. This metric allows us to track the terms of payment policies with suppliers and our ability to finance our operations through agreements with our suppliers.

Receivable Days

We calculate “Receivable Days” to be the average of beginning and end of period balance of Sundry debtors divided by revenue from sales of merchandise for the period and multiplied by the number of days during the period. Receivable Days measures the average number of days that it takes us to collect cash from customers after making a sale. This metric shows how quickly we convert revenues into cash received from our customers.

Payback Period

“Payback Period” is meant to represent, on a vintage basis, the average number of months it takes an operating store to recover the Average Investment per Store. The calculation excludes stores that were either permanently or temporarily closed. We calculate Payback Period for stores of a given vintage by adding the average 4-Wall Profitability per store and the cumulative changes in those stores’ operational accounts (defined as accounts payable, inventories and accounts receivables) and comparing the result to the Average Investment per Store made to open stores of that vintage.

The Payback Period helps management track new stores’ financial performance and manage resource allocation. The Payback Period is achieved for a given vintage of stores when the average 4-Wall Profitability and the cumulative changes in those stores’ operational accounts equals the Average Investment per Store made to open such stores.

Our target unit economics included in this prospectus are presented on a per store basis and our informed by our prior vintages performance. Our Payback Period for a given store is similarly calculated by adding targeted 4-Wall Profitability for the given store and the target cumulative changes in such stores’ operational accounts and comparing the result to the investment per store of such store.

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Sales per Store

We define our “Sales per Store” as the average of the revenue from sales of merchandise achieved by our stores that were open for the full year in consideration. When calculating this measure, we exclude stores that were temporarily closed (for one month or more) or permanently closed during the period in consideration.

This measure assists our management’s understanding of how store performance has evolved across different vintages. Sales per Store also serves as a benchmark to measure the performance of new stores and is useful to set growth and expansion targets.

4-Wall Profitability and 4-Wall Profitability Margin

We define “4-Wall Profitability” for a given vintage as revenue from sales of merchandise, minus cost of sales, plus discounts and rebates, plus differences with suppliers, minus private label packaging expenses, minus shrinkage, minus store expenses, which include store personnel expense, rent expenses, advertising, water, electricity, security, store and office equipment maintenance, building maintenance, stationery, waste and recyclable recollection services, and depreciation, among others. We calculate 4-Wall Profitability Margin for a period by dividing 4-Wall Profitability of stores of a certain vintage for the corresponding period by revenue from sales of merchandise for stores of that vintage for such period.

4-Wall Profitability and 4-Wall Profitability Margin are commonly used metrics in the retail industry that measure the profitability at the store level. Our management believes that 4-Wall Profitability and 4-Wall Profitability Margin are helpful metrics to measure our operational efficiency at the store level, without considering the effect of certain logistics and headquarters expenses not attributable to our stores.

Our target unit economics included in this prospectus are presented on a per store basis and are informed by our prior vintages performance. Our 4-Wall Profitability and 4-Wall Profitability Margin on a per store basis are similarly calculated as revenue from sales of merchandise, minus cost of sales, plus discounts and rebates, plus differences with suppliers, minus private label packaging expenses, minus shrinkage, minus store expenses, which include store personnel expense, rent expenses, advertising, water, electricity, security, store and office equipment maintenance, building maintenance, stationery, waste and recyclable recollection services, and depreciation, among others.

Average Investment per Store

Our “Average Investment per Store” measures the average investment required to open a store of a given vintage. We calculate the Average Investment per Store by adding the cumulative aggregate investment (including remodeling, furniture and equipment, shelfing, refrigeration equipment, security equipment, moving equipment, computer equipment, and others) incurred for all stores of a given vintage and then dividing it by the number of stores that opened during such vintage.

Our Average Investment per Store is a relevant unit economic for our expansion strategy as it provides relevant guidance on the average necessary investment required to open and continue to operate a new store and allows us to benchmark a store’s productivity based on their required initial and recurring investment needs.

Our target unit economics included in this prospectus are presented on a per store basis and are informed by our prior vintages performance. Our investment per store is similarly calculated by adding the aggregate investment (including remodeling, furniture and equipment, shelfing, refrigeration equipment, security equipment, moving equipment, computer equipment, and others) incurred for a store.

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Cash-on-Cash Return

We calculate our “Cash-on-Cash Return” by dividing the 4-Wall Profitability of stores of a certain vintage for the period under consideration by the Average Investment per Store for stores of the same vintage.

Our management believes that the Cash-on-Cash Return is a helpful metric to measure our productivity and expected return at a store level as well as measure the efficiency of our capital deployment.

Our target unit economics included in this prospectus are presented on a per store basis and are informed by our prior vintages performance. Our Cash-on-Cash Return on a per store basis is similarly calculated by dividing the 4-Wall Profitability of such store by the corresponding investment per store.

Sales Ramp-up Evolution by Vintage

“Sales Ramp-up Evolution by Vintage” measures, for stores of the same vintage, the median of such stores’ revenue from sales of merchandise during 12-month periods since the start of operations. When calculating this measure, we exclude the first calendar month of a store’s operations to account for stores that are not open for the entire month, as well as stores that have been permanently closed.

Our management believes that Sales Ramp-up Evolution by Vintage is a relevant metric to measure our stores’ sales performance progression over time, compared to previously opened stores. It allows us to track the evolution of our stores’ sales productivity since opening and compare them with other stores opened in different years.

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RISK FACTORS

An investment in our Class A common shares involves significant risks. Before you decide to invest in our Class A common shares, you should carefully consider all of the information set forth in this prospectus, including the risks described below. Note that an investment in the securities of issuers whose operations are located in emerging market countries such as Mexico involves a higher degree of risk than an investment in the securities of issuers whose operations are located in the United States or other more developed countries. In the event that any of these risks occurs, our business, financial condition, results of operations, cash flows and prospects may be materially adversely affected and, as a result, the value of our Class A common shares may decline and you may lose all or part of your investment. We currently believe that the risks described below are those that may adversely affect us. Additional risks and uncertainties not currently known to us, or that we currently believe to be immaterial, may have a material adverse effect on us in the future.

When determining whether to invest, you should also refer to the other information contained in this prospectus, including our audited consolidated financial statements as of December 31, 2022 and 2021 and for the years ended December 31, 2022, 2021 and 2020, together with the notes thereto, and our unaudited interim condensed consolidated financial statements as of September 30, 2023 and for the nine months ended September 30, 2023 and 2022, together with the notes thereto. You should also carefully review the cautionary statements referred to under “Special Note Regarding Forward-Looking Statements.” Our actual results could differ materially and adversely from those anticipated in this prospectus.

For the purposes of this section, the indication that a risk, uncertainty or problem may or will have an “adverse effect on us” or will “adversely affect us” means that the risk, uncertainty or problem could have a material adverse effect on our business, financial condition, results of operations, cash flows, prospects and/or the liquidity or trading price of our Class A common shares, except as otherwise indicated or as the context may otherwise require. You should view similar expressions in this “Risk Factors” section as having a similar meaning.

Risks Relating to Our Business and Industry

Economic factors may reduce our customers’ spending, impair our ability to execute our strategies and initiatives, and increase our costs and expenses, which could result in materially decreased sales or profitability.

Many of our customers have fixed or low incomes and limited discretionary spending resources. Any factor that could adversely affect their disposable income could impact potential customers’ ability to shop in our stores as well as decrease their spending or cause them to shift their spending to our lower price and lower margin product choices, which could result in materially lower sales and/or profitability. Factors that could reduce our customers’ disposable income include but are not limited to unemployment or underemployment or decline in real wages; inflation; pandemics (such as the COVID-19 pandemic); higher fuel, energy, healthcare and housing costs, interest rates and tax rates; lack of available credit; and decreases in, or elimination of, government subsidies such as assistance programs.

Many of the economic factors listed above, as well as commodity rates; transportation, energy costs, lease and insurance costs; wage rates; foreign exchange rate fluctuations; measures that create barriers to or increase the costs of international trade (including increased import duties or tariffs); changes in applicable laws and regulations; reduction in the level of remittances and other economic factors, also could impair our ability to successfully execute our strategies and initiatives, as well as increase our cost of goods sold and selling, general and administrative expenses (including real estate costs), and may have other adverse consequences that we are unable to fully anticipate or control, all of which may materially decrease our sales or profitability.

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Our plans depend significantly on strategies and initiatives designed to increase sales and profitability and improve the efficiencies, costs and effectiveness of our operations, and failure to achieve or sustain these plans could materially affect our results of operations.

We have short-term and long-term strategies and initiatives, which are designed to continue to improve our results of operations and financial condition. These include initiatives such as those relating to merchandising, real estate and new store development, private label product development, inventory management, supply chain, store operations, expense reduction, and technology. The effectiveness of these initiatives is inherently uncertain, even when tested successfully, and is dependent on consistency of training and execution, workforce stability, ease of execution and scalability, and the absence of offsetting factors that can influence results adversely. The number of our stores and distribution centers and our decentralized field management also contribute to the challenging nature of these factors. Other risk factors described herein also could negatively affect general implementation. Failure to achieve successful or cost-effective implementation of our initiatives could materially and adversely affect our business, results of operations and financial condition.

The success of our merchandising initiatives depends in part on our ability to predict the products that our customers will demand and to identify and timely respond to evolving trends in consumer preferences and demographic shifts in our markets. If we are unable to select and timely obtain products that are attractive to customers and at costs that allow us to sell them at an acceptable profit, or to effectively market such products, it could result in materially decreased sales and profitability.

We have experienced rapid growth in the past and there can be no assurance that the growth rate of our business will continue at such levels in the future.

We have experienced rapid growth as a business since our inception in 2005, averaging a store opening every 22 hours in 2023 and in 2022 and every 35 hours in 2021, with Same Store Sales growth of 17.8% in the nine months ended September 30, 2023, 21.9% in 2022 and 12.3% in 2021, in each case compared to the prior year. Moreover, our growth has been largely focused in 15 states across the center of Mexico which are generally more densely populated and developed than other regions in Mexico. Expansion into new regions involves risks and uncertainties related to our ability to replicate our business model, efficiently expand our logistics capabilities and achieve profitability. Although we expect to continue to grow our store network, including by expanding into new regions, we cannot assure that we will be able to achieve a similar growth rate in store openings, that stores in untested regions will be equally profitable or that we will be able to replicate our distribution network model in new regions.

Our growth depends on our ability to successfully lease, obtain permits for and adapt real estate spaces for stores and distribution centers.

Our expansion depends, in part, on our ability to identify retail space and distribution center space that is attractive in terms of location, size and the contractual conditions of the lease, as well as on our ability to obtain the necessary permits for such spaces on a timely basis. In order to be suitable, retail locations must comply with certain characteristics in terms of size and configuration for our business model, which might not be widely available in the market at any given time. In addition, the market for commercial property and industrial property in large metropolitan areas in Mexico is increasingly competitive and we believe that competition for such properties is likely to continue increasing. If we fail to identify and secure such spaces on a timely basis for any reason, including as a result of competition from other companies seeking similar locations or our inability to obtain the necessary permits, our anticipated growth may be adversely affected. There can be no assurance that we will successfully identify and lease suitable properties, lease such properties on acceptable terms on a timely basis or obtain the necessary permits to begin operating new stores.

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The performance and operation of our business are subject to risks associated with our leased property portfolio.

We lease all the retail locations for our retail stores which are generally subject to periodic rent review, lease expiry and renegotiation. As a result, we are susceptible to changes in the property rental market, such as increases in market rents. Our stores are also subject to various local laws and regulatory requirements.

New stores and stores with renewed lease terms may not produce anticipated levels of revenue while increasing our costs, which would increase our expenses as a percentage of sales and adversely affect our competitive position and profitability. There can be no assurance that we will continue to be able to renew our store lease agreements on acceptable terms or at all as they expire. In addition, we must comply on an ongoing basis with the various applicable local laws and regulatory requirements. If we are unable to renew lease agreements for existing store locations as they expire or lease other favorable locations on acceptable terms, or if our existing rental agreements are terminated or revised to our detriment for any reason, or if we fail to comply with applicable local laws and regulatory requirements, our financial condition and operating results could be adversely affected.

Our financial results are subject to risks relating to competition and narrow profit margins in the food retail industry, which could adversely affect our results of operations and financial condition.

The retail food industry in Mexico is highly fragmented and increasingly competitive and our market and strategy are generally characterized by narrow profit margins. Market participants in our industry generally compete with respect to price, customers, store location, merchandise quality, product assortment and presentation, service offerings, in-stock consistency, customer service, ease of shopping experience, promotional activity, employees, and market share. We compete with hard discount stores such as Bodega Aurrera Express, Tiendas Neto and Tiendas BARA, discount formats of large retailers such as Bodega Aurrera, Walmart-Express, Súper Ché, Soriana Mercado, among others, and also with other retailers, including international, national, regional and local supermarket chains, independent grocery stores, specialty food stores, convenience stores, open-air markets, bodegas, small grocery stores, general merchandisers and discount retailers. In particular, we compete against informal vendors which represent a significant part of the Mexican economy. According to INEGI, informal economic activity in Mexico was responsible for 24.4% of Mexican gross domestic product in 2022 employed on average 55.4% of the country’s workforce. Informal vendors also have different formats, from small street side stands to larger, well stocked neighborhood shops or specialty stands in markets, all of which target a customer segment similar to ours. Given the informal nature of their operations, informal vendors are able to offer substantial cost savings to customers.

Our ability to compete depends on our ability to maintain our existing stores and open new stores in advantageous locations, as well as to offer the most competitive prices. To maintain competitive prices, we may be required to lower them, either temporarily or permanently, and may have limited ability to increase them in response to increased costs, resulting in lower margins and reduced profitability. Some of our competitors have greater financial, distribution, marketing and other resources, and may be able to secure better arrangements with suppliers than us.

Competition is intense, and is expected to continue to be so as we expand within Mexico and start competing against regional players. Some of our competitors may seek to reduce their store locations while others enter or increase their presence in our geographic and product markets (including through the expansion of the availability of delivery services) and expand the availability of mobile, web-based and other digital technologies, to facilitate a more convenient and competitive online and in-store shopping experience. If our competitors or other discount food retailers were to enter our industry in a significant way, including through alliances or other business combinations, it could significantly alter the competitive dynamics of the retail marketplace and result in competitors with greatly improved competitive positions, which could materially affect our financial performance. Our ability to effectively compete will depend substantially on our continued ability

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to develop and execute compelling and cost-effective strategies and initiatives. If we fail to anticipate or respond effectively to competitive pressures and industry changes, it could materially affect our results of operations and financial condition.

Failure to attract, develop and retain qualified employees while controlling labor costs, as well as other labor issues, could adversely affect our financial performance.

Our future growth and performance, positive customer experience and legal and regulatory compliance depends on our ability to attract, develop, retain and motivate qualified employees while operating in an industry challenged by historically high rates of employee turnover. Our ability to meet our labor needs, while controlling our labor costs, is subject to many external factors, including competition for and availability of qualified personnel, unemployment levels, wage rates (including the heightened possibility of increased federal, state and/or local minimum wage rates), health and other insurance costs, changes in employment and labor laws or other workplace regulations (including those relating to employee benefit programs such as health insurance and paid leave programs or the proposed labor law reform in Mexico aimed at reducing the maximum working hours per week that was recently being discussed by Mexican Congress and could be reintroduced in future legislative terms), employee activism, and our reputation and relevance within the labor market. If we are unable to attract, develop and retain adequate numbers of qualified employees, our operations, customer service levels, legal and regulatory compliance, and support functions could suffer. In addition, to the extent a significant portion of our employee base unionizes, or attempts to unionize, our labor and other related costs could increase. Our ability to pass along labor and other related costs to our customers is constrained by our everyday low-price model, and we may not be able to offset such increased costs elsewhere in our business.

Our success depends on our executive officers, our regional management and other key personnel. If we lose key personnel or are unable to hire additional qualified personnel, our business may be harmed.

Our future success depends to a significant degree on the skills, experience and efforts of our executive officers, and other key personnel. Importantly, given our decentralized management structure, we depend significantly on our regional management teams. The unexpected loss of the services of any of such persons could adversely affect our operations. There can be no assurance that our executive succession planning, retention or hiring efforts will be successful. Competition for skilled and experienced management personnel is intense, and a failure to attract and retain new qualified personnel could adversely affect our operations.

Our private labels may not be successful in improving our gross profit and may increase certain of the risks we face.

Our business has expanded its own range of private label items, which included 90 different private label brands and over 350 SKUs as of December 31, 2022, representing 42.8% of our sales for 2022, and 93 different private label brands and over 385 SKUs as of September 30, 2023, representing 45.4% of our sales for the nine months ended September 30, 2023. These private labels are important for future growth prospects as private label items offer an important source of differentiation against our competitors and also generally offer more attractive margins. The sale and expansion of these offerings also subjects us to or increases certain risks, such as: product liability claims and product recalls; disruptions in raw material and finished product supply and distribution chains; inability to successfully protect our proprietary rights; claims related to trademarks and proprietary rights of third parties; supplier labor and human rights issues, and other risks generally encountered by entities that source, sell and market exclusive branded offerings for retail. Further, most of our private label items are manufactured in Mexico, and while our policies set out standards for ethical business practices, it does not control these manufacturers or their labor or other business practices. Maintaining broad market acceptance of our private label items depends on many factors, including pricing, costs, quality and customer perception, and we may not achieve or maintain expected sales for our private label items.

Failure to appropriately address these risks could materially and adversely affect our private label initiatives, reputation, results of operations and financial condition.

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Expansion into new product categories may carry significant risks and impact our operational results.

Our expansion into new product categories, including perishables, may present significant risks, potentially leading to adverse effects on our operational results. Introducing new products or categories requires substantial investment in procurement, storage, distribution, and marketing, as well as regulatory compliance and additional market competition. Specifically, perishables pose unique challenges due to their limited shelf life, needing rapid turnover and high-quality supply chain management to prevent loss. In addition, there is also the inherent risk that these new products or categories may not resonate with our customers, leading to underwhelming sales, excess inventory, and reduced margins. Failure to successfully anticipate consumer preference or efficiently manage these expanded offerings could result in unsold inventory, and financial losses, all of which could negatively impact our profitability and operating results.

Risks associated with or faced by our suppliers could adversely affect our financial performance.

We source our merchandise and private label products from a wide variety of primarily domestic suppliers. Our ability to offer a wide variety of products to our customers depends on our ability to obtain adequate products and supplies from manufacturers and other suppliers. Our suppliers’ ability to timely manufacture and deliver the products we purchase may be subject to changes to the prices and flow of goods and ingredients and most often are for reasons beyond our control, such as political or civil unrest, acts of war, currency fluctuations, disruptions in maritime lanes, port labor disputes, economic conditions and instability in countries in which foreign suppliers are located, the financial instability of suppliers, failure to meet our terms and conditions or our standards, issues with our suppliers’ labor practices or labor problems they may experience (such as strikes, stoppages or slowdowns, which could also increase labor costs during and following the disruption), the availability and cost of raw materials, pandemic outbreaks, merchandise quality or safety issues, transport availability and cost, increases in wage rates and taxes, transport security, inflation, and other factors relating to suppliers and the countries in which they are located or from which they import. Such changes could adversely affect our operations and profitability.

Our ability to maintain the accelerated growth rate we have experienced is heavily dependent, among other factors, on the ability of our suppliers to increase their capacity so they are able to fulfill our purchase orders at the same pace we expand and open new stores. Our suppliers may need to increase their capital expenditures and incur significant costs to increase such capacity. To the extent our suppliers are not able to increase their production and fulfillment capacity at the same rate we have grown, our ability to continue expanding rapidly may be impaired and as a result our margins and results of operation may be adversely affected. Additionally, if a supplier fails to deliver on its commitments, we could experience merchandise sellouts that could lead to lost sales and reputational harm. Further, failure of suppliers to meet our compliance protocols could prolong our procurement lead time, resulting in lost sales and adverse margin impact.

In the course of our operations, divergences and disputes may arise with our suppliers, including in relation to the terms of service and payment, which may result in an interruption or termination of our relationship with one or more suppliers, due to our election or as a result of actions by such supplier. Any such interruption or termination of a relationship could adversely affect our operations until such time as we replace such supplier. Any interruption or termination that has not been previously anticipated, especially if it results in interruption of our services or delivery of merchandise, could result in lost sales and adverse margin impact during any period in which such interruption is ongoing and result in reputational harm.

In the year ended December 31, 2022, we purchased products from 293 suppliers, with our largest supplier accounting for 4.2% of our total purchases, and the five largest suppliers accounting for 18.4% of our total purchases. Although we have developed a broad network of suppliers, some of our top selling products are only supplied by a single supplier or manufacturer. If any such single supply source becomes unavailable for any reason, replacing such supplier may be costly and adversely affect our ability to sell a given product until an adequate replacement is found. This risk is especially pronounced for our private label products where a

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supplier’s failure could adversely affect the availability of a specific product across our entire store network. While we generally believe substitute suppliers are available, until such a replacement is found and such supplier passes our quality control assessments, we could face a temporary reduction in store inventory levels and/or a reduction in the quality of our merchandise. These factors could materially decrease our sales, reduce our margins and adversely affect our results of operation.

Our trademarks and trade names may be misappropriated or challenged by others.

We own the material trademark and trade name rights used in connection with our brands, private labels and the marketing and sale of our products. We believe our brand names and related intellectual property are important to our continued success. We attempt to protect our trademarks and trade names by exercising our rights under applicable trademark and copyright laws. Any infringement of our intellectual property rights would likely result in a commitment of our time and resources to protect these rights through litigation or otherwise, which could be expensive and time-consuming. If we were to fail to protect our intellectual property rights for any reason, it could have an adverse effect on our business, results of operations and financial condition. We are subject and may continue to be subject to trademark disputes relating to the products that we sell and if we were to fail to protect our intellectual property rights for any reason, it could have an adverse effect on our business, results of operations and financial condition.

We have a negative working capital.

As is customary for businesses with high inventory turnover and strict control over working capital, we consistently maintain a negative working capital position, in which our 65 Payable Days for 2022 exceeded our 22 Inventory Days for 2022.

Although we received initial investments in the form of debt to fund our foundation and initial growth, our working capital and capital expenditure requirements are funded entirely from cash generated by our operations. Cash flows from our operating activities have been, and we expect that it will continue to be, the single largest source of our liquidity and capital resources.

If our revenues decrease materially, or key suppliers change payment terms, we may not have enough available cash to meet our obligations as they become due or fund our expansion. Further, we may not be able to raise additional funds on satisfactory terms, if at all, through equity or debt financings to meet our obligations or continue funding our expansion. In such an event, we may be required to delay, limit, reduce or terminate our business development or expansion efforts. Our business, financial condition and results of operations could be materially adversely affected as a result.

As a result of selling food products, we face the risk of product liability claims and adverse publicity.

The packaging, marketing, distribution and sale of food products purchased from others, as well as the production of foods under our private label brand names, entail an inherent risk of contamination or deterioration, which could potentially lead to product liability, product recall and resultant adverse liability and publicity. These products may contain contaminants that could, in certain cases, cause illness, injury or death to consumers. Our suppliers are legally responsible for any contamination or damage to goods during the production phase. However, we become legally responsible for any such defects from the moment we accept the goods from our suppliers. In many instances, it is difficult to determine during what phase contamination or damage occurred. There can be no assurance that any claims will not be asserted against us in the future or that we will not be forced to undertake significant product recalls. Moreover, we do not have product liability insurance and do not have contractual indemnification provisions in all cases. If a material product liability claim were successful, contractual indemnifications may not be adequate to cover all liabilities we may incur. If we do not have adequate contractual indemnification available product liability claims relating to defective products could have a material adverse effect on our ability to successfully market our products and on our financial condition and operating results.

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Even if a product liability claim is not successful or is not fully pursued, the negative publicity surrounding any alleged contamination or deterioration of our private label products could have a material adverse effect on our brand, image and profitability of these products.

Inventory shrinkage may negatively affect our results of operations and financial condition.

Although historically we have not experienced significant inventory shrinkage, inventory shrinkage is an unavoidable cost of doing business. Higher rates of inventory shrinkage or increased security or other costs to combat inventory theft could adversely affect our results of operations and financial condition. There can be no assurance that we will be successful in our efforts to contain or reduce inventory shrinkage.

Our return policy may negatively affect our profitability and financial condition.

Our commitment to customer satisfaction includes a no-questions-asked no-receipt needed money-back return policy, which, while enhancing consumer confidence and loyalty, also exposes us to certain financial risks. This policy can lead to a higher volume of returned merchandise compared to competitors with more restrictive return policies. Handling returns involves additional logistics, restocking, and customer service costs, and can result in the inability to resell returned products at full price, particularly if they are perishable, used, or no longer in salable condition. High return rates can lead to increased waste, affect inventory management, and result in financial losses, impacting our margins and overall profitability. The financial impact could include additional expenses related to the processing and disposition of returns, which could adversely affect our results of operations.

Our cash flows from operations, profitability and financial condition may be negatively affected if we are not successful in managing our inventory balances.

Our inventory balance represented 15.7% and 16.4% of our total assets as of September 30, 2023 and December 31, 2022, respectively. Efficient inventory management is a key component of our business success and profitability. We must maintain sufficient inventory levels and an appropriate product mix to meet our customers’ demands without allowing those levels to increase such that the costs to store and hold the goods unduly impacts our financial results or increases the risk of inventory shrinkage. If we do not accurately predict customer trends, spending levels, or price sensitivity, we may have to take unanticipated markdowns to dispose of the excess inventory, which also can adversely affect our financial results. We continue to focus on ways to reduce these risks, but we cannot make assurances that we will be successful in our inventory management. If we are not successful in managing our inventory balances, our cash flows from operations and financial condition may be negatively affected.

A significant disruption to our distribution network, the capacity of our distribution centers or the timely receipt of inventory could adversely affect sales or increase our transportation costs, which would decrease our profitability.

We rely on our distribution and transportation network to provide goods to our stores timely and cost-effectively. We and our vendors primarily rely on trucks to move goods from vendor locations to our distribution centers and our stores. Any disruption, unanticipated or unusual expense or operational failure related to this process (e.g., delivery delays, including as a result of pandemic outbreaks, or increases in transportation costs (such as those we experienced during 2021 and continue to experience), including increased fuel costs, import freight costs, a decrease in transportation capacity; or labor shortages) could negatively impact sales and profits. Labor shortages or work stoppages in the transportation industry or disruptions to the national and international transportation infrastructure could also increase our costs or otherwise negatively affect our business. The COVID-19 pandemic disrupted the global and domestic transportation and distribution of goods and resulted in product delivery delays and higher delivery prices. The supply chain disruptions that we have experienced to date as a result of the COVID-19 pandemic did not have a material negative impact on our financial results in 2021.

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As of December 31, 2023, all of our 14 distribution centers were leased by us, and we are analyzing the expansion of our distribution capabilities in line with our store openings. Delays in opening new facilities as they become necessary, termination of the leases of our distribution centers, renewing leases on less advantageous terms for existing facilities, or our failure to integrate new facilities, could adversely affect our financial performance by slowing store growth or by increasing transportation and product costs. In addition, distribution-related construction or expansion projects entail risks that could cause delays and cost overruns, such as: shortages of materials or skilled labor; work stoppages; unforeseen construction, scheduling, engineering, environmental or geological problems; weather interference; fires or other casualty losses; and unanticipated cost increases. For these reasons, the completion date and ultimate cost of these projects could differ significantly from initial expectations, and we cannot guarantee that any project will be completed on time or within established budgets.

Material damage or interruptions to our information systems as a result of external factors, staffing shortages or challenges in maintaining or updating our existing technology or developing or implementing new technology, including artificial intelligence, could materially and adversely affect our business and results of operations.

We depend on a variety of information technology systems, including systems owned and managed by third-party vendors, for the efficient functioning of our business, including, without limitation, transaction processing and the management of our employees, facilities, logistics, inventories, stores and customer-facing digital applications and operations. Our technology initiatives may not deliver desired results or may do so on a delayed schedule. Additionally, such systems are subject to damage or interruption from power surges and outages, facility damage, physical theft, computer and telecommunications failures, inadequate or ineffective redundancy, malicious code (including malware, ransomware, or similar), successful attacks (e.g., account compromise; phishing; denial of service; and application, network or system vulnerability exploitation), software upgrade failures or code defects, natural disasters and human error. Design defects, damage to, or interruption to these systems may require a significant investment to repair or replace, disrupt our operations, result in the loss or corruption of critical data, and harm our reputation, all of which could materially and adversely affect our business or results of operations. Moreover, developing or implementing new technology, such as artificial intelligence software or models may result in risks associated with new or untested technology, such as loss or corruption of critical data, logistics failures among other undesired results.

Failure to maintain the security of our business, customer, employee or vendor information or to comply with privacy laws could expose us to litigation, government enforcement actions and costly response measures, and could materially harm our reputation and affect our business and financial performance.

In connection with sales, we transmit confidential credit and debit card information which is encrypted using point-to-point encryption. We also have access to, collect or maintain certain private or confidential information regarding our customers, employees and their dependents, and vendors, as well as our business. Some of this information is stored electronically, some of which may leverage third-party service providers. Additionally, we may share information with select vendors that assist us in conducting our business. While we have implemented procedures and technology intended to protect such information and require appropriate controls of our vendors, external attackers could compromise such controls and result in unauthorized disclosure of such information, as attacks are becoming increasingly sophisticated, may include attacks on our third-party business partners, and do not always or immediately produce detectable indicators of compromise. Moreover, inadvertent or malicious internal personnel actions could result in a defeat of security measures and a compromise of our or our third-party vendors’ information systems. Like other retailers, we and our vendors have experienced threats to, and infrequent immaterial incidents involving, data and systems, including by perpetrators of attempted random or targeted malicious attacks; computer malware, ransomware, bots, or other destructive or disruptive software; and attempts to misappropriate our information and cause system failures and disruptions. If attackers obtain customer, employee or vendor passwords through unrelated third-party breaches, and if impacted customers, employees, or vendors do not employ good online security practices (e.g., use the same password across different sites), these passwords could be used to gain access to their information or accounts with us in certain situations.

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A significant security breach of any kind experienced by us or one of our vendors, which could be undetected for a period of time, or a significant failure by us or one of our vendors to comply with applicable privacy and information security laws, regulations and standards could expose us to risks of data loss, litigation, government enforcement actions, fines or penalties, credit card brand assessments, negative publicity and reputational harm, business disruption and costly response measures (e.g., providing notification to, and credit monitoring services for, affected individuals, as well as further upgrades to our security measures) which may not be covered by or may exceed the coverage limits of our insurance policies, and could materially disrupt our operations. Any resulting negative publicity could significantly harm our reputation which could cause us to lose market share and could materially and adversely affect our business and financial performance.

Natural disasters and unusual weather conditions (whether or not caused by climate change), pandemic outbreaks or other health crises, political or civil unrest, acts of violence or terrorism, and disruptive global political events could disrupt business and result in lower sales and otherwise adversely affect our financial performance.

The occurrence of one or more natural disasters, such as hurricane Otis that struck Acapulco, Guerrero on Mexico’s pacific coast on October 25, 2023 where we have 54 stores, and other future hurricanes, fires, floods, tornadoes, earthquakes, unusual weather conditions, pandemic outbreaks or other health crises (including but not limited to the COVID-19 pandemic), political or civil unrest, acts of violence or terrorism, looting (including within our stores, distribution centers or other Company property), or disruptive global political events or similar disruptions could adversely affect our reputation, business and financial performance. If any of these events result in the closure, or a limitation on operating hours, of one or more of our distribution centers, a significant number of stores, our sourcing offices, our corporate headquarters or data center or impact one or more of our key suppliers, our operations and financial performance could be materially and adversely affected through an inability or reduced ability to make deliveries, process payroll or provide other support functions to our stores and through lost sales. For example, as a result of hurricane Otis our stores in Acapulco and surrounding areas, suffered damages and property loss of approximately Ps.91,089 thousand. Given the extensive damage to Acapulco’s infrastructure, its population and their property, we have delayed our expansion plans in the city which may affect our broader expansion plans, operations and financial performance. Although our stores were covered by insurance, there is no assurance that our insurers will cover all or a substantial amount of the losses incurred. Moreover, even if we receive adequate compensation from insurers, there is no guaranty that economic conditions in Acapulco will recover in a manner that will allow us to operate under the same conditions that prevailed before the storm. As of the date of this prospectus, 41 of the 54 stores in Acapulco and surrounding areas remain closed.

These events also could affect consumer shopping patterns or prevent customers from reaching our stores, which could lead to lost sales and higher markdowns, or result in increases in fuel or other energy prices, fuel shortage(s), new store or distribution center opening delays, the temporary lack of an adequate work force in a market, the temporary or long-term disruption of product availability in our stores, the temporary or long-term inability to obtain or access technology needed to effectively run our business, disruption of our utility services or information systems, and damage to our reputation. These events may also increase the costs of insurance if they result in significant loss of property or other insurable damage by us or in the market more generally.

Our current insurance program may expose us to unexpected costs and negatively affect our financial performance.

Our insurance coverage reflects deductibles, self-insured retentions, limits of liability and similar provisions that we believe are prudent based on our operations. However, there are types of losses we may incur but against which we cannot be insured or which we believe are not economically reasonable to insure, such as losses due to acts of war, certain crimes (including employee crime), certain wage and hour and other employment-related claims and litigation, actions based on certain consumer protection laws, and some natural and other disasters or similar events. If we incur material uninsured losses, our financial performance could suffer. Certain material events, such as political developments, security concerns and natural disasters have resulted, and may result again in sizable losses for the insurance industry and adversely affect the availability of adequate insurance

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coverage or result in excessive premium increases. To offset negative insurance market trends, we may elect to self-insure, accept higher deductibles or reduce the amount of coverage. In addition, we self-insure a significant portion of expected losses under our workers’ compensation, automobile liability, general liability (including claims made against certain of our landlords), property loss, and group health insurance programs. Significant changes in actuarial assumptions and management estimates underlying our recorded liabilities for these losses, including any expected increases in medical and indemnity costs, could result in materially different expenses than expected under these programs, which could materially and adversely affect our results of operations and financial condition. Although we maintain property insurance for catastrophic events at our store support center and distribution centers, we are effectively self-insured for other property losses. If we experience a greater number of these losses than we anticipate, our financial performance could be adversely affected.

Any events that negatively impact the reputation of, or value associated with the Tiendas 3B brand or any of our private labels could adversely affect our business.

The Tiendas 3B brand along with our other private labels are important assets of our business. Maintaining the reputation of and value associated with our brands is central to the success of our business we could be adversely affected if customers lose confidence in the safety and quality of the products sold or provided by us. For third-party brands, we depend on our suppliers’ investments in their own marketing and promoting their brands in order for customers to purchase their products rather than those of the suppliers’ competitors. We also depend on our suppliers to comply with applicable employment, environmental and other laws and standards so as not to negatively impact the Tiendas 3B name. However, there can be no assurance that suppliers are or will remain in compliance with such laws.

In light of the increased public focus on employment, health and safety and environmental matters, a violation, or allegations of a violation of such laws or regulations, or a failure to achieve particular standards by any of our manufacturers, could lead to unfavorable publicity and a decline in public demand for our products, or require us to incur expenditure or make changes to our supply chain and other business arrangements to ensure compliance. Any such events concerning us, or any of our manufacturers or suppliers that supply our products could create substantial erosion in the reputation of, or value associated with, the Tiendas 3B label or our other private labels and could result in a material adverse effect on our business, results of operations, financial condition, or prospects.

A significant change in governmental regulations and requirements could materially increase our cost of doing business, and noncompliance with governmental regulations could materially and adversely affect our financial performance.

We routinely incur significant costs in complying with numerous and frequently changing laws and regulations, including those applicable to the opening and operation of our stores. The complexity of this regulatory environment and related compliance costs continue to increase due to additional legal and regulatory requirements, our expanding operations, and increased regulatory scrutiny and enforcement efforts. New or revised laws, regulations, policies, rules (normas oficiales) and related interpretations and enforcement practices, particularly those dealing with the sale of products, including without limitation, product and food safety, marketing or labeling; consumer protection; information security and privacy; labor and employment; employee wages and benefits; health and safety; imports and customs; taxes; and environmental compliance, may significantly increase our expenses or require extensive system and operating changes that could materially increase our cost of doing business. Violations of applicable laws and regulations or untimely or incomplete execution of a required product recall can result in significant penalties (including loss of licenses or significant fines), class action or other litigation, governmental investigation or action and reputational damage. Additionally, changes in tax laws (including those related to the corporate tax rate), the interpretation of existing laws, or our failure to sustain our reporting positions on examination could adversely affect our overall effective tax rate. Furthermore, significant and/or rapid increases to the minimum wage rates could adversely affect our earnings if we are not able to otherwise offset these increased labor costs elsewhere in our business.

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Our operations are subject to the general risks of litigation.

We are involved, on an ongoing basis, in litigation arising in the ordinary course of business or otherwise, which could result in unfavorable decisions or financial penalties against us. Litigation may include class actions involving consumers, shareholders, employees or personal injury, and claims related to commercial, labor, employment, antitrust, tax, administrative, intellectual property, torts, contract, securities or environmental matters. Moreover, litigation requires substantial time, which may distract our management. Even if we are successful, any litigation may be costly, and any awards may not approximate the costs of such litigation. Furthermore, there may be claims or expenses, which are denied insurance coverage by our insurance carriers, not fully covered by our insurance, in excess of the amount of our insurance coverage or not insurable at all. Litigation trends and expenses and the outcomes of litigation cannot be predicted with certainty and adverse litigations, trends, expenses and outcomes could have a material adverse effect on our business, financial condition, results of operations and prospects.

We will continue to be subject to legal proceedings and we may be subject to investigations. We cannot assure you that these proceedings and investigations will not have an adverse effect on our business, financial condition, results of operations and prospects. Moreover, adverse publicity about regulatory or legal actions or investigations and allegations by other parties involved in regulatory or legal actions against us could damage our reputation and brand image, undermine our customers’ confidence and reduce long-term demand for our products, even if the regulatory or legal action is unfounded or not material to our operations.

The development and strengthening of the class action system could adversely affect our business and operations.

Since 2011, there is a legal framework in Mexico that allows the exercise of class actions in relation to the consumption of goods or services and in environmental matters. This could result in the filing of class actions against us by our customers or other market participants. Due to lack of judicial precedents in the interpretation and application of such laws, we cannot anticipate that class actions will be initiated against us, the outcome of any class action brought against us under such laws, including the extent of any liability and the impact of such liability on our activities, our financial situation, results of operations, cash flows, its prospects and/or the market price of our Class A common shares.

Changes in law, structural reforms, and related regulations that could impact pricing, reimbursement and coverage may adversely affect our business.

The continuing increase in consumer expenditures has been the subject of considerable government attention almost everywhere we conduct business. We cannot assure you that local, regional or federal government in the regions in which we operate will not enact laws or regulations designed to protect customer or reduce costs for consumers, including by imposing price caps on basic staples such as those primarily sold at our stores. Any such laws or regulations, changes thereto, or the enforcement thereof could adversely affect our pricing and profitability. Moreover, local governments may delay or restrict permits for new store locations in an effort to protect smaller local businesses or municipal markets, which could affect our ability to continue expanding.

Government investigations into sales and marketing practices may result in substantial penalties.

We operate in complex legal and regulatory environments, and any failure to comply with applicable laws, rules and regulations may result in civil and/or criminal legal proceedings. As those rules and regulations change or as interpretations of those regulations evolve, our prior conduct or that of companies we have acquired may be called into question. Such proceedings are unpredictable and may develop over lengthy periods of time. In addition, fines and corrective measures can be expensive and disruptive to operations.

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We are subject to the Mexican federal anticorruption laws, and similar worldwide anticorruption, anti-bribery and anti-money laundering laws. Failure to comply with these laws could result in penalties, which could harm our reputation and have an adverse effect on our business.

Our business is subject to a significant number of laws, rules and regulations, including those relating to anti-bribery, anti-corruption and anti-money laundering. However, the Mexican regulatory regime related to anti-bribery, anti-corruption and anti-money laundering legislation is still developing and could be less stringent than anti-bribery, anti-corruption and anti-money laundering legislation, which has been implemented in other jurisdictions.

We have implemented compliance processes and internal control systems designed to prevent and detect inappropriate practices, fraud or violation of law. However, our existing compliance processes and internal control systems may not be sufficient to prevent or detect all inappropriate practices, fraud or violations of law by our employees, contractors, agents, officers or any other persons who conduct business with or on behalf of us. We may in the future discover instances in which we have failed to comply with applicable laws and regulations or internal controls. If any of our employees, contractors, agents, officers or other persons with whom we conduct business engage in fraudulent, corrupt or other improper or unethical business practices or otherwise violate applicable laws, regulations or our own internal compliance systems, we could become subject to one or more enforcement actions by Mexican or foreign authorities (including the U.S. Department of Justice) or otherwise be found to be in violation of such laws, which may result in penalties, fines and sanctions and in turn adversely affect our reputation, business, financial condition and results of operations.

We are subject to the provisions contained in the Mexican Industrial Property Law.

The brands that we operate are subject to the special provisions contained in the Mexican Industrial Property Law (Ley Federal de Protección a la Propiedad Industrial). These provisions are subject to frequent changes, which generally have a tendency to make them more stringent. Although future capital and operating expenses have been budgeted to maintain compliance with the Mexican Industrial Property Law, it cannot be guaranteed that they will be sufficient in the face of a change or future application of a much stricter law than the current one. Therefore, we cannot assure you that the costs of complying with this law or the provisions related to this matter, current and future, or derived from a more strict or different interpretation of this law, and the responsibility that could be incurred by failure to comply with it will not adversely affect our operations, results of operations, cash flow or financial condition.

Failure to meet evolving expectations for reporting on or implementing environmental, social and governance (ESG) matters could adversely affect our sales and results of operation.

Expectations from shareholders, customers, employees, and other third parties concerning ESG reporting have increased and are increasing, and our ability to meet those expectations is dependent on several factors, including cooperation from suppliers and access to consistent and reliable data. Negative consumer perceptions regarding the sourcing of the products we sell and the sufficiency and transparency of our reporting on ESG matters, where applicable or as required by law, and events that give rise to actual, potential, or perceived compliance and social responsibility concerns could damage our reputation, result in lost sales, cause our clients to seek alternative sources for their products and make it difficult and costly for us to regain our client’s confidence.

We are subject to risks due to breaches of the Federal Law on Protection of Personal Data Held by Private Parties (Ley Federal de Protección de Datos Personales en Posesión de los Particulares).

We are subject to compliance with the Federal Law on Protection of Personal Data Held by Private Parties (Ley Federal de Protección de Datos Personales en Posesión de los Particulares). While we have procedures in place to comply at all times with such law, we are susceptible to breaches, due to our highly diversified operation

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and increasing e-commerce activity as well as complexity over digital protections, and its interactions across multiple systems including hardware, software, networks, applications, services or any other information technology that allow the exchange or computerized processing or digitized data. We will be susceptible to any violation that interrupts the protection of customer information, administrative security measures, physical security, unauthorized access by third parties, protection of mobile equipment, maintenance of data warehouses, technical security measures, electronic support, and physical support, among others. Since some of the information we receive is considered as sensitive in terms of the Mexican Federal Law on Personal Data Protection (Ley Federal de Protección de Datos Personales en Posesión de los Particulares), any breaches or perceived breaches of data privacy may lead to a wide range of sanctions from regulators as well as reduced confidence from clients and affect our reputation, which may have a substantial effect on our results.

We are subject to the Mexican Federal Consumer Protection Law.

We are subject to laws and regulations related to consumer protection, particularly with respect to our marketing and promotional programs. Despite the strict measures we take to protect our customers and our constant focus on improving the customer experience, there is a risk that a violation of consumer protection laws may occur at a store as part of our daily interaction with clients. In the event of non-compliance, the Mexican Consumer Protection Agency (Procuraduría Federal del Consumidor) could initiate proceedings against us, as well as impose sanctions, such as fines or closures to establishments, which could affect our operating results. Additionally, we may be subject to penalties from the Mexican Consumer Protection Agency (Procuraduría Federal del Consumidor) if we use marketing materials with inaccurate or misleading information, which, in turn may have an adverse effect in our reputation, business, financial condition and results of operation.

Risks Relating to Mexico and Other Global Risks

Since our operations are all based in Mexico, economic developments in Mexico may adversely affect our business and results of operations.

Currently, all of our operations are conducted, and all of our customers are located, in Mexico. Accordingly, our ability to raise revenues, our financial condition and results of operations are substantially dependent on the economic conditions prevailing in Mexico. As a result, our business may be significantly affected by the Mexican economy’s general condition, by the depreciation of the Mexican peso, by inflation and high interest rates in Mexico, or by political developments in Mexico. Declines in growth, high rates of inflation and high interest rates in Mexico have a generally adverse effect on our operations. If inflation in Mexico increases while economic growth slows, our business, results of operations and financial condition will be affected. The Mexican government may adopt policies, changes in law and drastic measures to attempt to control and reduce the inflation such as price controls and restrict product offering which may have a significant effect on Mexican private business, supply chains and ultimately our margins In addition, high interest rates and economic instability could increase our costs of financing.

During 2019 and 2020, Mexico’s sovereign debt rating was subject to downward revisions and negative outlooks from major rating agencies as a result of such agencies assessment of the overall financial capacity of the government of Mexico to pay its obligations and its ability to meet its financial commitments as they become due, citing among other factors, concerns with the state oil company (Petróleos Mexicanos, or “PEMEX”), and weakness in the macroeconomic outlook due to, among other things, trade tensions. We cannot ensure that the rating agencies will not announce additional downgrades of Mexico and/or PEMEX in the future. These downgrades could adversely affect the Mexican economy and, consequently, our business, financial condition, operating results and prospects. According to INEGI, for the year ended December 31, 2021, real GDP increased 4.7% and for the year ended December 31, 2022, real GDP increased 3.1%. In the event that the Mexican economy experiences a continued deterioration of economic conditions such as inflation, interest rate increases, downgrade of sovereign debt, among other factors, the activities, financial situation, operating results, cash flows and/or prospects of the Issuer, could be adversely and significantly affected.

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Developments in other countries could materially affect the Mexican economy and, in turn, our business, financial condition and results of operations.

Mexico’s economy is vulnerable to global market downturns and economic slowdowns. The global economy, including that of Mexico, was materially and adversely affected by a significant lack of liquidity, disruption in the credit markets, reduced business activity, rising unemployment, interest rates changes and erosion of consumer confidence during the global pandemic and its effects. This situation has had a direct adverse effect on the purchasing power of our customers in Mexico. The macroeconomic environment in which we operate is beyond our control, and the future economic environment may continue to be less favorable than in recent years. There is no assurance of a strong economic recovery or that the current economic conditions will ameliorate. The risks associated with current and potential changes in the Mexican economy are significant and could have a material adverse effect on our business and results of operations.

The market prices of securities issued by companies with Mexican operations are affected to varying degrees by the economic and market situation in other places, including the United States, China, the rest of Latin America and other countries with emerging markets. Therefore, investors’ reactions to events in any of these countries could have an adverse effect on the market price of securities issued by companies with Mexican operations. Past economic crises that have occurred in the United States, China or in countries with emerging markets could cause a decrease in the levels of interest in the securities issued by companies with Mexican operations.

In the past, the emergence of adverse economic conditions in other emerging countries has led to capital flight and, consequently, to decreases in the value of foreign investments in Mexico. The financial crisis that arose in the United States during the third quarter of 2008, unleashed a global recession that directly and indirectly affected the economy and the Mexican stock markets and caused, among other things, fluctuations in purchase prices the sale of securities issued by publicly traded companies, shortage of credit, budget cuts, economic slowdowns, volatility in exchange rates, and inflationary pressures.

Financial problems or an increase in risk related to investment in emerging economies or a perception of risk could limit foreign investment in Mexico and adversely affect the Mexican economy. Mexico has historically experienced uneven periods of economic growth and there can be no assurance that the overall business environment in which we operate will improve and we cannot predict the impact any future economic downturn could have on our results of operations and financial condition. However, consumer demand generally decreases during economic downturns, which will negatively affect our business and results of operations.

Fluctuations in the U.S. economy may adversely affect Mexico’s economy and our business.

The U.S. economy heavily influences the Mexican economy, and therefore, the deterioration of the United States’ economy, the termination of the USMCA, claims thereunder or other related events may impact the economy of Mexico. Economic conditions in Mexico have become increasingly correlated to economic conditions in the United States as a result of the North American Free Trade Agreement (“NAFTA”), and, subsequently, the USMCA, which has induced higher economic activity between the two countries and increased the remittance of funds from Mexican immigrants working in the United States to Mexican residents. On an annual basis, in 2022, almost 81.8% of Mexico’s total exports were purchased by the United States, the single country with the highest share of trade with Mexico.

Likewise, any action taken by the current U.S. or Mexico administrations, including changes to the USMCA and/or other U.S. government policies that may be adopted by the U.S. administration, could have a negative impact on the Mexican economy, such as reductions in the levels of remittances, reduced commercial activity or bilateral trade or declining foreign direct investment in Mexico. In addition, increased or perceptions of increased economic protectionism in the United States, Mexico and other countries could potentially lead to lower levels of trade and investment and economic growth, which could have a similarly negative impact on the Mexican economy. These economic and political consequences could adversely affect our business, operating results and financial condition.

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We cannot make assurances that any events in the United States or elsewhere will not materially and adversely affect us.

The effects of the COVID-19 pandemic, or other similar public health crises, may continue to amplify the risks and uncertainties facing our business.

COVID-19 has impacted and may continue to impact our business and the long-term impacts of the social, economic, and financial disruptions caused by the COVID-19 pandemic and the government responses to such disruptions are unknown. In addition, the impact on our business of the long-term effects of the COVID-19 pandemic, or other similar public health crises, will depend on numerous factors that we cannot accurately predict.

While our operations have generally stabilized since the peak of the pandemic, we cannot predict with certainty the extent that our operations may continue to be impacted by any continuing effects of COVID-19 on us or on our customers, suppliers, vendors, and other business partners, and each of their financial conditions; however, any adverse effect on these parties could materially and adversely impact us. To the extent that COVID-19 or other health disruptions affect the Mexican and global economy and our business, it may also heighten other risks described in this section, including but not limited to those related to consumer behavior and expectations, competition, implementation of strategic initiatives, cybersecurity threats, payment-related risks, supply chain disruptions, labor availability and cost, litigation and operational risk as a result of regulatory requirements.

The political situation in Mexico could negatively affect our operating results.

In Mexico, political instability has been a determining factor in business investment. Significant changes in laws, public policies and/or regulations or the use of public referendums (consultas populares) could affect Mexico’s political and economic situation, which could, in turn, adversely affect our business. Any change in the current consumer protection or outer regulatory policies could have a significant effect on Mexican consumer service providers, including us, variations in interest rates, demand for our products and services, market conditions, and the prices of and returns on Mexican securities.

Mexican political events may significantly affect our business operations. As of the date of this prospectus, the president’s political party and its allies hold a simple majority in the Chamber of Deputies and the Senate and a strong influence in various local legislatures. Although the federal administration currently does not have significant power to implement substantial changes in law, policy and regulations in Mexico, including Constitutional reforms, which could negatively affect our business, results of operations, financial condition and prospects, we cannot guarantee that following the upcoming presidential elections of 2024 this will remain the case. We cannot predict whether potential changes in Mexican governmental and economic policy could adversely affect Mexico’s economic conditions or the sector in which we operate. We cannot provide any assurances that political developments in Mexico, over which we have no control, will not have an adverse effect on our business, results of operations, financial condition and prospects.

As of the date of this prospectus, and after the mid-term elections held on June 6, 2021, the political party Movimiento Regeneración Nacional (National Regeneration Movement, or “Morena”) lost the absolute majority in the Cámara de Diputados (Chamber of Deputies) that it had held since 2018. However, Morena continues to hold the most seats relative to any other political party. In June 2024, Mexico will hold presidential elections and will renew the composition of the Chamber of Deputies (Cámara de Diputados), as well as local congresses and local governments. We cannot predict the impact that political developments in Mexico will have on the Mexican economy nor can provide any assurances that these events, over which we have no control, will not have an adverse effect on our business, financial condition and results of operations.

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The Mexican federal government has increasingly made significant changes to policies and regulations and may continue to do so in the future. The Mexican federal government drastically cut spending for the 2019 budget and it may cut spending in the future which may adversely affect economic growth. On July 2, 2019, the new Mexican Federal Republican Austerity Law (Ley Federal de Austeridad Republicana) was approved by the Mexican Senate. Federal government actions, such as those implemented to control inflation, federal spending cuts and other regulations and policies may include, among other measures, increases in interest rates, changes in tax policies, price controls, currency devaluations, capital controls and limits on imports. Our business, financial condition and results of operations may be adversely affected by changes in governmental policies or regulations involving or affecting our management, operations and tax regime.

We cannot assure you that changes in the Mexican federal government policies will not adversely affect our business, financial condition and results of operations. In particular, tax legislation in Mexico is subject to continuous change, and we cannot assure you that the Mexican government will maintain existing political, social, economic or other policies or that such changes would not have a material adverse effect on our business, financial condition, results of operations and prospects.

The administration of Mr. López Obrador has taken actions that have significantly undermined investors’ confidence in private ventures following the results of public referendums, such as the cancellation of public and private projects authorized by previous administrations, including the construction of the new Mexican airport, which immediately prompted the revision of Mexico’s sovereign rating, the cancellation of the construction of a brewing facility of “Constellation Brands” in Baja California, Mexico, the expropriation of “Ferrosur’s” railways in the Tehuantepec Isthmus, and the recent unilateral changes in the tariff regimes for private concessionaires of Mexican airports. Mexican Congress has also passed amendments to the Electric Industry Law (Ley de la Industria Eléctrica) which seek to disincentivize private investment in the electricity sector and concentrate generation within state-owned companies and laws that reduce the independence of the Instituto Nacional Electoral, Mexico’s election supervisory body. Investors and credit rating agencies may be cautious about the Morena’s policies, which could contribute to a decrease in the Mexican economy’s resilience in the event of a global economic downturn. We cannot assure you that similar measures will not be taken in the future, which could have a negative effect on Mexico’s economy.

We cannot predict the impact that economic, social and political instability in or affecting Mexico could adversely affect our business, financial condition and results of operations, as well as market conditions and prices of our securities. These and other future developments, over which we have no control, in the Mexican economic, political or social environment may cause disruptions to our business operations and decreases in our sales and net income.

Fluctuation of the Mexican peso relative to the U.S. dollar could adversely affect our financial condition, our ability to repay debt and other obligations and results of operations.

The exchange rate for the Mexican peso fluctuates in relation to the U.S. dollar and such fluctuations may, from time to time, have a material adverse effect on our earnings, assets, liability valuation and cash flows. Given most of our suppliers’ raw materials are dollarized commodities or subject to global price fluctuations, depreciations of the Mexican peso may also increase the cost of our products. Given our pricing strategy, we may not always be able to pass on these increased costs to our clients sufficiently quickly or at all. Any failure or delay to pass on increased costs may adversely affect our profitability.” A material devaluation or depreciation of the Mexican peso against the U.S. dollar may result in disruption of the international foreign exchange markets and may limit our ability to transfer or to convert Mexican pesos into U.S. dollars and other currencies to make timely payments of interest and principal on our U.S. dollar-denominated debt or obligations in other currencies.

The Mexican peso is a free-floating currency and, as such, it experiences exchange rate fluctuations relative to the U.S. dollar over time. According to the Mexican Central Bank, during 2020, the Mexican peso depreciated by 5.2% against the U.S. dollar as compared to December 31, 2019. As of December 31, 2021, the Mexican peso had depreciated against the U.S. dollar by 2.7% as compared to December 31, 2020; however during the last months of 2022 and the first nine months of 2023, the Mexican peso has significantly appreciated against the

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U.S. dollar. While the Mexican government does not currently restrict, and since 1982 has not restricted, the right or ability of Mexican or foreign persons or entities to convert Mexican pesos into U.S. dollars or to transfer other currencies out of Mexico, the Mexican government could impose restrictive exchange rate policies or exchange controls in the future, as it has done in the past. Currency fluctuations may have an adverse effect on our financial position, results and cash flows in future periods. When the financial markets are volatile, as they have been in recent periods, our results may be substantially affected by variations in exchange rates and commodity prices and, to a lesser degree, interest rates. These effects include foreign exchange gain and loss on assets and liabilities denominated in U.S. dollars, fair value gain and loss on derivative financial instruments, commodities prices and changes in interest income and interest expense. These effects can be much more volatile than our operating performance and our operating cash flows.

The Mexican government exercises significant influence over the economy, and we face the risk of change in law.

The Mexican government has and is increasingly seeking to exert additional influence over the Mexican economy. Policies implemented by the Mexican government, changes in law and structural reforms may have a significant effect on Mexican private business, assets and securities. In the past, no party had a majority in Mexico’s congress, and congressional opposition hampered the passage of laws and reforms. However, as of the date of this prospectus, the president’s political party and its allies hold a simple majority in the Chamber of Deputies and the Senate and a strong influence in various local legislatures. The increased influence of the executive branch increases the risk of unexpected changes in law and policy.

Security risks in Mexico could increase, and this could adversely affect our results.

Mexico continues to experience high levels of violence and crime due to, among other factors, the activities of organized crime. Despite the measures adopted by the Mexican government, organized crime (especially drug-related crime) continues to exist and operate in Mexico. These activities, their possible escalation and the violence associated with them have had and may have a negative impact on the Mexican economy or on our operations in the future. The presence of violence among drug cartels, and between these and the Mexican law enforcement and armed forces, or an increase in other types of crime, pose a risk to our business, and might negatively impact business continuity.

High crime rates throughout Mexico could negatively our sales and operations. We and are our personnel are exposed to safety threats such as theft, assault or destruction of property. Additionally, our fleet and the merchandise it transports is subject to an increased risk of theft, particularly on Mexican highways. Although we have established measures to mitigate these risks and recover stolen goods, criminal events, could negatively influence business by reducing the flow of customers to our stores if the area is deemed or perceived to be unsafe and may disrupt our supply chain and increase our operating, logistics and safety costs.

Changes in global trade policy could adversely affect our business.

Political leaders in the United States and in other countries have been elected on protectionist platforms, fueling doubts about the future of global free trade. The U.S. government has indicated its intent to alter its approach to international trade policy and in some cases to renegotiate, or potentially terminate, certain existing bilateral or multi-lateral trade agreements and treaties with foreign countries, and has made proposals and taken actions related thereto. In addition, the U.S. government has recently imposed tariffs on certain foreign goods, including steel and aluminum and has indicated a willingness to impose tariffs on imports of other products. Some foreign governments, including China, have instituted retaliatory tariffs on certain U.S. goods and have indicated a willingness to impose additional tariffs on U.S. products. Other countries, including Mexico, have threatened retaliatory tariffs on certain U.S. products. Global trade disruption, significant introductions of trade barriers and bilateral trade frictions, together with any future downturns in the global economy resulting therefrom, could adversely affect our financial performance. In particular, the United States, Mexico and Canada recently renegotiated the North American Free Trade Agreement. Under the renamed USMCA, several provisions were renegotiated and the extent to which they will affect the Mexican economy is still uncertain.

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There can be no assurance that the USMCA will not be renegotiated, or its terms will continue to drive growth in Mexico, or that U.S. and Mexico trade relations will not deteriorate leading to further imposition of trade barriers. Any trade dispute between the United States and Mexico may have negative effects on the Mexican economy, the exchange rate, inflation and economic prospects, which will in turn negatively affect our business and results of operation.

High inflation rates may adversely affect our financial condition and results of operations.

The current inflation rate in Mexico is higher than the inflation rates of its most important commercial partners, including the United States and Canada. High inflation rates could adversely affect our business and financial condition and our results of operations. Mexico has a history of high levels of inflation and may experience high inflation in the future. Historically, inflation in Mexico has led to higher interest rates, depreciation of the Mexican peso and the imposition of substantial government controls over prices. The annual rate of inflation for the last three years, as measured by changes in the Mexican National Consumer Price Index (Índice Nacional de Precios al Consumidor), as provided by INEGI and as published by the Mexican Central Bank, was 3.2% in 2020, 7.4% in 2021 and 7.8% in 2022. If Mexico experiences high levels of inflation as it has in the past, these might adversely affect our operations and financial performance.

Furthermore, the impact of COVID-19, geopolitical developments such as the Russia-Ukraine conflict and global supply chain disruptions continue to increase uncertainty in the outlook of near-term and long-term economic activity, including whether inflation will continue and how long, and at what rate. Increases in inflation raise our costs for commodities, labor, materials and services and other costs required to grow and operate our business, and failure to secure these on reasonable terms may adversely impact our financial condition. Additionally, increases in inflation, along with the uncertainties surrounding COVID-19, geopolitical developments and global supply chain disruptions, have caused, and may in the future cause, global economic uncertainty and uncertainty about the interest rate environment, which may make it more difficult, costly or dilutive for us to secure additional financing. A failure to adequately respond to these risks could have a material adverse impact on our financial condition, results of operations or cash flows

Risks Relating to this Offering and Our Class A Common Shares

Our principal shareholder, Bolton Partners Ltd., will own all of our Class B common shares and a portion of our Class C common shares, which in the aggregate will represent approximately 46.4% of the voting power of our common shares immediately following this offering and will therefore exercise significant influence over all matters requiring shareholder approval, which will limit or preclude your ability to influence corporate matters.

Each Class A common share, which are the shares being sold in this offering, will entitle its holder to one vote per share, each Class C common share will entitle its holder one vote per share and each Class B common share will entitle its holder to 15 votes per share, so long as the total number of the issued and outstanding Class B common shares represents at least 1.0% of the aggregate number of the aggregate common shares of the Issuer then outstanding.

Immediately following this offering, our principal shareholder will own all of our Class B common shares and a portion of our Class C common shares, representing approximately 46.4% of the voting power and 11.6% of the total number of our outstanding common shares, and will therefore have significant influence over matters requiring shareholder approval. However, the foregoing does not include Class C common shares that will be held by our principal shareholder and our directors and officers in respect of both unvested and vested (but currently unexercisable) stock options or delayed-delivery awards under the Liquidity Event Bonus Plan and the Founder Liquidity Bonus, as applicable. Taking into account such Class C common shares, which our principal shareholder, directors and officers will be entitled to receive at later dates, and assuming net settlement at their respective strike prices, our principal shareholder would beneficially own approximately 45.0% of the combined voting power of our outstanding common shares following this offering. See “Principal and Selling Shareholders.”

As a result, and for so long as our principal shareholder continues to beneficially own a sufficient number of Class B common shares and Class C common shares, our principal shareholder will have significant influence over the

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outcome of all decisions taken by our shareholders. Our principal shareholder will also be able to significantly influence our actions in areas such as business strategy, financing, distributions, acquisitions and dispositions of assets or businesses. For example, our principal shareholder’s significant influence may cause us to make acquisitions that increase the amount of our indebtedness or outstanding Class A common shares, sell revenue-generating assets or inhibit change of control transactions that benefit other shareholders. Our principal shareholder’s decisions on these matters may be contrary to your expectations, preferences, or interests. Our principal shareholder may be able to prevent any other shareholder, including you, from blocking these actions. Our multiple class capital structure and our staggered board of directors may also limit the ability of others to acquire control. For more information, see “Description of Share Capital—Voting Rights” and “Management—Board of Directors.”

Our Class A common shares may not be a suitable investment for all investors, as an investment in our Class A common shares presents risks and the possibility of financial losses.

The investment in our Class A common shares is subject to risks. Investors who wish to invest in our Class A common shares are subject to asset losses, including loss of the entire value of their investment, as well as other risks, including those related to our Class A common shares, us, the sector in which we operate, our shareholders and the general macroeconomic environment in Mexico, among other risks.

Each potential investor in our Class A common shares must therefore determine the suitability of that investment in light of its own circumstances. In particular, each potential investor should:

• have access to, and knowledge of, appropriate analytical tools to evaluate, in the context of its particular financial situation, an investment in our Class A common shares and the impact our Class A common shares will have on its overall investment portfolio;

• have sufficient financial resources and liquidity to bear all of the risks of an investment in our Class A common shares;

• understand thoroughly the terms of our Class A common shares and be familiar with the behavior of any relevant indices and financial markets; and

• be able to evaluate (either alone or with the help of a financial adviser) possible scenarios for economic, interest rate and other factors that may affect its investment and its ability to bear the applicable risks.

We may elect to raise additional capital in the future by issuing securities or may enter into corporate transactions with an effect similar to a merger, which may dilute your interest in our shares and affect the trading price of our Class A common shares.

We may elect to raise additional funds to grow our business and implement our growth strategy through public or private issuances of common shares or securities convertible into, or exchangeable for, our Class A common shares, including by using Class A common shares as acquisition consideration. Any such event may dilute your interest in our share capital or result in a decrease in the market price of our Class A common shares. In addition, we may also enter into mergers or other similar transactions in the future, which may dilute your interest in our shares or result in a decrease in the market price of our Class A common shares. Any fundraising through the issuance of shares or securities convertible into or exchangeable for our Class A common shares, or the participation in corporate transactions with an effect similar to a merger, may dilute your interest in our capital stock or result in a decrease in the market price of our Class A common shares.

We do not anticipate paying any cash dividends in the foreseeable future.

We currently intend to retain our future earnings, if any, for the foreseeable future, to fund the operation of our business and future growth. Accordingly, we do not anticipate paying any cash dividends to holders of our Class A common shares. As a result, capital appreciation in the price of our Class A common shares, if any, will be your only source of gain on an investment in our Class A common shares. The declaration, payment and amount of any future dividends will be made at the discretion of our board of directors and will depend upon, among other things, the results of operations, cash flows and financial condition, operating and capital requirements, and other factors as our board of

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directors considers relevant. In addition, our holding company structure makes us dependent on the operations of our subsidiaries. There is no assurance that future dividends will be paid, and if dividends are paid, there is no assurance with respect to the amount of any such dividend. See “Dividends and Dividend Policy.”

Class A common shares eligible for future sale, or the perception that there may be future sales of Class A common shares, may cause the market price of our Class A common shares to drop significantly.

The market price of our Class A common shares may decline as a result of sales of a large number of our Class A common shares in the market, by our principal shareholder, the Cornerstone Investors or our existing shareholders after this offering or the perception that these sales may occur. These sales, or the possibility that these sales may occur, also might make it more difficult for us to sell equity securities in the future at a time and at a price that we deem appropriate.

Following the completion of this offering, we will have outstanding 33,660,589 Class A common shares (or 38,709,677 Class A common shares, if the underwriters exercise in full their option to purchase additional shares from the selling shareholders), 5,200,000 Class B common shares and 73,340,163 Class C common shares (or 68,291,075 Class C common shares, if the underwriters exercise in full their option to purchase additional shares from the selling shareholder). Our Class A common shares sold in this offering will be freely tradable without restriction or further registration under the Securities Act by persons other than our affiliates within the meaning of Rule 144 of the Securities Act.

Our existing shareholders or entities controlled by them or their permitted transferees will, pursuant to the lock-up provisions of our memorandum and articles of association described below and certain other transfer restrictions, be unable to sell their Class B common shares or Class C common shares or convert those shares into Class A common shares for sale in the public market for the duration of the Liquidity Lock-up Period, other than after 180 days following this offering pursuant to registration rights in connection with possible follow-on offerings. If any of our shareholders, the affiliated entities controlled by them or their respective permitted transferees were to sell a large number of their Class A common shares pursuant to their registration rights, the market price of our Class A common shares may decline significantly. In addition, the perception in the public markets that sales by them might occur may also cause the trading price of our Class A common shares to decline.

Our memorandum and articles of association provide that the holders of Class B common shares and Class C common shares, subject to certain exceptions including after 180 days, in connection with a follow-on offering, if requested by the requisite shareholders, may not directly or indirectly offer, sell, contract to sell, pledge, grant any option to purchase, make any short sale or otherwise dispose of any Class A common shares, Class B common shares or Class C common shares, or any options or warrants to purchase any such shares, or any securities convertible into, exchangeable for or that represent the right to receive such shares during the initial 180-day lock-up period and for the duration of the Liquidity Lock-Up Period.

Sales of a substantial number of our Class A common shares upon expiration of the lock-up provisions of our memorandum and articles of association, the perception that such sales may occur, could cause the market price of our Class A common shares to fall or make it more difficult for you to sell your Class A common shares at a time and price that you deem appropriate.

Our multiple class capital structure means our Class A common shares will not be included in certain indices. We cannot predict the impact this may have on the trading price of our Class A common shares.

We cannot predict whether our multiple class capital structure, combined with the concentrated control of our company will result in a lower or more volatile market price of our Class A common shares or in adverse publicity or other adverse consequences. FTSE Russell, S&P Dow Jones and MSCI announced changes to their eligibility criteria for the inclusion of shares of public companies on certain indices, namely, to exclude companies with multiple classes of common shares. FTSE Russell requires greater than five percent of the company’s voting rights (aggregated across all of its equity securities, including, where identifiable, those not listed or trading) in the hands of public shareholders whereas S&P Dow Jones announced that companies with multiple share class structures, such as ours, will not be eligible for inclusion in the S&P 500, S&P MidCap 400 and S&P SmallCap 600, which together comprise the S&P

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Composite 1500. MSCI also announced its review of no-vote and multi-class structures and temporarily barred new multi-class listings from its ACWI Investable Market Index and U.S. Investable Market 2500 Index. We cannot guarantee that other stock indices will not take a similar approach to FTSE Russell, S&P Dow Jones and MSCI in the future. Pursuant to these policies, our multiple class capital structure makes our Class A common shares ineligible for inclusion in such indices and mutual funds, exchange-traded funds and other investment vehicles that attempt to passively track these indices will not invest in our stock. Any such exclusion from indices could result in a less active trading market for our Class A common shares and depress the valuations of publicly traded companies excluded from the indices compared to those of similar companies that are included. In addition, several shareholder advisory firms have announced their opposition to the use of multiple share class structures. As a result, our multiple class capital structure may cause shareholder advisory firms to publish negative commentary about our corporate governance practices or otherwise seek to cause us to change our capital structure. Any actions or publications by shareholder advisory firms critical of our corporate governance practices or capital structure could also adversely affect the value of our Class A common shares.

Our holding company structure makes us dependent on the operations of our subsidiaries.

The Issuer is a company limited by shares incorporated under the laws of the British Virgin Islands. The Issuer operates as a holding company and, accordingly, our material assets are our direct and indirect equity interests in our subsidiaries. The Issuer is therefore dependent upon the results of operations and, in turn, the payments, dividends and distributions from our subsidiaries for funds to pay our holding company’s operating and other expenses and to pay future cash dividends or distributions, if any, to holders of our Class A common shares, and we may have tax costs in connection with any dividend or distribution. In addition, the payments, dividends and distributions from our subsidiaries to us for funds to pay future cash dividends or distributions, if any, to holders of our Class A common shares, could be restricted under financing arrangements that we or our subsidiaries may enter into in the future and we and such subsidiaries may be required to obtain the approval of lenders to make such payments to us in the event they are in default of their repayment obligations. Under Mexican law, our Mexican subsidiaries may only pay dividends, if among other things, any existing losses applicable to prior years have been made up or absorbed into shareholders equity and after at least 5% of net profits for the relevant fiscal year have been allocated to a legal reserve until the amount of the reserve equals 20% of a company’s paid-in capital stock. If we or our Mexican subsidiaries fail to comply with the requirements to pay dividends under Mexican law, we may not be able to make distributions to our shareholders or service our debt obligations, which could ultimately have a material adverse effect on us.

If securities or industry analysts do not publish research, or publish inaccurate or unfavorable research, about our business, the price of our Class A common shares and their trading volume could decline.

The trading market for our Class A common shares will depend in part on the research and reports that securities or industry analysts publish about us or our business. Securities and industry analysts do not currently, and may never, publish research on our company. If no or too few securities or industry analysts commence coverage of our company, the trading price for our Class A common shares would likely be negatively affected. In the event securities or industry analysts initiate coverage, if one or more of the analysts who cover us downgrade our Class A common shares or publish inaccurate or unfavorable research about our business, the price of our Class A common shares would likely decline. If one or more of these analysts cease coverage of our company or fail to publish reports on us regularly, demand for our Class A common shares could decrease, which might cause the price of our Class A common shares and their trading volume to decline.

As a foreign private issuer, we will have different disclosure and other requirements than U.S. domestic registrants.

As a foreign private issuer, we may be subject to different disclosure and other requirements than domestic U.S. registrants. For example, as a foreign private issuer, in the United States, we are not subject to the same disclosure requirements as a domestic U.S. registrant under the U.S. Securities Exchange Act of 1934, as amended (“Exchange Act”), including the requirements to prepare and issue quarterly reports on Form 10-Q or to file current reports on Form 8-K upon the occurrence of specified significant events, the proxy rules applicable to domestic U.S. registrants under Section 14 of the Exchange Act or the insider reporting and short-swing profit

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rules applicable to domestic U.S. registrants under Section 16 of the Exchange Act. In addition, we intend to rely on exemptions from certain U.S. rules which will permit us to follow British Virgin Islands legal requirements rather than certain of the requirements that are applicable to U.S. domestic registrants.

Furthermore, foreign private issuers are required to file their annual report on Form 20-F within 120 days after the end of each fiscal year, while U.S. domestic issuers that are accelerated filers are required to file their annual report on Form 10-K within 75 days after the end of each fiscal year. Foreign private issuers are also exempt from Regulation Fair Disclosure, aimed at preventing issuers from making selective disclosures of material information. As a result of the above, even though we are required to furnish reports on Form 6-K disclosing the limited information which we have made or are required to make public pursuant to British Virgin Islands law, or are required to distribute to shareholders generally, and that is material to us, you may not receive information of the same type or amount that is required to be disclosed to shareholders of a U.S. company.

As a foreign private issuer, we are permitted to, and we will, rely on exemptions from certain corporate governance standards applicable to U.S. issuers, including the requirement that a majority of an issuer’s directors consist of independent directors. This may afford less protection to holders of our Class A common shares.

U.S. rules require listed companies to have, among other things, a majority of the members of their board of directors to be independent, and to have independent director oversight of executive compensation, nomination of directors and corporate governance matters. As a foreign private issuer, however, we are permitted to, and we will, follow home country practice in lieu of the above requirements. See “Description of Share Capital—British Virgin Islands Company Considerations”

We may lose our foreign private issuer status which would then require us to comply with the Exchange Act’s domestic reporting regime and cause us to incur significant legal, accounting and other expenses.

In order to maintain our current status as a foreign private issuer, either (a) more than 50% of our common shares must be either directly or indirectly owned of record by non-residents of the United States or (b)(1) a majority of our executive officers or directors may not be U.S. citizens or residents; (2) more than 50% of our assets must not be located in the United States; and (3) our business must be administered principally outside the United States. If we lose this status, we would be required to comply with the Exchange Act reporting and other requirements applicable to U.S. domestic issuers, which are more detailed and extensive than the requirements for foreign private issuers. We may also be required to make changes in our corporate governance practices in accordance with various SEC and New York Stock Exchange rules. The regulatory and compliance costs to us under U.S. securities laws if we are required to comply with the reporting requirements applicable to a U.S. domestic issuer may be significantly higher than the costs we will incur as a foreign private issuer.

There is no existing market for our Class A common shares, and we do not know whether one will develop to provide you with adequate liquidity. If the trading price of our Class A common shares fluctuates after this offering, you could lose a significant part of your investment.

Prior to this offering, there has not been a public market for our Class A common shares and, although our Class A common shares have been approved for listing on the New York Stock Exchange, an active trading market for our Class A common shares may not develop. If an active trading market does not develop, you may have difficulty selling any of our Class A common shares that you buy. We cannot predict the extent to which investor interest in our company will lead to the development of an active trading market on the New York Stock Exchange, or otherwise or how liquid that market might become. The initial public offering price for our Class A common shares was determined by negotiations between us and the underwriters and may not be indicative of prices that will prevail in the open market following this offering. Consequently, you may not be able to sell our Class A common shares at prices equal to or greater than the price paid by you in this offering. In addition to the risks described above, the market price of our Class A common shares may be influenced by many factors, some of which are beyond our control, including:

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• announcements by us or our competitors of significant contracts or acquisitions;

• technological innovations by us or competitors;

• the failure of financial analysts to cover our Class A common shares after this offering or changes in financial estimates by analysts;

• actual or anticipated variations in our results of operations;

• changes in financial estimates by financial analysts, or any failure by us to meet or exceed any of these estimates, or changes in the recommendations of any financial analysts that elect to follow our Class A common shares or the shares of our competitors;

• announcements by us or our competitors of significant contracts or acquisitions;

• future sales of our shares; and

• investor perceptions of us and the industries in which we operate.

In addition, the stock market in general has experienced substantial price and volume fluctuations that have often been unrelated or disproportionate to the operating performance of particular companies affected. These broad market and industry factors may materially harm the market price of our Class A common shares, regardless of our operating performance. In the past, following periods of volatility in the market price of certain companies’ securities, securities class action litigation has been instituted against these companies. This litigation, if instituted against us, could adversely affect our financial condition or results of operations. If a market does not develop or is not maintained, the liquidity and price of our Class A common shares could be seriously harmed.

We have broad discretion in the use of the net proceeds from this offering and may not use them effectively.

Our management will have broad discretion in the application of the net proceeds from this offering and could spend the proceeds in ways that do not improve our results of operations or enhance the value of our Class A common shares. The failure by our management to apply these funds effectively could result in financial losses that could have a material adverse effect on our business, financial condition, results of operations and prospects. Pending their use, we may invest the net proceeds from this offering in a manner that does not produce income or that loses value. See “Use of Proceeds.”

Participation in this offering by the Cornerstone Investors could reduce the public float for our Class A common shares.

The Cornerstone Investors have, severally and not jointly, indicated an interest in purchasing up to aggregate of US$118 million in shares of our Class A common shares in this offering at the initial public offering price. The Class A common shares to be purchased by the Cornerstone Investors will not be subject to a lock-up agreement with the underwriters. Because these indications of interest are not binding agreements or commitments to purchase, the Cornerstone Investors may determine to purchase more, less or no shares in this offering or the underwriters may determine to sell more, less or no shares to the Cornerstone Investors. The underwriters will receive the same discount on any of our Class A common shares purchased by the Cornerstone Investors as they will from any other Class A common shares sold to the public in this offering. If one or more of the Cornerstone Investors are allocated all or a portion (or more) of the Class A common shares in which they have indicated an interest in purchasing in this offering, and purchase any such shares, such purchase could reduce the available public float for our common stock if the Cornerstone Investors hold such Class A common shares long term.

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New investors in our Class A common shares will experience immediate and substantial book value dilution after this offering.

The initial public offering price of our Class A common shares will be substantially higher than the pro forma net tangible book value per share of the outstanding Class A common shares immediately after this offering. Based on the initial public offering price of US$17.50 per share and our net tangible book value as of September 30, 2023, if you purchase our Class A common shares in this offering you will pay more for your shares than the amounts paid by our existing shareholders for their shares and you will suffer immediate dilution of approximately US$15.86 per share in pro forma net tangible book value. As a result of this dilution, investors purchasing shares in this offering may receive significantly less than the full purchase price that they paid for the shares purchased in this offering in the event of a liquidation. See “Dilution.”

We have identified material weaknesses in our internal control over financial reporting and, if we fail to remediate such deficiencies (or identify and remediate any other material weaknesses) or otherwise fail to maintain an effective system of internal controls, we may be unable to accurately report our results of operations, meet our reporting obligations or prevent fraud. Any inability to report and file our financial results accurately and timely could harm our business and adversely impact the trading price of our securities.

Internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements in accordance with IFRS. A material weakness is defined as a deficiency, or a combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of a company’s annual or interim financial statements will not be prevented or detected on a timely basis by the company’s internal controls.

Prior to this offering, we have been a private company and have had had limited accounting and financial reporting personnel and other resources with which to address our internal controls and procedures. As a privately held company, we were not required to evaluate our internal control over financial reporting in a manner that meets the standards of publicly traded companies required by Section 404(a) of the Sarbanes-Oxley Act of 2002 (the “Sarbanes-Oxley Act”). We are still in the process of implementing Internal Control—Integrated Framework (2013 Framework) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). However, in connection with the audit of our financial statements as of December 31, 2022 and 2021 and for the years ended December 31, 2022, 2021 and 2020 in accordance with PCAOB standards, we identified material weaknesses in our internal control over financial reporting relating to the presentation of our consolidated financial statements under IFRS where we rely on outside advisors for support and in the segregation of duties related to our ERP system.

Following the identification of these material weaknesses, we have taken measures, and plan to continue to take additional measures, to remediate these issues, including, among others, the engagement of additional personnel. However, the implementation of these measures may not fully address the material weaknesses in our internal control over financial reporting that we have identified, and we cannot, as of the date of this prospectus, conclude that they have been fully remediated. Unless these material weaknesses are timely remediated, there is a risk that our internal control processes may not detect, or detect on a timely basis, misstatements in our financial statements or other financial reporting. In addition, going forward, we may continue to depend on third party advisors in respect of certain financial reporting matters. We have engaged a third-party advisor regarding the implementation of our internal control program and have been working actively during 2023 in anticipation of being a public company in the United States upon consummation of this offering. We are currently aiming to remediate during 2024 the material weaknesses we have identified as part of this internal control program, and we do not currently expect to incur material costs associated with our remediation plan.

After the consummation of this offering, we will be subject to the reporting requirements under the Exchange Act and the Sarbanes-Oxley Act, as well as the rules and regulations of the SEC. Furthermore, once we have implemented Internal Control—Integrated Framework (2013 Framework) issued by COSO, and we perform an evaluation of internal controls over financial reporting under the Sarbanes-Oxley Act, we may identify further

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issues, including additional material weaknesses or control deficiencies. If we fail to maintain the adequacy of our internal control over financial reporting, as these rules and regulations are modified, supplemented, or amended from time to time, we may not be able to conclude on an ongoing basis that we have effective internal control over financial reporting in accordance with Section 404 of the Sarbanes-Oxley Act. In addition, even if our management concludes that our internal control over financial reporting is effective, our independent registered public accounting firm, after conducting its own independent testing, may disagree with our assessment or may issue a report that is qualified if it is not satisfied with our internal controls or the level at which our controls are documented, designed, operated or reviewed, or if it interprets the relevant requirements differently from us. In addition, after we become a public company, our reporting obligations may place a significant strain on our management, operational and financial resources, and systems for the foreseeable future. We may be unable to timely complete our evaluation testing and any required remediation.

If we fail to achieve and maintain an effective internal control environment or remediate any identified material weaknesses and other deficiencies or discover and address future material weaknesses or deficiencies, we could suffer material misstatements in our financial statements, fail to meet our reporting obligations or fail to prevent fraud, which would likely cause investors to lose confidence in our reported financial information. This could, in turn, limit our access to capital markets, subject us to potential delisting from the New York Stock Exchange, harm our results of operations, or lead to a decline in the trading price of our Class A common shares.

Risks Relating to Investing in a British Virgin Islands Company

We are a British Virgin Islands company and it may be difficult for you to obtain or enforce judgments against us or our executive officers and directors in the United States.

The Issuer is incorporated under the laws of the British Virgin Islands. Most of our assets are located outside the United States. Furthermore, most of our directors and officers and the experts named in this prospectus reside outside the United States, and most of their assets are located outside the United States. As a result, you may find it difficult to effect service of process within the United States upon these persons or to enforce outside the United States judgments obtained against us or these persons in U.S. courts, including judgments in actions predicated upon the civil liability provisions of the U.S. federal securities laws. Likewise, it may also be difficult for you to enforce in U.S. courts judgments obtained against us or these persons in courts located in jurisdictions outside the United States, including actions predicated upon the civil liability provisions of the U.S. federal securities laws. It may also be difficult or impossible for an investor to bring an action in a British Virgin Islands court predicated upon the civil liability provisions of the U.S. federal securities laws against us or these persons.

As there is no treaty in force on the reciprocal recognition and enforcement of judgments in civil and commercial matters between the United States and the British Virgin Islands, courts in the British Virgin Islands will not automatically recognize and enforce a final judgment rendered by a U.S. court.

Any final and conclusive monetary judgment obtained against us in U.S. courts, for a definite sum, may be treated by the courts of the British Virgin Islands as a cause of action in itself so that no retrial of the issued would be necessary, provided that in respect of the U.S. judgment:

• the U.S. court issuing the judgment had jurisdiction in the matter and the Issuer either submitted to such jurisdiction or were resident or carrying on business within such jurisdiction and were duly served with process;

• the judgment given by the U.S. court was not in respect of multiple damages, penalties, taxes, fines or similar fiscal or revenue obligations of the Issuer;

• in obtaining judgment there was no fraud on the part of the person in whose favor judgment was given or on the part of the court;

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• recognition or enforcement of the judgment in the British Virgin Islands would not be contrary to public policy of the British Virgin Islands;

• no new admissible evidence relevant to the action is submitted prior to the rendering of the judgment by the courts of the British Virgin Islands;

• the proceedings pursuant to which judgment were obtained did not contravene the rules of natural justice of the British Virgin Islands; and

• there is due compliance with the correct procedures under the laws of the British Virgin Islands.

You may face difficulties in protecting your interests, and your ability to protect your rights through the U.S. federal courts may be limited, because the Issuer is incorporated in the British Virgin Islands.

The Issuer is a company incorporated under the laws of the British Virgin Islands. As a result, it may be difficult for investors to enforce judgments obtained in the United States courts against the Issuer or our directors or officers.

Our corporate affairs will be governed by our memorandum and articles of association, the Companies Act and the common law of the British Virgin Islands. Under our memorandum and articles of association, we indemnify and hold our directors harmless against all claims and suits brought against them, subject to limited exceptions. Under our memorandum and articles of association, to the extent allowed by law, the rights and obligations among or between us, any of our current or former directors, officers and employees and any current or former shareholder will be governed exclusively by the laws of the British Virgin Islands and subject to the exclusive jurisdiction of the British Virgin Islands courts, unless those rights or obligations do not relate to or arise out of their capacities as such. This exclusive jurisdiction may limit the shareholders’ ability to bring a claim against us in a jurisdiction that they consider favorable to them in disputes with us. In addition, it may be costlier for shareholders to present claims in the courts located in the British Virgin Islands, which could discourage such claims. Nevertheless, our shareholders will not be deemed to have waived their rights related to our compliance with U.S. federal securities laws and the rules and regulations thereunder applicable to foreign private issuers. Although there is doubt as to whether U.S. courts would enforce this provision in an action brought in the United States under U.S. securities laws, this provision could make enforcing judgments obtained outside the British Virgin Islands more difficult to enforce against our assets in the British Virgin Islands or jurisdictions that would apply British Virgin Islands law.

There may be less publicly available information about us than is regularly published by or about U.S. issuers. Also, the British Virgin Islands regulations governing the securities of British Virgin Islands companies are not as extensive as those in effect in the United States, and the British Virgin Islands law and regulations in respect of corporate governance matters may not be as protective of minority shareholders as state corporation laws in the United States. Therefore, you may have more difficulty protecting your interests in connection with actions taken by the Issuer, our directors and officers or our principal shareholder than you would as a shareholder of a corporation incorporated in the United States.

The rights of shareholders to take action against the directors, actions by minority shareholders and the statutory and fiduciary responsibilities of our directors to the Issuer under British Virgin Islands law are governed by the Companies Act and the common law of the British Virgin Islands. The common law of the British Virgin Islands is derived from English common law, and whilst the decisions of the English courts are of persuasive authority, they are not binding on a court in the British Virgin Islands. The rights of our shareholders and the statutory and fiduciary responsibilities of our directors under British Virgin Islands law may not be as clearly established as they would be under statutes or judicial precedent in some jurisdictions in the United States. In particular, the British Virgin Islands has a less developed body of securities laws as compared to the United States, and some states, such as Delaware, have more fully developed and judicially interpreted bodies of corporate law. In addition, while statutory provisions do exist in British Virgin Islands law for derivative actions to be brought in certain circumstances, such actions require the permission of a court in the British Virgin Islands

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and shareholders in British Virgin Islands companies may not have standing to initiate a shareholder derivative action in a federal court of the United States. The circumstances in which any such action may be brought, and the procedures and defenses that may be available in respect to any such action, may result in the rights of shareholders of a British Virgin Islands company being more limited than those of shareholders of a company organized in the United States. Accordingly, shareholders may have fewer alternatives available to them if they believe that corporate wrongdoing has occurred.

The British Virgin Islands courts are also unlikely:

• to recognize or enforce against us judgments of courts of the United States based on certain civil liability provisions of U.S. securities laws where that liability is in respect of penalties, taxes, fines or similar fiscal or revenue obligations of the Issuer; and

• to impose liabilities against the Issuer, in original actions brought in the British Virgin Islands, based on certain civil liability provisions of U.S. securities laws that are penal in nature.

As a result of all of the above, public shareholders may have more difficulty in protecting their interests in the face of actions taken by the Issuer, our board of directors, our management or our principal shareholder than they would as public shareholders of a U.S. company. For a discussion of certain differences between the provisions of the Companies Act, remedies available to shareholders and the laws applicable to companies incorporated in the United States and their shareholders, see “Description of Share Capital––British Virgin Islands Company Considerations.”

You may not be able to participate in future equity offerings, and you may not receive any value for rights that we may grant.

Under our memorandum and articles of association, holders of Class B common shares are entitled to preemptive rights in the event that additional Class A common shares are issued in order to maintain their proportional ownership interest. However, our memorandum and articles of association also provide that such preemptive subscription rights do not apply to certain issuances of securities by us, including (i) pursuant to any employee compensation plans; (ii) as consideration for (a) any merger, consolidation or purchase of assets or (b) recapitalization or reorganization; (iii) in connection with a pro rata division of shares or dividend in specie or distribution; or (iv) pursuant to any bona fide shareholder rights plan adopted by the Company, and holders of our Class B common shares are not entitled to the benefits of any redemption or sinking fund provisions.

We are required to comply with economic substance requirements in the British Virgin Islands.

The British Virgin Islands, together with several other non-European Union jurisdictions, have introduced legislation aimed at addressing concerns raised by the Council of the European Union as to offshore structures engaged in certain activities which attract profits without real economic activity. With effect from January 1, 2019, the Economic Substance (Companies and Limited Partnerships) Act, 2018 (as amended, the “ESA”) came into force in the British Virgin Islands introducing certain economic substance requirements for British Virgin Islands tax resident companies which are engaged in certain “relevant activities,” which in our case applies for financial years from 2019 onwards.

At present, the activities which are conducted by us would constitute holding business. Although it is presently anticipated that the ESA will have little material impact on us or our operations, as the legislation is new and remains subject to further clarification and interpretation it may not be possible to ascertain the precise impact of any legislative changes or changes in official guidance on us. We are required to make an annual filing with the British Virgin Islands International Tax Authority confirming if we carried out any “relevant activities” during the preceding financial period and, if so, providing certain prescribed information.

If our activities change or if the scope of the “relevant activities” is changed by subsequent legislation, we may be required to increase our substance in the British Virgin Islands to satisfy such requirements, which could result in additional costs that could adversely affect our financial condition or results of operations. If we were required to satisfy economic substance requirements in the British Virgin Islands but failed to do so, we could face financial penalties, restriction or regulation of our business activities and/or may be struck off as a registered entity in the British Virgin Islands or liquidated.

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SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

This prospectus contains or incorporates by reference forward-looking statements within the meaning of U.S. federal securities laws. You can identify these statements because they are not limited to historical fact or they use words such as “outlook,” “may,” “will,” “should,” “could,” “would,” “believe,” “anticipate,” “plan,” “expect,” “estimate,” “forecast,” “confident,” “opportunities,” “goal,” “prospect,” “positioned,” “intend,” “committed,” “continue,” “future,” “guidance,” “years ahead,” “looking ahead,” “going forward,” “focused on,” “will likely result,” “can,” “project,” “accelerate,” “schedule,” “on track,” “seek,” “ensure,” “potential,” “objective,” “focused on,” “predict,” “look to,” “likely to,” “scheduled to,” or “subject to” and similar expressions that concern our strategy, plans, intentions, initiatives, or beliefs about future occurrences or results.

Readers are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date on which they are made. There is no assurance that the expected events, trends or results will actually occur and we and the underwriters undertake no obligation to update publicly or revise any forward-looking statements and estimates whether as a result of new information, future events or otherwise.

Forward-looking statements include, but are not limited to, statements regarding our current belief or expectations as of the date of this prospectus and estimates on future events and trends that affect or may affect our business, financial condition, results of operations, liquidity, prospects and the trading price of our Class A common shares. Although such forward-looking statements are based on assumptions and information currently available to us, which we believe to be reasonable, none of the forward-looking statements, whether expressed or implied, are indicative of or guarantee future results. Given such limitations, you should not make any investment decision on the basis of the forward-looking statements contained herein.

All forward-looking statements are subject to risks, uncertainties and other factors (including, without limitation, those described under “Risk Factors”) that may cause our actual results to differ materially from those which we expected. Key factors that could cause actual results to differ materially from the expectations expressed in or implied by such forward-looking statements, include, but are not limited to:

• economic factors reducing our customers’ spending, impairing our ability to execute our strategies and initiatives, and increasing our costs and expenses, resulting in materially decreased sales or profitability;

• failure to achieve or sustain our strategies and initiatives, including those relating to store openings, sourcing and supplier relationships, private label product development and cost initiatives, inventory management, supply chain, store operations, expense reduction and technology;

• risks associated with our private label products, including, but not limited to, our level of success in improving their margins;

• our ability to successfully identify, lease, obtain permits for and adapt real estate spaces for stores and distribution centers;

• our ability to renew our existing leases on terms that are not detrimental to us;

• competitive pressures and changes in the business environment and the geographic and product markets where we operate, including, but not limited to, pricing, promotional activity, expanded availability of mobile, web-based and other digital technologies, and alliances or other business combinations;

• our failure to attract, train and retain qualified employees while controlling labor costs and other labor issues;

• our loss of key personnel, including regional management, or inability to hire additional qualified personnel;

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• sustainability of negative levels of working capital;

• product liability, product recall or other product safety or labeling claims;

• risks and challenges associated with sourcing merchandise from suppliers, including, but not limited to, those related to international trade;

• failure to successfully manage inventory balances;

• a significant disruption to our distribution network, the capacity of our distribution centers or the timely receipt of inventory, or delays in constructing or opening new distribution centers;

• damage or interruption to our information systems as a result of external factors, staffing shortages or challenges in maintaining or updating our existing technology or developing or implementing new technology;

• failure to maintain the security of our business, customer, employee or vendor information or to comply with privacy laws;

• the impact of changes in or noncompliance with laws and governmental regulations and requirements (including, but not limited to, those relating to environmental compliance, product and food safety or labeling, information security and privacy, labor and employment, employee wages, and those governing the sale of products, as well as tax laws, the interpretation of existing tax laws, or our failure to sustain our reporting positions, in each case negatively affecting our tax rate) and developments in or outcomes of private actions, class actions, multi-district litigation, arbitrations, derivative actions, administrative proceedings, regulatory actions or other litigation;

• incurrence of material uninsured losses, excessive insurance costs or accident costs;

• deterioration in market conditions, including market disruptions, limited liquidity and interest rate fluctuations, or changes in our credit profile;

• risks related to public health crises such as the COVID-19 outbreak, including but not limited to, the effects on our supply chain, distribution network, store and distribution center growth or customers’ spending patterns;

• natural disasters, unusual weather conditions (whether or not caused by climate change), pandemic outbreaks or other health crises, acts of violence or terrorism, and global political events;

• changes to, or withdrawals from, free trade agreements, including the USMCA to which Mexico is a party; and

• additional factors that may be disclosed under “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations.”

We caution you that the foregoing list of significant factors may not contain all of the material factors that are important to you. In addition, in light of these risks and uncertainties, the matters referred to in the forward-looking statements contained in this prospectus may not in fact occur. Many of these risks are beyond our ability to control or predict. All forward-looking statements attributable to us or persons acting on our behalf are expressly qualified in their entirety by the cautionary statements contained throughout this prospectus.

We caution you that the important factors referenced above may not contain all of the factors that are important to you. We cannot assure you that we will realize the results or developments we expect or anticipate or, even if substantially realized, that they will result in the consequences or affect us or our operations in the way we expect. We undertake no obligation, and specifically disclaim any duty, to update or revise any forward-looking statement as a result of new information, future events or otherwise, except as may be required by law. As a result of these risks and uncertainties, we caution you not to place undue reliance on any forward-looking statements included herein or that may be made elsewhere from time to time by, or on behalf of, us.

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USE OF PROCEEDS

We estimate that the net proceeds from our issuance and sale of 28,050,491 Class A common shares in this offering will be approximately US$453,040,400, after deducting the estimated underwriting discounts and commissions and estimated offering expenses payable by us.

The principal purposes of this offering are to allow us to repay in full the Promissory Notes and the Convertible Notes, obtain additional resources to support the development and growth of our business, provide us with greater financial flexibility, create a public market for our Class A common shares and facilitate our future access to the capital markets. We intend to use the net proceeds to us from this offering for the full repayment of the (i) US$247,103,825 principal and accrued interest on the Senior Promissory Notes. the US$4,100,000 maturity extension fee relating thereto and the US$400,000 one time service fee payable to affiliates of Quilvest Capital Partners, (ii) US$12,634,296 principal and accrued interest on the 2017 Junior Promissory Notes and the US$230,000 maturity extension fee relating thereto, (iii) US$1,055,842 principal and accrued interest on the 2020 Junior Promissory Notes and the US$20,000 maturity extension fee relating thereto and (iv) US$23,229,744 principal and accrued interest on the Convertible Notes, in each case, outstanding as of the date of this prospectus, and the remainder, if any, for general corporate purposes, which may include investing in the expansion of our operations in Mexico, including the opening of new stores, and maintaining liquidity. The Senior Promissory Notes accrue interest at a rate of 14% per annum mature on December 31, 2026. The 2017 Junior Promissory Notes accrue interest at a rate of 15% per annum mature on December 31, 2026. The 2020 Junior Promissory Notes accrue interest at a rate of 14% per annum mature on December 31, 2026. The Convertible Notes accrue interest at a rate of 14% per annum and mature on November 20, 2026. See “Management’s Discussion of Results of Operations and Financial Condition—Indebtedness” for additional information about the Promissory Notes and the Convertible Notes. Any remaining amounts will be used for general corporate purposes. We will have broad discretion in allocating the portion of the net proceeds from this offering that is not used to repay the Promissory Notes and Convertible Notes.

Although we currently anticipate that we will use the net proceeds from this offering as described above, there may be circumstances where a reallocation of funds is necessary. The amounts and timing of our actual expenditures will depend upon numerous factors, including the factors described under “Risk Factors” in this prospectus. Accordingly, our management will have flexibility in applying the net proceeds from this offering. An investor will not have the opportunity to evaluate the economic, financial or other information on which we base our decisions on how to use the net proceeds.

Pending the determination of the net proceeds from this offering, we intend to invest them in a variety of capital preservation investments, including short-term, interest-bearing instruments and government securities. No assurance can be given that we will invest the net proceeds from this offering in a manner that produces income or that does not result in a loss in value.

We will not receive any proceeds from the sale of Class A common shares by the selling shareholders.

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DIVIDENDS AND DIVIDEND POLICY

The amount of any dividends will depend on many factors, such as our results of operations, financial condition, cash requirements, prospects and other factors deemed relevant by our board of directors. We currently intend to retain all available funds and future earnings, if any, to fund the development and expansion of our business and we do not anticipate paying any cash dividends in the foreseeable future. Any future determination to pay dividends will be made at the discretion of our board of directors and will depend on various factors, including applicable laws, our results of operations, financial condition, cash requirements, future prospects and any other factors deemed relevant by our board of directors.

As a holding company, our ability to pay dividends depends on our receipt of cash dividends from our operating subsidiaries, which may further restrict our ability to pay dividends as a result of their respective jurisdictions of incorporation (including imposing legal restrictions on dividend distribution by subsidiaries), agreements of our subsidiaries or covenants under future indebtedness that we or they may incur. Our ability to pay dividends is therefore directly related to positive and distributable net results from our subsidiaries. See “Risk Factors—Risks Related to Our Business and Industry—Our holding company structure makes us dependent on the operations of our subsidiaries.”

Certain British Virgin Islands and Mexican Legal Requirements Related to Dividends

Dividends may only be paid in accordance with the provisions of our memorandum and articles of association and Section 57 of the British Virgin Islands Business Companies Act, 2004 (as amended) where the board of directors is satisfied on reasonable grounds that immediately after the payment of the dividend the value of the Issuer’s assets will exceed its liabilities and the Issuer will be able to pay its debts as they fall due. Pursuant to our memorandum and articles of association, all dividends unclaimed for three years after having been declared may be forfeited by a resolution of directors for the benefit of the Issuer. See “Description of Share Capital.”

Under Mexican law, subject to the satisfaction of certain quorum requirements, only shareholders at a general meeting have the authority to declare a dividend. Although not required by law, such declarations typically follow the recommendation of the board of directors. Additionally, under Mexican law, our Mexican subsidiaries may only pay dividends if, among other things, any existing losses applicable to prior years have been made up or absorbed into shareholders’ equity and after at least 5% of net profits for the relevant fiscal year have been allocated to a legal reserve until the amount of the reserve equals 20% of a company’s paid-in capital stock.

The amount and payment of future dividends, if any, will be subject to applicable law and will depend upon a variety of factors that may be considered by our board of directors or our shareholders, including our future operating results, financial condition, capital requirements, investments in potential acquisitions or other growth opportunities, legal restrictions, contractual restrictions in our current and future debt instruments and our ability to obtain funds from our subsidiaries. Such factors may limit or prevent the payment of any future dividends and may be considered by our board of directors in recommending, or by our shareholders in approving, the payment of any future dividends.

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CAPITALIZATION

The table below sets forth our current and non-current debt and lease liabilities, our total stockholders’ equity and total capitalization (defined as the sum of total debt and lease liabilities plus total stockholders’ equity) as of September 30, 2023, derived from our interim unaudited condensed consolidated financial statements as of September 30, 2023, as follows:

• on a historical basis; and

• as adjusted, to reflect the issuance and sale of 28,050,491 Class A common shares by us in this offering at the initial public offering price of US$17.50 per Class A common share (translated into Mexican pesos using the selling exchange rate of Ps.17.19 per US$1.00, as published by the Mexican Central Bank on January 31, 2024), assuming no exercise of the option by the underwriters to purchase additional Class A common shares, and after deducting underwriting discounts and commissions and estimated offering expenses payable by us and to reflect (i) the repayment in full of the Promissory Notes and the Convertible Notes (as if they had been repaid on September 30, 2023), (ii) the payment of: US$4,100,000 to the Senior Promissory Note holders, US$230,000 to the 2017 Junior Promissory Note holders and US$20,000 to the 2020 Junior Promissory Note holders, as consideration for the Promissory Note holders’ agreement to extend the maturity of the Promissory Notes from May 31, 2024 to December 31, 2026, and (iii) the payment of a onetime US$400,000 service fee to affiliates of Quilvest Capital Partners. Our total capitalization may be different in the event that we do not allocate the net proceeds of this offering as described under “Use of Proceeds.”

You should read this table in conjunction with “Presentation of Financial Information” “Use of Proceeds,” “Summary Financial Information,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” our audited consolidated financial statements as of December 31, 2022 and 2021 and for the years ended December 31, 2022, 2021 and 2020, together with the notes thereto, and our unaudited interim condensed consolidated financial statements as of September 30, 2023 and for the nine months ended September 2023 and 2022, together with the notes thereto, in each case included elsewhere in this prospectus.

	As of September 30, 2023
	Actual			As Adjusted
	(thousands of Ps.)
Cash and cash equivalents	Ps.	1,001,083		Ps.	3,955,324
Current debt and lease liabilities:
Short-term debt	Ps.	778,011		Ps.	778,011
Lease liabilities		518,027			518,027
Non-current debt and lease liabilities:
Debt with related parties(1)		4,300,719			—
Long-term debt		565,777			114,625
Lease liabilities		5,354,493			5,354,493
Total debt and lease liabilities(2)	Ps.	11,517,027		Ps.	6,765,156
Stockholders’ equity:
Capital stock		471,282			8,259,046
Reserve for share-based payments		769,573			769,573
Cumulative losses(3)		(5,860,847	)		(5,942,500	)
Total stockholders’ equity	Ps.	(4,619,992	)	Ps.	3,086,120
Total capitalization	Ps.	6,897,035		Ps.	9,851,276

(1) As of September 30, 2023, the outstanding principal and accrued interest under the Promissory Notes held by related parties that will be repaid with the proceeds of this offering was US$256,669,606 (Ps.4,412,151 thousand). See “Use of Proceeds.”

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(2) As of the date of this prospectus, the aggregate amount of outstanding principal and accrued interest under the Promissory Notes is US$284,023,708 (Ps.4,882,368 thousand).

(3) Cumulative losses reflects payment of: US$4,100,000 to the Senior Promissory Note holders, US$230,000 to the 2017 Junior Promissory Note holders and US$20,000 to the 2020 Junior Promissory Note holders, as consideration for the Promissory Note holders’ agreement to extend the maturity of the Promissory Notes from May 31, 2024 to December 31, 2026, as well as the payment of a one time US$400,000 service fee to affiliates of Quilvest Capital Partners, in each case translated into Mexican pesos using the selling exchange rate of Ps.17.19 per US$1.00, as published by the Mexican Central Bank on January 31, 2024.

Except as set forth above, there has been no material change to our capitalization since September 30, 2023.

To the extent that we grant options to our employees in the future and those options are exercised or other issuances of common shares are made, there will be further dilution to new investors.

We will not receive any proceeds from the sale of Class A common shares by the selling shareholders, and accordingly, our total capitalization will not be impacted by such proceeds received by the selling shareholders.

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DILUTION

As of September 30, 2023, our total stockholders’ equity was Ps.(4,619,992) thousand, and we had a negative net tangible book value of Ps.4,627,042 thousand, corresponding to a negative net tangible book value of Ps.54.99 per common share, after giving effect to the share split (or Ps.164.96 per common share before giving effect to the 3-for-1 share split). Net tangible book value per common share represents the amount of total assets (excluding other intangible assets) less total liabilities, divided by 84,150,261, the total number of the Issuer’s common shares outstanding as of September 30, 2023, after giving effect to the share split (or 28,050,087 common shares before giving effect to the 3-for-1 share split).

After giving effect to the sale by us of the 28,050,491 Class A common shares offered by us in this offering at the offering price of US$17.50 per Class A common share (translated into Mexican pesos using the selling exchange rate of Ps.17.19 per US$1.00, as published by the Mexican Central Bank on January 31, 2024), after deducting the estimated underwriting discounts and commissions and estimated offering expenses payable by us, our pro forma net tangible book value estimated at September 30, 2023 would have been Ps.3,160,722 thousand, representing Ps.28.17 per common share. This represents an immediate increase in net tangible book value of Ps.83.16, or 151.2% per common share, to current shareholders and an immediate dilution in net tangible book value of Ps.272.65, or 90.6% per common share, to new investors purchasing Class A common shares in this offering. Dilution for this purpose represents the difference between the price per common shares paid by these investors and net tangible book value per common share immediately after the consummation of this offering.

If you invest in our Class A common shares, your interest will be diluted to the extent of the difference between the initial public offering price per Class A common share and the pro forma net tangible book value per Class A common share which accounts for the issuance and sale of new Class A common shares in this offering.

Because our Class A common shares, Class B common shares and Class C common shares have the same dividend and other rights, except for voting, conversion, preemptive rights and transfer restrictions, we have counted the Class A common shares, Class B common shares and Class C common shares equally for purposes of the dilution calculations below.

The information in this “Dilution” section does not reflect an additional 54,897,379 Class C common shares that are issuable upon the exercise of options granted under our 2004 Option Plan and awards granted under the Founder Liquidity Bonus and Liquidity Event Bonus Plan, since the exercise of such options and the delivery of such awards is subject and as a result may not be exercised or delivered, as applicable until a later date and no earlier than 180 days from the date of this offering, as applicable. However, investors should note that they may experience further dilution in the future upon the issuance of such Class C common shares. For additional information, see “Management—2004 Option Plan,” “Management—Liquidity Event Bonus Plan” and “Management—Founder Liquidity Bonus.”

The following table illustrates this dilution to new investors purchasing Class A common shares in this offering.

	Ps. (except as otherwise indicated)
Initial public offering price per Class A common share(1)	US$	17.50
Initial public offering price per Class A common share(2)		300.83
Net tangible book value per common share as of September 30, 2023 (after giving effect to the share split)		(54.99	)
Pro forma net tangible book value per common share after completion of this offering(3)		28.17
Increase in pro forma net tangible book value per common share attributable to current shareholders		83.16
Dilution in pro forma net tangible book value per Class A common share attributable to new shareholders(3)		272.65

(1) Corresponds to the initial offering price per Class A common share set forth on the cover page of this prospectus.

(2) Represents US$17.50 as translated into Mexican pesos using the selling exchange rate of Ps.17.19 per US$1.00, as published by the Mexican Central Bank on January 31, 2024.

(3) Dilution represents the difference between the offering price per Class A common share paid by new shareholders and the pro forma net tangible book value per Class A common share immediately after giving effect to this offering.

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The actual offering price per Class A common share is not based on the pro forma net tangible book value of our common shares, but was established based through a book building process.

The following table summarizes, on the same pro forma basis as of September 30, 2023, the number of common shares acquired from us, the total cash consideration paid and the average price per common share paid to us by our current shareholders and by new investors purchasing Class A common shares in this offering. As the table shows, new investors purchasing Class A common shares in this offering will pay an average price per Class A common share substantially higher than our pre-IPO shareholders paid. This information is based on the initial public offering price of US$17.50 per Class A common share, before deducting the underwriting discounts and commissions and estimated offering expenses payable by us in connection with this offering.

	Common Shares Purchased				Total Consideration				Average Price per Common Share (US$)
	Amount		Percentage of   Total Common Shares (%)		Amount (millions of US$)		Percentage (%)
Current shareholders		84,150,261		75.0		27.42		5.3		0.33
New investors(1)		28,050,491		25.0		490.88		94.7		17.50
Total		112,200,752		100.0		518.30		100.0		4.62

(1) Dilution figures presented above only include newly issued common shares and do not reflect common shares sold by the selling shareholders.

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MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

This section contains forward-looking statements that involve risks and uncertainties. Our actual results and the timing of events may differ significantly from those expressed or implied in such forward-looking statements for several reasons, including those described under “Special Note Regarding Forward-Looking Statements” and “Risk Factors” and other issues discussed herein.

The following analysis and discussion of our financial condition and results of operations should be read in conjunction with our audited consolidated financial statements as of December 31, 2022 and 2021 and for the years ended December 31, 2022, 2021 and 2020, together with the notes thereto, and our unaudited interim condensed consolidated financial statements as of September 30, 2023 and for the nine months ended September 30, 2023 and 2022, together with the notes thereto, in each case included elsewhere in this prospectus, as well as the information set forth under “Presentation of Financial and Other Information” and “Summary Financial and Other Information.” Our consolidated financial statements are presented in thousands of Mexican pesos, except as otherwise specified.

Overview

We are pioneers and leaders of the grocery hard discount model in Mexico and one of the fastest growing retailers in the country as measured by our sales and store growth rates. From 2020 to 2022, our total revenue grew at a CAGR of 34.4%, reaching Ps.32.6 billion (US$1.85 billion) for 2022, and our number of stores increased from 1,249 as of year-end 2020 to 2,288 as of year-end 2023, which represents a CAGR of 22.4%. Our total revenue for the 12-month period ended September 30, 2023 was Ps.41.2 billion (US$2.3 billion).

Our business model is simple yet disruptive: we offer a limited assortment of products that cover the daily grocery needs of our clients. We price our products to offer what is generally market-leading value for money: the lowest sustainable price in the market for a given quality. Our stores also offer convenience, since they are generally located within central neighborhoods that allow for daily visits and minimize transportation needs for our customers. Our customers visit us on average three to four times per week to fulfill one or two days of groceries.

The Tiendas 3B product range consists of approximately 800 stock keeping units (“SKUs”) of branded, private label and spot products.

• Branded products are well known national and international brand label goods that we offer at the lowest sustainable price in the market to attract customers and drive traffic. For 2022 and the nine months ended September 30, 2023, branded products represented 51.8% and 48.8% of our sales, respectively.

• Private label products are products that we have developed ourselves and which we believe are of comparable or better quality than the equivalent branded alternative offered at our stores. For 2022 and the nine months ended September 30, 2023, private label products represented 42.8% and 45.4% of our sales, respectively.

• Spot products are quality food and non-food products that we offer in addition to our regularly stocked products. These are offered in limited amounts and offer exceptional value. The selection changes every two weeks on average. For 2022 and the nine months ended September 30, 2023, our spot products represented 5.4% and 5.8% of our sales, respectively.

This discussion, which presents our results for the years ended December 31, 2022, 2021 and 2020 and for the nine months ended September 31, 2023 and 2022, should be read in conjunction with our audited consolidated financial statements as of December 31, 2022 and 2021 and for the years ended December 31, 2022,

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2021 and 2020, together with the notes thereto, and our unaudited interim condensed consolidated financial statements as of September 30, 2023 and for the nine months ended September 30, 2023 and 2022, together with the notes thereto, in each case included elsewhere in this prospectus. We intend for this discussion to provide the reader with information that will assist in understanding our financial statements, the changes in certain key items in those financial statements from period to period and the primary factors that accounted for those changes. We also discuss certain performance metrics that management uses to assess our performance.

Principal Factors Affecting our Results of Operations and Material Trends

Overall economic trends. The overall economic environment and related changes in consumer behavior have a significant impact on our business. Given we focus on consumer staples, shifts in economic conditions may increase or decrease customer spending at our stores. While improvements in economic conditions generally lead to increased spending, our business model naturally hedges against downturns as consumers seek affordability during economically challenging times. When economic conditions improve, we tend to retain these captured customers as they appreciate our focus not only on price but also on quality. Macroeconomic factors that can affect customer spending patterns, and thereby our results of operations, include employment rates, inflation, business conditions, the availability of credit, interest rates, flow of remittances from abroad, tax rates and fuel and energy costs.

Product mix, consumer preferences and demand. Our ability to continue appealing to existing customers and attract new ones depends on our capacity to originate, develop, and offer a compelling product assortment of private labels and branded products that is aligned to customer preferences. Although most of our products are staples, misjudging the market for our products may result in excess inventories or lower sales, impacting our sales growth and profitability.

Materialization of infrastructure investment to support growth. Our historical operating results reflect the impact of our ongoing investments to support our growth, including store expansion investments as well as in our proprietary warehouse and distribution network. We have made significant investments in our business that we believe have laid the foundation for continued profitable growth. We believe that strengthening our management team and enhancing our information systems, including our regional management, will enable us to support our continued growth and allow scaling our profitable business model.

Effective sourcing and distribution of products. Our sales and gross profit are affected by our ability to purchase the products we sell in sufficient quantities at competitive prices. We believe our suppliers have adequate capacity to meet our current and anticipated demand, in part because we collaborate and coordinate closely with them on the development of new private label products. However, our suppliers’ ability to timely manufacture and deliver the products may be subject to various factors, including, among others, changes to the prices and flow of goods and ingredients, logistics disruptions, availability and cost of raw materials and labor disruptions. Any disruption in our supply chain could adversely affect our sales and profitability, including due to an inability to procure and stock sufficient quantities of merchandise to match market demand and our expansion plans resulting in lost sales.

Inflation and deflation trends. Our financial results can be directly impacted by substantial increases in product costs due to commodity cost increases or general inflation, which could lead to a reduction in our sales as well as greater margin pressure if costs cannot be passed on to consumers. To date, changes in general inflation have not materially impacted our business. In response to increasing general inflation, we seek to minimize the impact of such events by sourcing our merchandise from different vendors, changing our product mix and increasing our pricing when necessary.

Impacts of the COVID-19 Pandemic and Subsequent Period

Throughout 2020 and 2021, the COVID-19 pandemic had a widespread impact on the global economy and affected our business, as well as our customers, suppliers and other business partners. However, our business model proved resilient during the pandemic. Our focus on consumer staples meant our stores were able to remain open during lockdown periods. Moreover, our robust supplier relationships and inventory management during the

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pandemic period ensured our stores were fully stocked throughout this period. As a result, we were able to maintain a sustained growth rate in sales, and store openings during the period and were able to capture sales from new customers that were seeking better value given the adverse economic impact of the COVID-19 pandemic.

Some of our most important stakeholders are our suppliers, and through intensive cooperation with them, we were able to successfully manage our business through the COVID-19 pandemic, maintaining and strengthened our leading position in the grocery industry in 2022. Our sales increased by 41.0%, compared to 2021, as a result of our 392 net new store openings in 2022.

Public Company Cost

Upon the consummation of this offering, we will become a public company, and our Class A common shares will be publicly traded on the New York Stock Exchange. As a result, we will need to comply with new laws, regulations and requirements that we did not need to comply with as a private company, including provisions of the Sarbanes-Oxley Act, other applicable SEC regulations and the requirements of the New York Stock Exchange. Compliance with the requirements of being a public company will require us to increase our administrative expenses in order to pay our employees, legal counsel and accounting advisors to assist us in, among other things, instituting and monitoring a more comprehensive compliance and board governance function, establishing and maintaining internal control over financial reporting in accordance with Section 404 of the Sarbanes-Oxley Act and preparing and distributing periodic public reports in compliance with our obligations under the federal securities laws. In addition, as a public company, it will be more expensive for us to obtain directors’ and officers’ liability insurance.

Components of Our Results of Operations

The following is a summary of the principal line items comprising consolidated statements of profit or loss.

Revenue from Sales of Merchandise

Revenue from sales of merchandise represents the sale of products to customers net of returns made by customers. Additionally, revenue from sales of merchandise includes net revenues earned from service fees and commissions collected from clients that make payments to third parties at our stores such as cell-phone providers and utilities.

Sales of Recyclables

Sales of recyclables includes sales of ancillary materials used in our day-to-day operations, such as cardboard and stretch film, net of costs of delivery of these products based on established contractual terms and conditions.

Cost of Sales

Cost of sales represents the cost of merchandise that is sold at our, stores including logistics costs incurred in bringing each product to the final point of sale and warehousing costs, as well as depreciation of properties, furniture, equipment and lease-hold improvements, right-of-use assets and shrinkage.

Gross Profit

Gross profit is equal to revenue from sales of merchandise and sales of recyclables net of cost of sales.

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Sales Expenses

Sales expenses generally consist of expenses relating to our stores and the operation of our stores, including wages and salaries of store employees, depreciation of properties, furniture, equipment and lease-hold improvements and right-of-use assets, amortization of intangible assets, energy expenses, social security contributions relating to store employees, maintenance and conservation expenses and cash-in-transit services.

Administrative Expenses

Administrative expenses generally consist of expenses relating to headquarters, regional offices and the back office, including wages and salaries of administrative employees, depreciation, and amortization, energy, social security contributions of administrative employees, payments relating to options granted under our share-based compensation plan, administrative services, advertising expenses, corporate services, maintenance and conservation expenses and professional fees.

Other Income—Net

Other income includes a variety of income streams, including from non-recurring sources, such as dispositions of assets, subleases and royalties.

Operating Profit

Operating profit is equal to gross profit net of sales expenses, administrative expenses, plus other income—net.

Financial Income

Financial income is comprised of interest generated on accounts or investments held by us.

Financial Costs

Financial costs are comprised principally of interest on lease liabilities, promissory notes, convertible notes and the financing of transportation and store equipment, including through a reverse factoring arrangement we have entered into with Santander.

Exchange Rate Fluctuation

Foreign currency transactions are translated to the functional currency using the exchange rates in effect on the transactions dates. Gains and losses on exchange fluctuations resulting from such transactions and for conversion at the exchange rates at the end of the year of monetary assets and liabilities denominated in foreign currency are recognized as exchange rate fluctuation gain or loss. Exchange rate fluctuations are primarily driven by changes in the carrying value of amounts payable under the Promissory Notes and the Convertible Notes, which are payable at maturity in U.S. dollars.

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Historical Results of Operations

For the Nine Months Ended September 30, 2023 compared to the Nine Months Ended September 30, 2022

	For the nine months ended September 30,						Variation (%)
	2023			2022
	(thousands of Ps.)
Revenue from sales of merchandise	Ps.	31,694,573		Ps.	23,081,400			37.3	%
Sales of recyclables		68,282			83,378			(18.1	)%
Total revenue		31,762,855			23,164,778			37.1	%
Cost of sales		(26,733,603	)		(19,670,105	)		35.9	%
Gross profit		5,029,252			3,494,673			43.9	%
Sales expenses		(3,431,030	)		(2,469,975	)		38.9	%
Administrative expenses		(1,033,144	)		(720,272	)		43.4	%
Other income – net		692			1,015			(31.8	)%
Operating profit		565,770			305,441			85.2	%
Financial income		20,510			14,514			41.3	%
Financial costs		(1,007,868	)		(828,350	)		21.7	%
Exchange rate fluctuation		403,922			53,522			654.7	%
Financial costs – net		(583,436	)		(760,314	)		(23.3	)%
Loss before income tax		(17,666	)		(454,873	)		(96.1	)%
Income tax expense		(191,503	)		(129,327	)		48.1	%
Net loss for the period	Ps.	(209,169	)		(584,200	)		(64.2	)%

Revenue from Sales of Merchandise

Revenue from sales of merchandise increased 37.3% to Ps.31,694,573 thousand for the nine months ended September 30, 2023 from Ps.23,081,400 thousand for the nine months ended September 30, 2022. Of the total increase in revenue from sales of merchandise, 26.9% was attributable to sales from 395 net new stores opened between October 1, 2022 and September 30, 2023, while 43.0% of the increase was attributable to increases in sales volume and 30.1% of the increase was attributable to higher prices due to inflation and shifts in the product mix. Same Store Sales for the nine months ended September 30, 2023 increased 17.8%.

Sales of Recyclables

Sales of recyclables decreased 18.1% to Ps.68,282 thousand for the nine months ended September 30, 2023 from Ps.83,378 thousand for the nine months ended September 30, 2022. The decrease was mainly driven by a decrease in the cardboard price per ton, offset by an increase in higher sales.

Cost of Sales

Cost of sales increased 35.9% to Ps.26,733,603 thousand for the nine months ended September 30, 2023 from Ps.19,670,105 thousand for the nine months ended September 30, 2022. The increase was attributable mainly to an increase in sales in existing stores and new stores and was proportional to the increase in revenue from sales of merchandise. However, this increase was partially offset by better negotiations with suppliers resulting in a lower increase relative to the growth of revenue from sales of merchandise growth in the nine months ended September 30, 2022. Our cost of sales as a percentage of total revenue was 84.2% and 84.9% for the nine months ended September 30, 2023 and 2022, respectively.

Gross Profit

Gross profit increased 43.9% to Ps.5,029,252 thousand for the nine months ended September 30, 2023 from Ps.3,494,673 thousand for the nine months ended September 30, 2022, and our gross profit margin, calculated as

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gross profit as a percentage of total revenue, was 15.8% and 15.1% for the nine months ended September 30, 2023 and 2022, respectively.

Sales Expenses

Sales expenses increased 38.9% to Ps.3,431,030 thousand for the nine months ended September 30, 2023 from Ps.2,469,975 thousand for the nine months ended September 30, 2022. Our sales expenses as a percentage of total revenue, were approximately flat at 10.8% and 10.7% for the nine months ended September 30, 2023 and 2022, respectively. The increase in sales expenses remained proportional to the increase in revenue from sales of merchandise and largely derived from the opening of new stores, an increase in headcount required to operate new stores, and to the effects of inflation.

Administrative Expenses

Administrative expenses increased 43.4% to Ps.1,033,144 thousand for the nine months ended September 30, 2023 from Ps.720,272 thousand for the nine months ended September 30, 2022. Our administrative expenses, as a percentage of total revenue, were 3.3% and 3.1% for the nine months ended September 30, 2023 and 2022, respectively. The increase in administrative expenses was principally due to option grants under our share-based compensation plan, but the rest of the administrative expenses were lower in proportion to the growth in revenue from sales of merchandise from the nine months ended September 30, 2022 to the nine months ended September 30, 2023. We estimate that the increase in the volume of our operations will tend to stabilize certain administrative expenses such as those relating to IT systems, key executive personnel expenses and personnel expenses for roles such as category managers, IT and finance. Expenses recognized in respect of grants under our share-based compensation plan during the nine months ended September 30, 2023 and 2022 were Ps.302,438 thousand and Ps.227,842 thousand, respectively.

Other Income—Net

Other income – net decreased 31.8% to Ps.692 thousand for the nine months ended September 30, 2023 from Ps.1,015 thousand for the nine months ended September 30, 2022. The decrease was mainly due to a decrease in the unoccupied distribution centers that were subleased.

Operating Profit

For the reasons described above, operating profit increased 85.2% to Ps.565,770 thousand for the nine months ended September 30, 2023 from Ps.305,441 thousand for the nine months ended September 30, 2022. Our operating profit, as a percentage of total revenue, were 1.8% and 1.3% for the nine months ended September 30, 2023 and 2022, respectively.

Financial Income

Financial income increased 41.3% to Ps.20,510 thousand for the nine months ended September 30, 2023 from Ps.14,514 thousand for the nine months ended September 30, 2022. The increase was primarily attributable to a higher interest gain on short-term investments and an increase in the gain on commissions from supplier finance arrangement.

Financial Costs

Financial costs increased 21.7% to Ps.1,007,868 thousand for the nine months ended September 30, 2023 from Ps.828,350 thousand for the nine months ended September 30, 2022. This increase was primarily driven by Ps.459,621 thousand and Ps.457,934 thousand in accrued interest on the Promissory Notes and Convertible Notes (which are intended to be repaid in full with the proceeds of this offering) during the nine months ended September 30, 2023 and 2022, respectively, as well as the increased interest expense generated by increased lease liabilities, due to new lease agreements for our expanding store base of Ps.526,566 thousand and Ps.358,510 thousand, during the nine months ended September 30, 2023 and 2022, respectively.

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Exchange Rate Fluctuation

Exchange rate fluctuation was a gain of Ps.403,922 thousand for the nine months ended September 30, 2023 as compared to a gain of Ps.53,522 thousand for the nine months ended September 30, 2022. This change was driven by the significant devaluation of the U.S. dollar compared to the Mexican peso during the nine months ended September 30, 2023, which, in turn, impacted the carrying value of the Promissory Notes and the Convertible Notes, which are denominated in U.S. dollars. See Notes 9 and 10 to our interim unaudited condensed consolidated financial statements as of September 30, 2023 and for the nine months ended September 30, 2023 and 2022 for further information.

Financial Costs—Net

For the reasons described above, financial costs – net decreased 23.3% to Ps.583,436 thousand for the nine months ended September 30, 2023 from Ps.760,314 thousand for the nine months ended September 30, 2022.

Loss Before Income Tax

For the reasons described above, loss before income tax was Ps.17,666 thousand for the nine months ended September 30, 2023 as compared to a loss before income tax of Ps.454,873 thousand for the nine months ended September 30, 2022.

Income Tax Expense

Income tax expense increased 48.1% to Ps.191,503 thousand for the nine months ended September 30, 2023 from Ps.129,327 thousand for the nine months ended September 30, 2022. This change was due to an increase in taxable profits in our subsidiaries, on which an increase in the annual income tax expense is expected to be recognized for the full financial year.

Net Loss for the Period

For the reasons described above, net loss was Ps.209,169 thousand for the nine months ended September 30, 2023 as compared to a net loss of Ps.584,200 thousand for the nine months ended September 30, 2022.

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For the Year Ended December 31, 2022 compared to the Year Ended December 31, 2021

	For the years ended December 31,						Variation (%)
	2022			2021
	(thousands of Ps.)
Revenue from sales of merchandise	Ps.	32,472,577		Ps.	23,032,275			41.0	%
Sales of recyclables		107,820			58,906			83.0	%
Total revenue		32,580,397			23,091,181			41.1	%
Cost of sales		(27,655,643	)		(19,655,090	)		40.7	%
Gross profit		4,924,754			3,436,091			43.3	%
Sales expenses		(3,460,840	)		(2,422,688	)		42.9	%
Administrative expenses		(952,090	)		(623,874	)		52.6	%
Other income – net		8,445			4,524			86.7	%
Operating profit		520,269			394,053			32.0	%
Financial income		19,840			7,988			148.4	%
Financial costs		(1,168,786	)		(1,004,535	)		16.4	%
Exchange rate fluctuation		264,930			(122,368	)		(316.5	)%
Financial costs – net		(884,016	)		(1,118,915	)		(21.0	)%
Loss before income tax		(363,747	)		(724,862	)		(49.8	)%
Income tax expense		(201,363	)		(91,812	)		119.3	%
Net loss for the year	Ps.	(565,110	)	Ps.	(816,674	)		(30.8	)%

Revenue from Sales of Merchandise

Revenue from sales of merchandise increased 41.0% to Ps.32,472,577 thousand for 2022 from Ps.23,032,275 thousand for 2021. Of the total increase in revenue from sales of merchandise, 22.8% was attributable to sales from 392 net new stores in 2022, while 38.9% of the increase was attributable to increases in sales volume and 38.3% of the increase was attributable to higher prices due to inflation and shifts in the product mix. Same Store Sales for 2022 increased 21.9%.

Sales of Recyclables

Sales of recyclables increased 83.0% to Ps.107,820 thousand for 2022 from Ps.58,906 thousand for 2021. The increase was mainly driven by an increase in the sale of ancillary materials mainly Due to an increase of revenue from the sales of merchandise which led to a higher volume of ancillary materials and operational enhancements in the collection of these materials from our stores.

Cost of Sales

Cost of sales increased 40.7% to Ps.27,655,643 thousand for 2022 from Ps.19,655,090 thousand for 2021. The increase was attributable mainly to the increase in sales in existing stores and new stores and was proportional to our increase in revenue from sales of merchandise. However, this increase was partially offset by administrative efficiencies from better negotiations with suppliers and better shrinkage control resulting in a lower increase relative to the growth of revenue from sales of merchandise growth in 2022. Our cost of sales as a percentage of total revenue was 84.9% and 85.1% in 2022 and 2021, respectively.

Gross Profit

Gross profit increased 43.3% to Ps.4,924,754 thousand for 2022 from Ps.3,436,091 thousand for 2021, and our gross profit margin, calculated as gross profit as a percentage of total revenue, was 15.1% and 14.9% in 2022 and 2021, respectively.

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Sales Expenses

Sales expenses increased 42.9% to Ps.3,460,840 thousand for 2022 from Ps.2,422,688 thousand for 2021. Our sales expenses as a percentage of total revenue, were approximately flat at 10.6% and 10.5% in 2022 and 2021, respectively. The increase in sales expenses remained proportional to the increase in revenue from sales of merchandise and largely derived from the opening of new stores, the increase in headcount required to operate new stores, and to the effects of inflation.

Administrative Expenses

Administrative expenses increased 52.6% to Ps.952,090 thousand for 2022 from Ps.623,874 thousand for 2021. Our administrative expenses, as a percentage of total revenue, were 2.9% and 2.7% in 2022 and 2021, respectively. The increase in administrative expenses was principally due to option grants under our share-based compensation plan, but administrative expenses were otherwise in proportion to the growth in revenue from sales of merchandise from 2021 to 2022. We estimate that the increase in the volume of our operations will tend to stabilize certain administrative expenses such as those relating to IT systems, key executive personnel expenses and personnel expenses for roles such as category managers, IT and finance. Expenses recognized in respect of grants under our share-based compensation plan during 2022 and 2021 were Ps.303,789 thousand and Ps.142,123 thousand, respectively.

Other Income—Net

Other income – net increased 86.7% to Ps.8,445 thousand for 2022 from Ps.4,524 thousand for 2021. The increase was mainly driven by non-recurring sales of fixed assets.

Operating Profit

For the reasons described above, operating profit increased 32.0% to Ps.520,269 thousand for 2022 from Ps.394,053 thousand for 2021. Our operating profit, as a percentage of total revenue, was 1.6% in 2022 and 1.7% in 2021.

Financial Income

Financial income increased 148.4% to Ps.19,840 thousand for 2022 from Ps.7,988 thousand for 2021. The increase was primarily attributable to a higher interest gain on short-term investments.

Financial Costs

Financial costs increased 16.4% to Ps.1,168,786 thousand for 2022 from Ps.1,004,535 thousand for 2021. This increase was primarily driven by Ps.615,592 thousand and Ps.537,411 thousand in accrued interest on the Promissory Notes and Convertible Notes (which are intended to be repaid in full with the proceeds of this offering) during 2022 and 2021, respectively, as well as the increased interest expense generated by increased lease liabilities, due to new lease agreements for our expanding store base of Ps.507,875 thousand and Ps.440,678 thousand, during 2022 and 2021, respectively.

Exchange Rate Fluctuation

Exchange rate fluctuation was a gain of Ps.264,930 thousand for 2022 as compared to a loss of Ps.122,368 thousand for 2021. This change was driven by the significant devaluation of the U.S. dollar compared to the Mexican peso during 2022, which, in turn, impacted the carrying value of the Promissory Notes and the Convertible Notes, which are denominated in U.S. dollars. See Notes 13 and 14 to our audited consolidated financial statements as of December 31, 2022 and 2021 and for the years ended December 31, 2022, 2021 and 2020 for further information.

Financial Costs—Net

For the reasons described above, financial costs – net decreased 21.0% to Ps.884,016 thousand for 2022 from Ps.1,118,915 thousand for 2021.

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Loss Before Income Tax

For the reasons described above, loss before income tax was Ps.363,747 thousand for 2022 as compared to a loss of Ps.724,862 thousand for 2021.

Income Tax Expense

Income tax expense increased 119.3% to Ps.201,363 thousand for 2022 from Ps.91,812 thousand for 2021. The increase was attributable to higher taxable profits, resulting from the increased revenue from sales of merchandise, an increase in non-deductible expenses and inflationary adjustments to tax profit. For 2022, we had a negative effective tax rate of 55.4%, as compared to a negative effective tax rate of 12.7% for 2021.

Net Loss for the Year

For the reasons described above, net loss was Ps.565,110 thousand for 2022 as compared to a net loss of Ps.816,674 thousand for 2021.

For the Year Ended December 31, 2021 compared to the Year Ended December 31, 2020

	For the years ended December 31,						Variation (%)
	2021			2020
	(thousands of Ps.)
Revenue from sales of merchandise	Ps.	23,032,275		Ps.	18,017,491			27.8	%
Sales of recyclables		58,906			32,399			81.8	%
Total revenue		23,091,181			18,049,890			27.9	%
Cost of sales		(19,655,090	)		(15,605,281	)		26.0	%
Gross profit		3,436,091			2,444,609			40.6	%
Sales expenses		(2,422,688	)		(1,900,206	)		27.5	%
Administrative expenses		(623,874	)		(365,538	)		70.7	%
Other income – net		4,524			2,554			77.1	%
Operating profit		394,053			181,419			117.2	%
Financial income		7,988			7,108			12.4	%
Financial costs		(1,004,535	)		(826,848	)		21.5	%
Exchange rate fluctuation		(122,368	)		(128,040	)		(4.4	)%
Financial costs – net		(1,118,915	)		(947,780	)		18.1	%
Loss before income tax		(724,862	)		(766,361	)		(5.4	)%
Income tax expense		(91,812	)		(3,310	)		2,673.8	%
Net loss for the year	Ps.	(816,674	)	Ps.	(769,671	)		6.1	%

Revenue from Sales of Merchandise

Revenue from sales of merchandise increased 27.8% to Ps.23,032,275 thousand for 2021 from Ps.18,017,491 thousand for 2020. Of the total increase in revenue from sales of merchandise, 25.7% was attributable to sales from 251 net new stores in 2021, while 43.6% of the increase was attributable to increases in sales volume and 30.7% of the increase was attributable to higher prices due to inflation and shifts in the product mix. Same Store Sales for 2021 increased 12.3%.

Sales of Recyclables

Sales of recyclables increased 81.8% to 58,906 thousand for 2021 from Ps.32,399 thousand for 2020. The increase was mainly driven by the gains from the sale of cardboard and stretch film, due to efficiency improvements on the collection of scraps from our stores.

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Cost of Sales

Cost of sales increased 26.0% to Ps.19,655,090 thousand for 2021 from Ps.15,605,281 thousand for 2020. The increase was primarily attributable to increased sales of merchandise. However, administrative efficiencies obtained from better supplier terms and improved shrinkage control partially offset the increased costs, resulting in our cost of sales as a percentage of total revenue decreasing to 85.1% in 2021 compared to 86.5% in 2020.

Gross Profit

Gross profit increased 40.6% to Ps.3,436,091 thousand for 2021 from Ps.2,444,609 thousand for 2020, and our gross profit margin, calculated as gross profit as a percentage of total revenue, was 14.9% and 13.5% in 2021 and 2020, respectively. As described above, the increase was attributable primarily due to the higher sales, offset by the increase in logistics costs related to the sales of new stores.

Sales Expenses

Sales expenses increased 27.5% to Ps.2,422,688 thousand for 2021 from Ps.1,900,206 thousand for 2020. Our sales expenses as a percentage of total revenue, were flat at 10.5% in 2021 and 2020. The increase in sales expenses remained proportional to the increase in revenue from the sales of merchandise and largely derived from the opening of new stores and the increase in headcount required to operate our growing store base.

Administrative Expenses

Administrative expenses increased 70.7% to Ps.623,874 thousand for 2021 from Ps.365,538 thousand for 2020. Our administrative expenses, as a percentage of total revenue, were 2.7% and 2.0% in 2021 and 2020, respectively. The increase was mainly driven by grants of options under share-based compensation plan, the hiring of administrative employees and increased audit and legal fees. Expenses recognized in respect of grants under our share-based compensation plan during 2021 and 2020 were Ps.142,123 thousand and Ps.19,696 thousand, respectively.

Other Income—Net

Other income – net increased 77.1% to Ps.4,524 thousand for 2021 from Ps.2,554 thousand for 2020.The increase was mainly driven by non-recurring sale of fixed assets.

Operating Profit

For the reasons described above, operating profit increased 117.2% to Ps.394,053 thousand for 2021 from Ps.181,419 thousand for 2020. Our operating profit, as a percentage of total revenue, was 1.7% and 1.0% in 2021 and 2020, respectively.

Financial Income

Financial income increased 12.4% to Ps.7,988 thousand for 2021 from Ps.7,108 thousand for 2020. The increase was primarily attributable to a higher interest gain on short-term investments.

Financial Costs

Financial costs increased 21.5% to Ps.1,004,535 thousand for 2021 from Ps.826,848 thousand for 2020. The increase was driven by Ps.537,411 thousand and Ps.463,589 thousand in accrued interest on the Promissory Notes and Convertible Notes (which are intended to be repaid in full with the proceeds of this offering) during 2021 and 2020, respectively, and the increased interest expense generated by lease liabilities, resulting from new lease agreements for our expanding store base of Ps.440,678 thousand and Ps.337,940 thousand during 2021 and 2020, respectively.

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Exchange Rate Fluctuation

Exchange rate fluctuation decreased 4.4% to a loss of Ps.122,368 thousand for 2021 from a loss of Ps.128,040 thousand for 2020. The decrease was driven by the fluctuations in the exchange rate of the U.S. dollar and the Mexican peso, which, in turn, impacted the carrying value of the Promissory Notes and Convertible Notes which are denominated in U.S. dollars. See Notes 13 and 14 to our audited consolidated financial statements as of December 31, 2022 and 2021 and for the years ended December 31, 2022, 2021 and 2020 for further information.

Financial Costs—Net

For the reasons described above, financial cost – net increased 18.1% to Ps.1,118,915 thousand for 2021 from Ps.947,780 thousand for 2020.

Loss Before Income Tax

For the reasons described above, loss before income tax was Ps.724,862 thousand for 2021 compared to a loss of Ps.766,361 thousand for 2020.

Income Tax Expense

Income tax expense increased to Ps.91,812 thousand for 2021 from Ps.3,310 thousand for 2020. The increase was primarily due to the fact that there was a higher income tax of the period, originated by higher taxable profits. For 2021, we had a negative effective tax rate of 12.7%, as compared to a negative effective tax rate of 0.4% for 2020.

Net Loss for the Year

For the reasons described above, net loss was Ps.816,674 thousand for 2021 as compared to a net loss of Ps.769,671 thousand for 2020.

Seasonality

Since our products mostly consist of food staples, our sales are not generally affected by seasonality. Variations in our performance from quarter to quarter are generally a consequence of store openings and holidays. Therefore, the results for a given quarter may not be indicative of results expected for the entire year.

Liquidity and Capital Resources

The following discussion of our liquidity and capital resources is based on the financial information derived from our audited consolidated financial statements as of December 31, 2022 and 2021 and for the years ended December 31, 2022, 2021 and 2020, and our unaudited interim condensed consolidated financial statements as of September 30, 2023 and for the nine months ended September 30, 2023 and 2022, included elsewhere in this prospectus.

Overview

Liquidity represents our ability to generate sufficient cash flows from operating activities to meet our obligations as well as our ability to obtain appropriate financing.

As a result of our inventory and account payables management strategy, we generally rely on our positive cash flow dynamics as a source of financing for our operations and expansion. We have historically benefited from our working capital dynamic driven from our favorable payable terms relative to the high rotation of our inventory and minimal receivable balances, as most of our sales from merchandise are received in cash at the time of sale. As a result, we can generate a significant amount of negative working capital from such timing d

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ifferences. Our working capital for 2021, 2022 and the nine months ended September 30, 2023 was Ps.(2,121,704) thousand, Ps.(3,205,200) thousand and Ps.(4,243,026) thousand, respectively. As of December 31, 2022 and 2021, our total current assets amounted to Ps.3,599,202 thousand and Ps.2,862,715 thousand, respectively. As of September 30, 2023, our total current assets amounted to Ps.4,020,750 thousand.

We have also used certain amounts of short-term and long-term debt with related parties and third parties to supplement our cash flows. As of December 31, 2022 and 2021, our long-term debt with unaffiliated third parties consisted of Ps.540,734 thousand and Ps.451,285 thousand, respectively. As of September 30, 2023, our long-term debt with unaffiliated third parties consisted of Ps.565,777 thousand. In addition to financing from third parties, we have issued several senior and junior, U.S. dollar-denominated pay-in-kind Promissory Notes that mature on December 31, 2026, most of which are held by related parties, including some of our shareholders. The aggregate principal amount and accrued interest outstanding on the Promissory Notes was US$224,387 thousand (Ps.4,344,461 thousand) as of December 31, 2022 and US$248,005 thousand (Ps.4,369,722 thousand) as of September 30, 2023. We have also issued Convertible Notes. The aggregate principal amount and accrued interest outstanding on the Convertible Notes was US$19,465 thousand (Ps.376,878 thousand) as of December 31, 2022 and US$21,689 thousand (Ps.382,149 thousand) as of September 30, 2023. See “—Indebtedness—Promissory Notes and Convertible Notes” for additional information.

In addition, we have entered into a reverse factoring arrangement with Banco Santander Mexico, S.A. (“Santander”) pursuant to which a participating supplier receives the original invoice amount discounted at an agreed rate, and we pay Santander the original amount of the invoice within 60 days after the supplier collects the invoice from Santander. The aggregate limit of amounts invoiced under this arrangement is Ps.350,000 thousand. Pursuant to the terms of this arrangement, we have created a trust, which is meant to be a source of payment in the case of a payment default, into which cash flows coming from 419 stores in a minimum aggregate amount of Ps.300,000 thousand are deposited and released so long as no payment default occurs. See Note 3.12 to our audited consolidated financial statements as of December 31, 2022 and 2021 and for the years ended December 31, 2022, 2021 and 2020 for more information about this arrangement.

On June 2, 2023, we and HSBC Mexico, S.A. (“HSBC”) entered into a reverse factoring transaction (the “HSBC Supplier Finance Agreement”) and a credit facility (the “HSBC Credit Line,” and together with the HSBC Supplier Finance Agreement, the “HSBC Agreement”). The aggregate principal amount financeable under the HSBC Agreement is Ps.450,000 thousand. Pursuant to the terms of the HSBC Supplier Finance Agreement, participating suppliers may discount their invoices with HSBC, and they will receive the original invoice amount discounted at an agreed rate and we will then pay HSBC the original amount by the earlier of: (x) the date HSBC pays the supplier plus the number of credit days originally agreed to with the supplier, and (y) 90 days after the supplier collects the invoice from HSBC. The supplier elects which invoices are entered into the factoring transaction. Once entered, such invoices are novated and the liability of the Company to cover such invoice is extinguished. Invoices that are not discounted with HSBC are payable to the supplier at the original maturity date. There are no commissions or interests payable to HSBC when invoices are discounted, and only an opening commission of Ps.2,250 thousand was paid for entering into the agreement, however, we receive a commission from HSBC for each factoring transaction and we must pay penalties in case of late payment. In addition, under the terms of the HSBC Agreement, the Company must comply with certain covenants, including restrictions on dividends. Additionally, pursuant to the terms of the HSBC Agreement, we have created a trust, which is meant to be a source of payment in the case of a payment default, into which Ps.540,000 thousand of cash flows have to be deposited each month and are released so long as no payment default occurs. Drawdowns on the HSBC Credit Facility are payable within 90 days and accrue interest at a rate of TIIE+3.25% and matures within 36 months.

We intend to increase our capital expenditures to support the growth in our business and operations. We believe that our existing cash and cash equivalents and the liquidity provided from other sources of funds (including the proceeds from this offering) will be sufficient to meet our anticipated cash needs for at least the next 12 months, considering our expected organic growth. Our future capital requirements and the adequacy of available funds will depend on many factors, including those described under “Risk Factors.” In addition, the

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impact of rising interest rates has adversely affected the cost of borrowing, hedging activities and access to capital in general, which could limit our ability to obtain financing or hedges in a timely manner, on acceptable terms or at all.

Cash Flows

The following table sets forth certain consolidated cash flow information for the periods indicated:

	For the nine months ended September 30,
	2023			2022
	(thousands of Ps.)
Net cash flows provided by operating activities	Ps.	1,942,839		Ps.	1,243,127
Net cash flows used in investing activities		(901,193	)		(773,984	)
Net cash flows used in financing activities		(1,027,374	)		(743,306	)
Increase (decrease) in cash and cash equivalents		14,272			(274,163	)
Net foreign exchange difference		1,835			7,840
Net increase (decrease) in cash and cash equivalents	Ps.	16,107		Ps.	(266,323	)

	For the Years Ended December 31,
	2022			2021			2020
	(thousands of Ps.)
Net cash flows provided by operating activities	Ps.	2,116,335		Ps.	1,366,308		Ps.	1,082,703
Net cash flows used in investing activities		(1,111,350	)		(524,080	)		(296,497	)
Net cash flows used in financing activities		(1,027,115	)		(450,241	)		(446,643	)
(Decrease) increase in cash and cash equivalents		(22,130	)		391,987			339,563
Net foreign exchange difference		7,066			(1,963	)		(3,805	)
Net (Decrease) increase in cash and cash equivalents	Ps.	(15,064	)	Ps.	390,024		Ps.	335,758

Net Cash Provided by Operating Activities

Net cash provided by operating activities was Ps.1,942,839 thousand and Ps.1,243,127 thousand for the nine months ended September 30, 2023 and 2022, respectively. Net cash provided by operating activities for the nine months ended September 30, 2023 increased by Ps.699,712 thousand as compared to the nine months ended September 30, 2022, primarily driven by an increase in accounts payable to suppliers and a positive impact of loss before income tax. The foregoing was partially offset by an increase in inventories balance due to our 395 net new store openings between October 1, 2022 and September 30, 2023 and higher sales, and a positive contribution from increased in operating profit.

Net cash provided by operating activities was Ps.2,116,335 thousand, Ps.1,366,308 thousand and Ps.1,082,703 thousand for the years ended December 31, 2022, 2021 and 2020, respectively. Net cash provided by operating activities for the year ended December 31, 2022 increased by Ps.750,027 thousand as compared to the year ended December 31, 2021, primarily driven by an increase in accounts payable to suppliers and a positive impact of loss before income tax. The foregoing was partially offset by an increase in inventories balance due to our 392 net new store openings and higher sales, and a positive contribution from increased operating profit. Net cash provided by operating activities for the year ended December 31, 2021 increased by Ps.283,605 thousand as compared to the year ended December 31, 2020, primarily driven by an increase in accounts payable to suppliers. The foregoing was partially offset by an increase in inventory balance due to the opening of 251 new stores and higher sales resulting from increased operating profit.

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Net Cash Used in Investing Activities

Net cash used in investing activities generally consists of expenses and capital expenditures to expand our number of stores and distribution centers, investments in our supply chain, including purchase and sale of property and equipment, and maintenance of existing stores.

Net cash used in investing activities was Ps.901,193 thousand and Ps.773,984 thousand for the nine months ended September 30, 2023 and 2022, respectively. Net cash used in investing activities increased by Ps.127,209 thousand for the nine months ended September 30, 2023 as compared to the nine months ended September 30, 2022, mainly as we expanded our store count by 395 net new store openings between October 1, 2022 and September 30, 2023 and three new distribution centers, leading to increased purchases of property and equipment and of cold rooms.

Net cash used in investing activities was Ps.1,111,350 thousand, Ps.524,080 thousand and Ps.296,497 thousand for the years ended December 31, 2022, 2021 and 2020, respectively. Net cash used in investing activities increased by Ps.587,270 thousand for the year ended December 31, 2022 as compared to the year ended December 31, 2021, mainly as we expanded our store count by 392 net new store openings and three new distribution centers, leading to increased purchases of property and equipment and of cold rooms. Net cash used in investing activities increased by Ps.227,583 thousand for the year ended December 31, 2021 as compared to the year ended December 31, 2020, mainly as a result of the purchase of property and equipment, and acquisitions of cold rooms due to the opening of 251 new stores and two new distribution centers. We expect to continue to use cash to make expenditures to open new stores, renovate existing stores and distribution centers, acquire store equipment and transportation equipment and invest in software.

Net Cash Used in Financing Activities

Net cash used in financing activities generally consists of transactions related to our short-term and long-term debt and financing obligations. Transactions with non-controlling interest shareholders are also classified as cash flows from financing activities.

Net cash used in financing activities was Ps.1,027,374 thousand and Ps.743,306 thousand for the nine months ended September 30, 2023 and 2022, respectively. Net cash used in financing activities increased by Ps.284,068 thousand for the nine months ended September 30, 2023 as compared to the nine months ended September 30, 2022, mainly driven by an increase of lease payments due to our 395 net new store openings between October 1, 2022 and September 30, 2023 and the opening of three new distribution center, offset by an increase in transactions under our reverse factoring arrangement with Santander and HSBC.

Net cash used in financing activities was Ps.1,027,115 thousand, Ps.450,241 thousand and Ps.446,643 thousand for the years ended December 31, 2022, 2021 and 2020, respectively. Net cash used in financing activities increased by Ps.576,874 thousand for the year ended December 31, 2022 as compared to the year ended December 31, 2021, mainly driven by an increase of lease payments due to 392 net new store openings and the opening of three distribution centers, offset by an increase in transactions under our reverse factoring arrangement with Santander. Net cash used in financing activities increased by Ps.3,598 thousand for the year ended December 31, 2021 as compared to the year ended December 31, 2020, mainly driven by an increase of lease payments due to our 251 net new store openings and the opening of two new distribution centers, which was partially offset by the interest payable at the maturity of the Promissory Notes and an increase in transactions under our reverse factoring arrangement with Santander.

Capital Expenditures

We make, and expect to continue to make, capital expenditures for store openings, renovation of existing stores and distribution centers, acquisitions of store equipment and transportation equipment, and investments in software.

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For the year ended December 31, 2024, we have budgeted capital expenditures of approximately Ps.2,425 thousand, including approximately Ps.1,651 thousand for opening new stores and the remodeling expenses for the reopening of damaged Acapulco stores and approximately Ps.104 thousand for opening of new distribution centers, which will be funded through our operating activities. Our capital expenditures represented 2.84% and 3.35% of our total revenue in the nine months ended September 30, 2023 and 2022, respectively. Capital expenditures for the nine months ended September 30, 2023 and 2022 amounted to Ps.940,202 thousand and Ps.773,984 thousand, respectively.

Our capital expenditures represented 3.4%, 2.3% and 1.6% of our total revenue in 2022, 2021 and 2020, respectively. Capital expenditures for the years ended December 31, 2022, 2021 and 2020 amounted to Ps.1,122,877 thousand, Ps.532,173 thousand and Ps.297,028 thousand, respectively.

We expect to fund our capital expenditures program with a combination of cash flows from operations and additional financing. We cannot assure you that we will generate sufficient cash flow from operations, or that we will have access to external financing sources, to adequately fund such or any future capital expenditures.

Indebtedness

Our indebtedness for borrowed money consists of promissory notes and convertible notes which we have incurred to finance our expansion. Additionally, we have historically incurred limited amounts of third-party financing for our operations, which has been limited to supplier financing lines and financial leases of transportation and certain store equipment.

The table below sets forth selected information regarding our outstanding indebtedness corresponding to the Promissory Notes and the Convertible Notes as of September 30, 2023 and December 31, 2022, 2021 and 2020. Variations in the aggregate amount of our indebtedness from period to period are primarily due to either increases in accrued interest payable on the Promissory Notes which, are payable in U.S. dollars, or to the issuance of the Convertible Notes.

	As of September 30,		As of December 31,
	2023		2022		2021		2020
			(thousands of Ps.)
Senior Promissory Notes
Debt – Related parties	Ps.	4,120,743	Ps.	4,098,238	Ps.	3,815,332	Ps.	3,238,044
Debt – Third parties		20,268		20,158		18,767		15,927
Total	Ps.	4,141,011	Ps.	4,118,396	Ps.	3,834,099	Ps.	3,253,971
2017 Junior Promissory Notes
Debt – Related parties		Ps. 177,254	Ps.	175,114	Ps.	161,591	Ps.	135,934
Debt – Third parties		33,763		33,355		30,779		25,892
Total	Ps.	211,017	Ps.	208,469	Ps.	192,370	Ps.	161,826
2020 Junior Promissory Notes
Debt – Related parties	Ps.	2,722	Ps.	2,707	Ps.	2,520	Ps.	2,139
Debt – Third parties		14,972		14,890		13,863		11,765
Total	Ps.	17,694	Ps.	17,597	Ps.	16,383	Ps.	13,904
Convertible Notes
Debt – Third parties	Ps.	382,149	Ps.	376,878	Ps.	346,719	Ps.	148,547
Total	Ps.	382,149	Ps.	376,878	Ps.	346,719	Ps.	148,547

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Promissory Notes and Convertible Notes

As part of our financing strategy, we have incurred indebtedness pursuant to certain senior and junior, U.S. dollar-denominated pay-in-kind promissory notes and pay-in-kind convertible notes. The Promissory Notes are held mostly by related parties, including our shareholders, and mature on December 31, 2026. The Convertible Notes, which are held by third parties, mature on November 20, 2026 and, by their terms, will be converted into our Class C shares starting on May 25, 2025; however, upon consummation of the IPO Reorganization, such right will correspond to conversion into Class A common shares, and, in any event, the Convertible Notes are expected to be repaid in full with the proceeds received by us from this offering. The Promissory Notes and Convertible Notes contain substantially identical covenants, including relating to limitations on disposition of assets, restricted payments and incurrence of indebtedness, and are guaranteed by Tiendas BBB, S.A. de C.V., Tiendas Tres B, S.A. de C.V. and Desarrolladora Tres B, S.A. de C.V. (the “Guarantors”). As of the date of this prospectus, we were in compliance with all the covenants under these documents. We expect to allocate proceeds from this offering to repay in full all amounts outstanding under the Promissory Notes and the Convertible Notes.

Set forth below is a summary of the principal terms of the Promissory Notes and the Convertible Notes:

Senior Promissory Notes. On November 30, 2016, BBB Foods Inc. entered into a Senior Promissory Notes Agreement, pursuant to which BBB Foods Inc. issued U.S. dollar-denominated payment-in-kind promissory notes (the “Senior Promissory Notes”) in the aggregate principal amount of US$94,747,329 (Ps.1,669,401 thousand) with an original maturity date of November 30, 2022, which was later extended to May 31, 2024 and then to December 31, 2026 by the holders. The Senior Promissory Notes accrue interest at a rate of 14% per annum with a default interest rate of 5% per annum. Interest on the Senior Promissory Notes is added to the outstanding principal amount thereof, such that the outstanding principal amount increases by an amount equal to the accrued interest. As of September 30, 2023 and December 31, 2022, accrued interest contractually outstanding on the Senior Promissory Notes was US$140,277,001 (Ps.2,471,611 thousand) and US$117,963,235 (Ps.2,283,945 thousand), respectively. The aggregate principal amount and all accrued interest on the Senior Promissory Notes is payable on the maturity date. 99.5% of the aggregate principal amount of the Senior Promissory Notes is held by related parties of the Issuer, including certain of its shareholders, and the remaining 0.5% is held by third parties. The Senior Promissory Notes are guaranteed by the Guarantors pursuant to a guarantee agreement dated November 20, 2020. As consideration for the Senior Promissory Note holders’ agreement to extend the maturity from May 31, 2024 to December 31, 2026, we agreed to pay an additional US$4,100,000 to the Senior Promissory Note holders on the date the Senior Promissory Notes are repaid with the proceeds of this offering.

2017 Junior Promissory Notes. On August 9, 2017, BBB Foods Inc. entered into a Junior Promissory Notes Agreement, pursuant to which BBB Foods Inc. issued U.S. dollar-denominated payment-in-kind promissory notes (the “2017 Junior Promissory Notes”) in the aggregate principal amount of US$5,000,000 (Ps.88,098 thousand) with an original maturity date of November 30, 2022, which was later extended to May 31, 2024 and then to December 31, 2026 by the holders. The 2017 Junior Promissory Notes are subordinated and junior in right of payment to the Senior Promissory Notes. The 2017 Junior Promissory Notes accrue interest at a rate of 15% per annum with a default interest rate of 5% per annum. Interest on the 2017 Junior Promissory Notes is added to the outstanding principal amount thereof, such that the outstanding principal amount increases by an amount equal to the accrued interest. As of September 30, 2023 and December 31, 2022, accrued interest contractually outstanding on the 2017 Junior Promissory Notes was US$6,976,315 (Ps.122,919 thousand) and US$5,767,168 (Ps.111,661 thousand), respectively. The aggregate principal amount and all accrued interest on the 2017 Junior Promissory Notes is payable on the maturity date. 84.0% of the aggregate principal amount of the 2017 Junior Promissory Notes is held by related parties of the Issuer, including certain of its shareholders and the remaining 16.0% is held by third parties. The 2017 Junior Promissory Notes are guaranteed by the Guarantors pursuant to a guarantee agreement dated November 20, 2020. As consideration for the 2017 Junior Promissory Note holders’ agreement to extend the maturity from May 31, 2024 to December 31, 2026, we agreed to pay an additional US$230,000 to the 2017 Junior Promissory Note holders on the date the 2017 Junior Promissory Notes are repaid with the proceeds of this offering.

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2020 Junior Promissory Notes. On June 30, 2020, BBB Foods Inc. entered into a Junior Promissory Notes Agreement, pursuant to which BBB Foods Inc. issued U.S. dollar-denominated payment-in-kind promissory notes (the “2020 Junior Promissory Notes” and, together with the 2017 Junior Promissory Notes, the “Junior Promissory Notes” and the Junior Promissory Notes, together with the Senior Promissory Notes, the “Promissory Notes”) in an aggregate principal amount of US$650,000 (Ps.11,453 thousand) with an original maturity date of June 30, 2023, which was later extended to May 31, 2024 and then to December 31, 2026 by the holders. The 2020 Junior Promissory Notes are subordinated and junior in right of payment to the Senior Promissory Notes. The 2020 Junior Promissory Notes accrue interest at a rate of 14% per annum with a default interest rate of 5% per annum. Interest on the 2020 Junior Promissory Notes is added to the outstanding principal amount thereof, such that the outstanding principal amount increases by an amount equal to the accrued interest. As of September 30, 2023 and December 31, 2022, accrued interest contractually outstanding on the 2020 Junior Promissory Notes was US$354,228 (Ps.6,241 thousand) and US$258,884 (Ps.5,012 thousand). The aggregate principal amount and all accrued interest on the 2020 Junior Promissory Notes is payable on the maturity date. 15.4% of the aggregate principal amount of our 2020 Junior Promissory Notes is held by related parties of the Issuer, including certain of its shareholders and the remaining 84.6% is held by third parties. The 2020 Junior Promissory Notes are guaranteed by the Guarantors pursuant to a guarantee agreement dated November 20, 2020. As consideration for the 2020 Junior Promissory Note holders’ agreement to extend the maturity from May 31, 2024 to December 31, 2026, we agreed to pay an additional US$20,000 to the 2020 Junior Promissory Note holders on the date the 2020 Junior Promissory Notes are repaid with the proceeds of this offering.

Convertible Notes. On November 20, 2020, BBB Foods Inc. entered into a Junior Convertible Promissory Note Agreement with LIV FD, S.A. de C.V., S.O.F.O.M., E.N.R., pursuant to which BBB Foods Inc. issued U.S. dollar-denominated convertible notes in an aggregate principal amount of US$15,000,000 (the “Convertible Notes”). The Issuer has issued two convertible notes under the facility. The first Convertible Note was issued on November 20, 2020 in an aggregate principal amount of US$7,500,000. The second Convertible Note was issued on February 3, 2021 in an aggregate principal amount of US$7,500,000. The Convertible Notes are subordinated and junior in right of payment to the Senior Promissory Notes. The Convertible Notes mature on November 20, 2026 and accrue interest at a rate of 14% per annum compounded quarterly. Interest on the Convertible Notes is added to the outstanding principal amount thereof, such that the outstanding principal amount increases by an amount equal to the accrued interest. The aggregate principal amount and all accrued interest on the Convertible Notes is payable on the maturity date. The Convertible Notes are guaranteed by the Guarantors pursuant to a guarantee agreement dated November 20, 2020. As of September 30, 2023 and December 31, 2022, the contractual amounts payable under the Convertible Notes were US$22,041,616 (Ps.388,362 thousand) and US$19,857,885 (Ps.384,478 thousand), respectively.

Starting on May 25, 2025, and until the maturity date, the Convertible Notes will, by their terms, be convertible into Class C shares of the Issuer, at the option of the holder. The number of Class C shares in which the Convertible Notes are convertible is equal to the outstanding principal amount plus the amount of all accrued and unpaid interest at the time of the conversion, divided by the conversion price (US$86.25) (such amount may be adjusted after the issuance date for any share split, share combination or similar dilutive events that may occur with respect to Class C shares and shall be rounded to the nearest whole number). However, upon consummation of the IPO Reorganization, such right will correspond to the right to convert such Convertible Notes into Class A common shares, and, in any event, the Convertible Notes are expected to be repaid in full with the proceeds received by us from this offering. The Convertible Notes are classified as a financial liability since there is no fixed conversion rate because they are denominated in U.S. dollars and the Issuer’s functional currency is the Mexico peso. Therefore, the conversion rate will be determined depending on the exchange rate on the conversion date. Additionally, because the Convertible Notes are convertible at the option of the holder, the amount of principal and accrued interest from the incurrence of the debt until settlement is uncertain.

Quantitative and Qualitative Disclosures About Market Risk

We are exposed to a variety of risks in the ordinary course of our business, including, but not limited to, currency risk, liquidity risk and credit risk. We regularly assess each of these risks to minimize any adverse effects on our business as a result of those factors. See Note 5 to our to our audited consolidated financial

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statements as of December 31, 2022 and 2021 and for the years ended December 31, 2022, 2021 and 2020, and Note 4 to our to our interim unaudited condensed consolidated financial statements as of September 30, 2023 and for the nine months ended September 30, 2023 and 2022, for further discussion of our exposure to these risks.

Critical Accounting Policies and Estimates

Our financial statements are prepared in conformity with IFRS. In preparing our financial statements, we make assumptions, judgements and estimates about the carrying amounts of assets and liabilities that are not readily apparent from other sources. We base our estimates, assumptions and significant judgements on historical experience and other factors that we considered relevant. Actual results may differ from said estimates.

We reviewed our estimates, assumptions and significant judgments continuously. Our revisions to accounting estimates are recognized in the review period and future periods if the review affects both the current period and subsequent periods.

We disclose our significant accounting policies in the notes accompanying our consolidated financial statements included elsewhere in this prospectus.

Information on the judgments made in applying accounting policies that have significant effect on the amounts recognized in our consolidated financial statements are included in Note 4 to our audited consolidated financial statements as of December 31, 2022 and 2021 and for the years ended December 31, 2022, 2021 and 2020 and Note 3 to our to our interim unaudited condensed consolidated financial statements as of September 30, 2023 and for the nine months ended September 30, 2023 and 2022.

Internal Controls over Financial Reporting as Defined by COSO

We are in the process of implementing Internal Control—Integrated Framework (2013 Framework) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO), particularly regarding the documentation required to evidence the existence and effectiveness of the associated controls, as follows: (i) our control environment, to enable the identification and mitigation of risks of accounting errors; (ii) our risk assessment, to identify and communicate appropriate objectives and fraud risk, and to identify and assess changes in the business that could affect our system of internal controls; (iii) our control activities, to adequately select and develop control activities and objectives for information and related technologies; (iv) our information and communication, to evidence the processes and controls in place to ensure the adequate review over financial reporting, including journal entries; and (v) our monitoring activities, to ascertain whether the components of internal control are present and functioning.

As part of our implementation process, we hired several new experienced personnel in our financial reporting and internal controls team, as well as engaging external advisors to assist us, with the objective to work in the design, implementation of new processes, policies and procedures, improvements of the current internal controls to provide additional levels of review and approval, enhancements of internal documentation, implementation of new software solutions and strengthening the training program for staff related to the requirements of IFRS, the rules and regulations of the SEC and the Sarbanes-Oxley Act, as well as the guidelines of COSO’s Internal Control Integrated Framework.

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BUSINESS AND INDUSTRY

Overview

We are pioneers and leaders of the grocery hard discount model in Mexico and one of the fastest growing retailers in the country as measured by our sales and store growth rates. The 3B name, which references “Bueno, Bonito y Barato” – a Mexican saying which translates to “Good, Nice and Affordable”– summarizes our mission of offering irresistible value to budget savvy consumers through great quality products at bargain prices. From 2020 to 2022, our total revenue grew at a CAGR of 34.4%, reaching Ps.32.6 billion (US$1.85 billion) for 2022, and our number of stores increased from 1,249 as of year-end 2020 to 2,288 as of year-end 2023, which represents a CAGR of 22.4%. Our total revenue for the 12-month period ended September 30, 2023 was Ps.41.2 billion (US$2.3 billion).

Our business model is simple yet disruptive: we offer a limited assortment of products that cover the daily grocery needs of our clients. We price our products to offer what is generally market-leading value for money: the lowest sustainable price in the market for a given quality. Our stores also offer convenience, since they are generally located within central neighborhoods that allow for daily visits and minimize transportation needs for our customers. Our customers visit us on average three to four times per week to fulfill one or two days of groceries.

The Tiendas 3B product range consists of approximately 800 stock keeping units (“SKUs”) of branded, private label and spot products.

• Branded products are well known national and international brand label goods that we offer at the lowest sustainable price in the market to attract customers and drive traffic. For 2022 and the nine months ended September 30, 2023, branded products represented 51.8% and 48.8% of our sales, respectively.

• Private label products are products that we have developed ourselves and which we believe are of comparable or better quality than the equivalent branded alternative offered at our stores. For 2022 and the nine months ended September 30, 2023, private label products represented 42.8% and 45.4% of our sales, respectively.

• Spot products are quality food and non-food products that we offer in addition to our regularly stocked products. These are offered in limited amounts and offer exceptional value. The selection changes every two weeks on average. For 2022 and the nine months ended September 30, 2023, our spot products represented 5.4% and 5.8% of our sales, respectively.

Our stores serve low-to-middle income households, which according to the National Survey of Household Income and Expenditure conducted by INEGI, spent US$219 billion in 2022, or 70.7% of the Mexican population’s total current monetary spend, defined by INEGI as a households’ expenditure on food, beverages and tobacco, personal care, house cleaning products and over the counter healthcare products, among other categories other than rent and financial expenditures. We believe that our business model, which focuses on both value and convenience, allows us to serve our target market better than incumbent competitors and maintain real and sustainable competitive advantages.

Due to our low number of SKUs and focus on serving daily grocery needs, we have been able to achieve a high ratio of sales per SKU and a ratio of 3.0 Payable Days to Inventory Days during 2022, driving significant cash flow generation. We are also able to benefit from a virtuous cycle, where the ever-increasing scale of our purchases per SKU allows us to negotiate increasingly lower prices with our suppliers and, in turn, we are able to transfer those savings to our customers, therefore increasing customer loyalty and our sales.

The Tiendas 3B business model is highly efficient, allowing us to operate with gross margins that are lower than those of leading grocery retailers in Mexico, based on publicly available information. The strength of our model is underpinned by our limited product assortment, our decentralized organization, and our culture that values efficiency and simplicity. Efficiency translates into savings that can be passed on to our customers.

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Our management is decentralized and organized into regions, each run by a regional director, and built around a distribution center that serves approximately 150 stores and up to 200. Each region has sufficient functional resources to operate autonomously and efficiently. This structure, supported by nimble central headquarters, has enabled us to scale efficiently by allowing us to dynamically select new store locations in a constant pursuit of scale and expansion, while achieving positive gross and operating profit. Additionally, it enables suppliers to reach our decision makers quickly, fostering collaboration and accelerating the development of private label products.

Developing and retaining talent, as well as fostering a strong corporate culture, are key components of our business model and essential to sustaining our rapid growth rates and achieving efficiencies. We anticipate our personnel needs several years in advance and invest significant resources to ensure that we have the right talent at the right time.

We believe that the hard discount segment in Mexico has significant entry barriers for new participants, including: (i) the time and capital it takes to achieve scale and profitability given the inherent low gross margins of a hard discounter; (ii) the knowledge required to find competitive real estate and qualified personnel; (iii) the investment and know-how required to develop a meaningful private label product offering; and (iv) obtaining access to highly qualified senior management and experienced teams.

Our Business Model

Our business model is based on the following pillars:

• High rotation of products: By limiting our selection of products, we have been able to achieve a high turnover of sales per SKU, which makes us a relevant buyer of the products we sell, in turn allowing for favorable terms with suppliers. In 2022, we had 22 Inventory Days, 65 Payable Days and 0.1 Receivable Days, driving cash flow generation that supports our self-financed growth.

• Strong private label offering: We own 93 different private label brands representing over 385 SKUs, that cover an array of food and non-food products. We outsource the manufacturing of these products to over 100 carefully selected local manufacturers with tested supply reliability and quality controls. We are generally able to offer our private label products at a lower cost than that of the branded products they compete with. Further, our customer satisfaction studies and product analysis indicate that the quality of our private label products is comparable, if not better, than the competing branded products. Our enduring and long-term relationships with our suppliers have created a robust supplier ecosystem that underpins the strength of our private label product offering.

• Value for money: By consistently delivering and improving value for money to our customers, including through our private label products, we have earned their trust, increased our wallet share and attracted new customers. As a result, we have achieved Same Store Sales growth of 21.9%, 12.3% and 18.3% during 2022, 2021 and 2020, respectively, well above Mexico’s inflation rates of 7.8%, 7.4% and 3.2% for the same periods.

• Low-cost operations and virtuous cycle of efficiency: We have built a business model that allows us to generate operating profit while operating at market-leading low gross profit margins, by limiting our SKUs, decentralizing operations, focusing on simplicity, maintaining low capital expenditures per store, having a nimble and agile decision-making process, a horizontal management structure, and promoting a strong culture of efficiency. This allows us to offer and sustain everyday low prices to our customers. Our gross profit margin for 2022 was 15.1%, compared to gross profit margins of 28.1% of La Comer, 23.4% of Walmex, 22.9% of Chedraui and 22.1% of Soriana. For the nine months ended September 30, 2023, our gross profit margin was 15.8%.

• Rapid expansion: In 2023, we averaged a new store opening every 22 hours, which is faster than any other grocery retailer in Mexico. Our operations actively involve our regional personnel in the store opening process, with the goal of locating and securing the most attractive locations for new stores.

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Further, our low capital expenditure needed per new store which, combined with the attractive cash flow generation capacity of our stores, allows us to achieve attractive Payback Periods on average. In addition, our negative working capital dynamics allow us to self-fund these investments. We are systematic in our approach to opening stores, and our recent vintages are showing a faster sales ramp-up and higher profitability vis-à-vis our older vintages for the same comparable period. With an estimated white space for at least 12,000 additional Tiendas 3B stores in Mexico, we are constantly looking to increase our number of stores and expand into new regions.

Mexico Macroeconomic Environment and Demographic Overview

Macroeconomic Environment

Mexico: A large and growing economy with strong fundamentals

Mexico has maintained healthy macroeconomic fundamentals that offer a stable investment outlook conducive to long-term returns. With a GDP of US$1.4 trillion in 2022, Mexico ranked as the second largest economy in Latin America and the 14th largest in the world, according to the World Bank. Since 2010, Mexico has posted a consistent real GDP growth of 2.0% on the back of strong macro fundamentals such as controlled inflation (7.8% in 2022), low unemployment rates (3.0% in 2022), high trade openness index levels (83.6% in 2022), and robust foreign exchange reserves (US$201 billion in 2022).

Disciplined fiscal policy contributing to a stable environment for investors

Mexico’s disciplined fiscal policy also provides a stable backdrop for investment. For 2022, Mexico had a (0.7%) primary fiscal balance and public debt levels at 56% of GDP, which has enabled the country to maintain its investment grade credit ratings of Baa2/BBB/BBB- (Moody’s/S&P/Fitch).

Demographic Overview

Favorable demographics, with a young and expanding population

The grocery sector in Mexico is poised to benefit from demographic trends in Mexico, which has a large and rapidly growing young population. According to the latest data presented by INEGI in 2022, Mexico’s population reached 129 million people, making it the second most populous country in Latin America. From 2010 to 2022, Mexico had an average annual population growth rate of 1.1%. This rate was higher than those of Latin America, the US, and European Union, which experienced an average growth rate of 1.00%, 0.6%, and 0.1%, respectively over the same period, according to the World Bank. According to the Central Intelligence Agency World Factbook, in 2022 the average age in Mexico was 29.3 years, lower than the average age in Brazil (33.2), Chile (35.5) and the United States (38.5).

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Mid and low socioeconomic segments are a major driving force in consumer spending

Mexico’s population is heavily concentrated in the low and mid-low socioeconomic segments (within the second to ninth income decile), representing 80.0% of the total population, according to INEGI. This segment of the population plays a crucial role in the economy, serving as a major driving force behind consumer spending and thus making it one of the largest and most attractive market segments for businesses. Our stores serve low-to-middle income households, which according to the National Survey of Household Income and Expenditure conducted by INEGI, spent US$219 billion in 2022, or 70.7% of the Mexican population’s total current monetary spend.

Notes:
1. Considers an exchange rate of Ps$19.36 per USD 2. Each household has on average 3.43 members 3. Range considers average income by income decile	4. Excludes non-monetary expenses with an estimated value of US$84.9 Bn. Non-monetary expenses include self-consumption, payments in kind, gifts, and the estimated rent households would have had to pay if they did not own their house

We capture a large share of total household expenditure

According to data from INEGI, approximately 48.4% of the annual average Mexican household current monetary spend within the second to ninth income decile of our target customers is destined to food (excluding fruits and vegetables), beverages and tobacco, personal care products, house cleaning products and over the counter medicines, which are all product categories offered at our stores. Further, approximately 35.1% of annual average Mexican household current monetary spend within the second to ninth income decile is destined to food (excluding fruits and vegetables) and beverage products alone, such as the ones we sell.

Notes:

1. Total current monetary spend for income deciles II to IX

2. Includes transportation & communications, education, housing, clothing, fruit and vegetables, and healthcare (excl. OTC products)

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Favorable Tailwinds Supporting the Mexican Consumer

Consistent real wage growth

The minimum wage in Mexico has experienced significant growth since 2018, resulting in higher disposable household income. According to the National Minimum Wage Commission, over the last five years, the annual compounded growth rate (in local currency) was 18.6%, surpassing inflation and leading to real increases of the minimum wage, which in turn leads to more disposable income for lower income households.

High remittances provide support for increased spending

In 2022, remittances to Mexico (mainly money sent by Mexicans or Mexican descendants living outside of Mexico – primarily in the United States) reached an all-time-high of US$58.5 billion, supporting consumption spending in the country. Remittances have historically supplemented consumption expenditure of low- to middle-income households.

The Grocery Retail Industry in Mexico

Large and growing market

The Mexican formal grocery market had approximately US$124 billion annual sales for 2022 and is projected to grow at a 7.6% compounded annual rate from 2022 to 2027, according to Euromonitor. The market is expected to reach US$179 billion in annual sales by 2027.

Fragmented market: One dominant player but otherwise highly fragmented

The grocery market in Mexico is best viewed in two channels: the Modern (or organized) channel, which is a sub-set of the formal grocery market and which we define to include discounters, hypermarkets, supermarkets, convenience stores and warehouse clubs, and the Traditional (or informal) channel, which we define to include, among others, local grocers and food, drink, and tobacco specialty stores. The Modern channel, which we calculate represented US$79 billion in annual sales for 2022 based on data from Euromonitor, can be further divided into full-price retailers and discounters (including soft discounters and hard discounters, such as Tiendas 3B). Discounters represented 30.5% of the Modern channel for the year ended December 31, 2022, according to data from Euromonitor.

Walmex is the dominant player in the Modern channel, representing 34.2% of that channel’s total sales for 2022 based on data from Euromonitor. Walmex’s most successful format is Bodega Aurrera, a discounter which represented 16.7% of sales in the Modern channel. Beyond that, the market is highly fragmented.

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The hard discount business model

Hard discount is still a nascent business model in Mexico within the Modern channel. According to NielsenIQ, hard discounters, such as Tiendas 3B and Tiendas Neto, only represented 2.3% of sales in the Mexican grocery market for 2022. Although large retail players, such as Walmex (through Bodega Aurrera Express) or FEMSA (through Tiendas BARA), have presence in discount formats, since inception, Tiendas 3B has successfully competed with those formats as well as with other established grocery players as shown by our growth track record.

Hard discount grocery retailers, like ourselves, are different from other retailers in the Modern channel. The hard discount model focuses on a limited assortment of high value for money, high rotation branded and private label products that address the consumer’s essential daily needs. A hard discounters operations seek to be highly efficient and simple, with streamlined logistics, distribution, storefront operations and standardized no-frill store layouts with flexible locations. As a result of the efficiencies in the business model, hard discounters who achieve scale tend to have low gross margins and yet can achieve high returns on invested capital.

Tiendas 3B’s addressable market

Our stores serve low-to-middle income households, which according to the National Survey of Household Income and Expenditure conducted by INEGI, spent US$219 billion in 2022, or 70.7% of the Mexican population’s total current monetary spend. According to data from INEGI, approximately 48.4% of annual average Mexican household current monetary spend within the second to ninth income decile is destined to food (excluding fruits and vegetables), beverages and tobacco, personal care products, house cleaning products and over the counter medicines. Our product offering covers all of these categories. Further, approximately 35.1% of annual average Mexican current monetary spend within the second to ninth income decile is destined to food (excluding fruits and vegetables) and beverage products alone, such as the ones we sell.

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Tiendas 3B’s whitespace opportunity

We believe that there is a large whitespace opportunity for Tiendas 3B. This opportunity will be driven by market expansion as a result of favorable demographic trends, the under-penetration of hard discount stores in the Mexican grocery market, and hard discount’s growing appeal with the Mexican consumers. Tiendas 3B’s addressable market is large and poised for continued growth.

Based on our estimates at December 31, 2022, we believe there is a potential to open at least 12,000 additional Tiendas 3B stores in Mexico at current population levels in urban areas alone. We have mapped out whitespace by identifying communities with over 10,000 inhabitants as our stores are designed to adequately serve that number of people in a trade area of 800 meters from each store. This would represent almost a six-fold increase over our 2,288 stores as of December 31, 2023.

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Hard discount in Mexico has significant growth potential when compared to other countries

The hard discount retail market in Mexico appears to be underpenetrated when compared to other countries with more established hard discount retail markets.

According to NielsenIQ, in 2022, the hard discount market in Mexico represented only 2.3% of NielsenIQ’s measurement of the Mexican grocery market. In contrast, grocery retailers which we consider hard discounters in Germany (i.e., Aldi and Lidl), in Poland (i.e., Biedronka, Aldi and Lidl), and in Turkey (i.e., BIM and A101), which are countries with succesful and mature hard-discount markets, represented 23.6%, 33.6% and 24.1%, respectively, of their corresponding grocery market’s annual sales in 2022 based on data from Euromonitor.

Source: Euromonitor, NielsenIQ, Company Information, INEGI, World Bank

Notes:

1. Considers Biedronka, Lidl and Aldi

2. Considers BIM and A101

3. Considers Aldi and Lidl

4. Information from NielsenIQ “Hard Discounters” report

Although the Mexican food retail market has other features that differentiates it from that of Germany, Poland and Turkey at the time the hard discount model was introduced in those countries, including having a highly developed and efficient food retailers, we believe that these markets exemplify how the hard discount model can prosper even as countries grow richer. Initially, similar to Mexico, German and Polish consumers were attracted to hard discount given the great value proposition. At the time hard discount was introduced in Germany (1946 following the Second World War), in Poland (1990 following the fall of the Soviet Union) and Turkey (in 1995), German real GDP per capita, adjusted for inflation to date and price differences between countries was US$7,195, Poland’s was US$8,150 and Turkey’s was US$9,963. Even as per capita income ramped up in those countries, hard discounter penetration continued to increase. Although there is no assurance that the Mexican market will develop in the same fashion, we believe Mexican consumers are increasingly attracted to the hard discount model’s value proposition.

Our History

In 2004, K. Anthony Hatoum, founder, Chairman and Chief Executive Officer of Tiendas 3B, decided to start a new hard discounter in Mexico based on his experience with BIM, the successful Turkish hard discounter, and his conviction of the model’s sustainable competitive advantages and financial attractiveness. After analyzing the prospects of several countries in Asia, Eastern Europe and Latin America, Mr. Hatoum chose to start this new business in Mexico. Convinced by the country’s business case, he opened the first store in February of 2005 in Mexico City.

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The development of private label products, core to offering high value to our customers, has been part of our business strategy since our founding. We launched our first private label, “LactiBu,” a modified liquid milk formula, in May 2005. As of September 30, 2023, we had developed over 93 different private label brands, representing over 385 SKUs. Our value offer to our customers improves continuously as we introduce new private labels and continue to improve existing ones.

As of December 31, 2023, we had grown to become the leading hard discount retailer in Mexico with 2,288 stores, 14 distribution centers, and, as of September 30, 2023, approximately 21,950 employees. The charts below highlight our growth trajectory from 2019 to 2022.

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Our sales growth is attributable to both our store footprint expansion as well as Same Store Sales growth from our existing store base. Our Same Store Sales growth has seen consistent double-digit growth over recent years. As a result of our strong sales growth and operational efficiency, we have a track record of growing EBITDA, as depicted below.

Notes:

1. We calculate “EBITDA” as net income (loss) for the period, plus income tax expense, financial costs, net, and total depreciation and amortization. We calculate “EBITDA Margin” for a period by dividing EBITDA for the corresponding period by total revenue for such period.

Our founder-led management team continues to run the business and has successfully transitioned the company from a startup to Mexico’s 137^th most important company according to Expansión magazine’s ranking of the 500 most important companies in Mexico. Tiendas 3B was recognized by the Financial Times in 2023 as one of the fastest growing companies in the Americas.

Our belief in building a solid foundation to sustain high growth has led us to invest heavily in human resource development early on, establishing a strong culture, building robust processes, and an enterprise resource planning system capable of sustaining thousands of stores. This investment today has been fully justified as it is what we believe has allowed the company to sustain high growth rates.

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Key milestones in our history are shown below:

Competitive Landscape for Tiendas 3B

Walmex is the dominant force in Mexico’s grocery retail sector with a 34.2% share of the Modern channel’s 2022 sales. Its portfolio is spearheaded by Bodega Aurrera, a discounter and the leading discount format in Mexico, which represented 48.8% of Walmex’s 2022 sales. The remainder of Walmex’s sales are contributed by Walmart, a hypermarket, and Sam’s Club, a price club format, which represented 27.9% and 18.6% of sales, respectively. Walmart Express and Superama, supermarkets, adds an additional 4.2% and 0.5% of sales,

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respectively. To put in perspective Walmex’s market dominance, Walmart’s U.S. market share was 28.3% in 2022 according to Euromonitor.

Walmart sets the competitive tone in most modern grocery segments by leveraging its purchasing power and setting aggressive prices. Consumers, equipped with more information and purchasing options than ever, are constantly evaluating alternatives. Competitors are challenged to match these prices without compromising profitability, emphasizing the necessity for a distinct value proposition and constant differentiation.

We primarily compete with Bodega Aurrera (especially with its Express format), Tiendas Neto, and FEMSA’s Tiendas BARA. Due to our stores’ centralized locations, in the middle of neighborhoods, we also compete with traditional retailers, such as small independent corner grocers, pop-up markets, street vendors and municipal markets. Given the fragmentation of the retail sector we believe that our company competes against any format that offers products similar to what we currently offer.

In order to successfully compete, we believe that a grocery retailer needs to have notable and sustainable competitive advantages that allow it to set itself apart. Tiendas 3B does so by offering highly competitive prices without sacrificing quality, and convenient access to its stores.

Our Competitive Strengths

Since inception, we have successfully competed with well-established grocery retailers and our sustainable competitive advantages have allowed us to thrive. We believe that as we continue to grow, our advantages will become more pronounced:

Rapid store expansion capacity

We opened our first store in February 2005, and as of December 31, 2023, we had 2,288 stores and 14 distribution centers. As our sales have grown, the pace of our store openings has accelerated naturally, as illustrated in the chart below. We had 392 net new store openings during 2022 and 396 net new store openings during 2023, which translates into a new store opening every 22 hours.

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We are the fastest growing retailer in Mexico in terms of sales, based on a comparison of our sales figures with Euromonitor’s analysis of sales growth for the fastest growing retail players in Mexico. As shown below, Tiendas 3B has significantly outpaced incumbent retailers, with a total revenue CAGR of 34.4% from 2020 to 2022.

Source: Based on a comparison of Tiendas 3B’s sales figures with Euromonitor’s analysis of sales growth for competitors

Notes:

1. Considers Tiendas 3B’s total revenue CAGR. CAGRs of incumbent retail players according to Euromonitor’s estimated offline grocery retail value estimated with retail selling prices to consumers, excluding value added tax, in Mexican pesos and at current prices for the year

2. Only includes Walmart Supercenter format in Mexico

Sales growth underpinned by strong fundamentals

Our Same Store Sales growth and expansion are underpinned by strong store level fundamentals. Although growth through geographic expansion and store openings is a strong component of our expansion strategy, we believe our model is sustainable and scalable given the combined effect of growing average ticket size and a growing volume of transactions per store at our existing stores.

Notes:	Notes:
1. We calculate Average Ticket Size by dividing revenue from sales of merchandise by total number of transactions	1. Average transactions per store per month, only considering stores from vintages with five or more years of operations

High rotation of our inventory to generate significant negative working capital

By focusing on high rotation items and limiting them to one-brand one-size, curated to satisfy most grocery needs of the average Mexican family, we are able to keep low Inventory Days. In 2022, we had 22 Inventory Days.

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Our supplier payment terms (65 Payable Days for 2022) and low Inventory Days (22 Inventory Days for 2022), create a favorable negative working capital cycle that has enabled us to self-fund our rapid expansion. Our working capital for 2021, 2022 and the nine months ended September 30, 2023 was Ps.(2,121,704) thousand, Ps.(3,205,200) thousand and Ps.(4,243,026) thousand, respectively. Cash flows provided by our operating activities were Ps.1,082,703 thousand, Ps.1,366,308 thousand, Ps.2,116,335 thousand and Ps.1,942,839 thousand for 2022, 2021 and 2020 and the nine months ended September 30, 2023, respectively, compared to our capital expenditures of Ps.297,028 thousand, Ps.532,173 thousand, Ps.1,122,877 thousand and Ps.940,202 thousand for 2020, 2021 and 2022 and the nine months ended September 30, 2023, respectively.

Notes:

1. We calculate working capital as total current assets minus total current liabilities.

Lean operational model designed to maximize efficiency and minimize costs

Our limited assortment of products allows us to simplify and optimize operations leading to low sales expense as a percentage of total revenue, which was 10.6% for 2022 and 10.8% for the nine months ended September 30, 2023.

Every aspect of our operations has been carefully optimized for efficiency. We reduce working hours and operating costs by designing our products and packaging with efficiency in mind, choosing the right truck sizes and equipment, making judicious use of technology and efficiently distributing refrigerated goods, store orders, and managing our proprietary logistics infrastructure. For example, we reduce time and costs from stocking shelves by selling directly from the box (usually lidless) that arrives from our distribution centers. Our trucks and stores are designed to allow one driver to unload a store delivery single-handedly in 30 minutes or less and our distribution centers are strategically located to allow optimal re-stocking efficiency and route planning.

Standard supermarkets, with a larger number of SKUs are more complex and costly to run. They need higher gross margins to sustain their operations. By being able to operate at lower costs, we can achieve positive operating profit even with low gross margins, and can offer sustainable lower prices, which we believe is very hard to replicate for traditional grocery retailers.

Significant purchasing power

As our sales have grown, so has our purchasing power. We believe we can buy at very competitive prices since our sales are concentrated in a relatively lower number of SKUs. This allows us to continually lower our purchase costs, improve our payment terms and develop strong supplier relationships, which in turn enables us to transfer generated savings on to our customers. Further, we cooperate closely with our private label suppliers to help them negotiate better terms on their own supplies and raw materials, which also translates into savings for our customers.

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Building and constantly reinforcing customer trust and loyalty

We have built enduring customer relationships based on trust in our pricing and quality. We believe that this trust is a cornerstone of our business, allowing us to accelerate our sales growth and eventually expand into higher ticket items and additional product categories (so long as they also deliver our characteristic value-for-money). We offer a no-questions-asked no-receipt-needed money-back return policy on all products we sell. This guarantee helps build trust and encourages our customers to try our private label products.

Decentralized and nimble organization that is close to the action

We have a decentralized and lean organizational structure built around autonomous regions each led by a regional director. As of December 31, 2023, we had 14 operating regions. Each region consists of approximately 150 stores supported by a single distribution center with functional support areas, such as human resources, real estate, logistics, IT and regional purchasing and accounting. For example, the regional directors decide which new stores to open (within company guidelines) without requiring headquarters’ approval. All regions are similarly sized and configured in terms of operations and the model is readily replicable. As each region increases the number of stores it operates beyond 150 and up to 200, a new region is formed in adjacent geographies and stores are shifted accordingly to optimize logistics.

We believe this approach has many benefits. Decisions are closer to the action and therefore nimble. There is less bureaucracy. Opening new regions is rapid, efficient, and cost effective. Benchmarking among similar regions makes managing the entire business efficient and allows us to maintain a small central office even at scale.

We invest significantly in human resource development and our culture. We believe this is essential to maintaining sustainable gross and operating profit growth and managing a decentralized structure. We achieve these goals by: long-term planning, a belief in the concept of talent density, and investing in in-person training, which is supplemented by more than 100 training modules found in our online “Universidad 3B,” which is designed to foster a strong cultural affinity and operational excellence across the organization.

Founder-led management team with leading industry expertise

We are a founder-led company with a solid management team, the majority of which has been working together for more than 15 years, most since inception. Our management team has 130+ years of combined experience in the retail and hard discount industry, has extensive knowledge of the Mexican grocery market, and has held relevant positions within local and international players. The trajectory and continuity of our management team contributes to a strong and stable corporate culture that is both customer and employee-centric. Our management team has developed highly specialized know-how that we believe is hard to replicate and a key differentiating factor that has propelled our success.

Challenges for potential new Entrants

The intense competitive landscape in Mexico’s grocery retail sector creates a natural high barrier for any potential new entrant. Any new entrant will encounter large established players like Walmex, whose scale and successful discount format Bodega Aurrera sets the upper limit on prices, and hard discounters, but also hundreds of other retailers with thousands of locations that offer similar products and categories. Additionally, there is a large informal sector which is comprised of street markets and mom & pop stores that operate with low overhead costs and generally do not pay taxes. Even in a competitive environment such as this, Tiendas 3B has thrived. As new entrants do not typically start at scale (unless through an acquisition), they would need to expand while sustaining relatively low gross margins. Moreover, new entrants would have to develop a competitive advantage that trumps the value proposition and established presence of the incumbents. Historical data underscores the complexity of the landscape. Over the past two decades, several players have been acquired after facing competitive pressures.

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Prominent Exits in Mexico’s Grocery Retail Sector (2002-2022)

Retailer	Transaction	Year
Comercial Mexicana	Acquired by Soriana		2015
Super Precio (Gigante)	Acquired by Grupo Salinas and becomes Tiendas Neto		2012
Despensa del Hogar (Corvi)	Acquired by Super Precio		2009
Gigante	Acquired by Soriana		2007
Carrefour	Acquired by Chedraui		2005
Auchan	Acquired by Comercial Mexicana		2003

Our Strategy

Unrelenting focus on lean operating model to support profitable growth

Our business model has proven to be sustainable and resilient through different economic cycles, which we expect to continue. We believe we still have room to continue to improve our operating margins through the scalability of our platform. We have sustainably low operating costs as a percentage of sales, driven by scale, rigorous cost discipline, the judicious use of technology, making our processes even more efficient, and better integrating with our private label suppliers. We believe our current operational structure will allow us to continue supporting our expansion efforts at marginal incremental costs.

Rapidly expanding number of stores in contiguous regions, while maintaining low investment requirements per new store

We aim to open stores in places that are convenient for our customers, most of which access our stores on foot. We follow a disciplined approach to our geographic expansion without compromising our supply and distribution capabilities. Our standardized format and requirements assure that our capital requirements for new stores remain low, an important component as we fund our rapid expansion.

As of December 31, 2023, our stores were concentrated in 15 states in the central region of Mexico, including: Mexico City, State of Mexico, Hidalgo, Puebla, Tlaxcala, Morelos, Queretaro, Guanajuato, Michoacán, Guerrero, Veracruz, Aguascalientes, Nayarit, Jalisco, and San Luis Potosí. This geographic footprint has resulted from progressive expansion as we add new distribution centers to support stores in new areas, in each case targeting critical density to support the efficiencies of our structure. Our store location map reflects our disciplined expansion approach.

(*Mexico City Metropolitan Area has 7 DCs)

Illustrative DCs coverage areas

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Developing new private label product lines

We intend to consolidate our private label leadership by continuing to develop new private label product lines that offer higher value for money than branded alternatives to our customers. We work closely with over 100 local suppliers of our private label products to develop new and innovative product lines. Our close relationship and integration allow us to adapt our offering to changing customer needs and preferences. As we increase our private label sales penetration going forward, we will drive greater value to our customers, which we expect will translate into sales growth, while also increasing control of our margins and improving our profitability.

Our frequent client interactions, extensive market studies, and ongoing testing of products, allow us to understand and anticipate customer preferences, and to meet their evolving needs. Our team of 30 purchasers as of September 30, 2023 work hand in hand with our suppliers to continuously innovate and improve our portfolio of products.

We help our suppliers grow alongside us by providing transparency of our growth plans, paying them on time and facilitating access to our wide network of other supplier relationships. We see suppliers as strategic partners because we often find opportunities to develop brands and product presentations, aiming to increase the quality and improve the price of our products. We also help suppliers by sharing best practices we see from suppliers of other of our products (for example access to better packaging and labeling alternatives), which creates efficiencies across our business. Our annual private label supplier fair assists this exchange of ideas and solidifies our supplier ecosystem.

Increasing our sales of “Los Irrepetibles”

We intend to increase the sales contribution of “Los Irrepetibles,” our spot product offering that includes grocery and non-grocery products such as, electronics, apparel, home goods, and others. We offer a changing selection of approximately 50 spot products every two weeks on average. These products offer notably high value for money and add a treasure hunt factor to the shopping experience. We call them “Los Irrepetibles” because they are offered at prices so low that they will not be “repeated” (replenished) once we sell out.

Part of our strategy is to selectively offer higher ticket spot items that still offer tremendous value for money. We are currently conducting tests on a limited scale to assess our customers’ acceptance of these price points and product price elasticity. Going forward, we plan to expand our spot product purchasing division to improve purchasing capacity and product sourcing.

Introducing new categories of products and services

We plan to selectively introduce new product categories to meet our customers’ needs. At any moment we are actively testing several new product categories. As a result of these efforts, we recently introduced the beauty category in our stores. Additionally, we plan to expand our assortment in certain categories, including ice creams and fresh and frozen meats. Based on our internal analysis, we believe there is sufficient demand to introduce SKUs to our offering and drive additional sales and wallet penetration.

Additionally, we believe that our increasingly ubiquitous store footprint can be leveraged to increase the services we offer to our customers at our locations. Currently we offer utility and service payments, top-ups, amongst others. We see opportunities to expand our service offering given our customers’ frequent store visits each week.

Our Stores

Our stores have been thoughtfully designed to improve our customer’s experience and achieve operational efficiencies.

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Standardized Stores that are Efficient and Economical to Operate

Our stores follow a standardized format in terms of layout, size, assortment, and personnel. This facilitates operational efficiency and scalable growth. As of September 30, 2023, the size distribution of our stores was as follows: approximately 30.0% are smaller than 300 square meters, 60.0% range between 300 square meters and 450 square meters, and 10.0% exceed 450 square meters. This uniformity enables us to streamline inventory management, and optimized staffing, and other operational processes. The store’s exterior façade is painted in our corporate colors (red and green) that contrast with the typical street colors for better visibility and promote our brand. The interior of our stores is well lit, with wide and convenient aisles and reduced shelving height that allows store employees to see the full store, which in turn helps control shrinkage and makes restocking quicker and easier.

Moreover, we are generally able to negotiate favorable lease terms when we open new stores, Our rents are fixed, increase with inflation and on average represent 2.0% of a store’s sales. This is possible because we do not need to be at the premium location of a given target area. Our store locations are selected based on the accessibility for our clients and ease of maneuvering, parking and unloading of our trucks for restocking.

Convenient Store Locations for our Customers

Depending on the specific characteristics of each location, we tailor our store placements for both urban and non-urban settings. In urban areas, we position our stores in the heart of neighborhoods. This strategic placement aligns with our vision to reduce time and costs for families, making our stores readily accessible for daily needs and enabling frequent visits. In non-urban areas, we seek to be at the confluence of traffic, at major intersections, or in places where the inhabitants of a wider geography come to fulfill their grocery shopping.

Geographical Presence

We opened our first store in Mexico City and have since expanded primarily in the central region of Mexico. As of December 31, 2023, we were present in Mexico City, State of Mexico, Hidalgo, Puebla, Tlaxcala, Morelos, Querétaro, Guanajuato, Michoacán, Guerrero, Veracruz, Aguascalientes, Nayarit, Jalisco, and San Luis Potosí. We believe the concentrated density of our geographic footprint illustrates our operational discipline and demonstrates the ongoing opportunity for geographic expansion.

Our real estate efforts are led by seasoned teams with more than 100 years of combined experience. Each of our regions has its own real estate team which is familiar with the local market and demand dynamics. The teams follow a standard and disciplined approach to searching, appraising, negotiating, and closing real estate transactions. Each region decides on its new store locations and each regional director approves new stores without the need to get headquarters’ approval, to the extent they adhere to our real estate guidelines.

As we open more regions, the number of real estate teams increases and so does our ability to increase the rate of store openings. We will continue to increase the density of stores in the areas in which we currently operate, while seeking to expand and increase our penetration in the near term in Jalisco and in neighboring states to those where we operate, such as Oaxaca.

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Our geographical presence is shown below:

Standard Store Operations

Our stores are open from 8:00 a.m. to 9:30 p.m., seven days a week, all year round. A typical store is operated by a store manager, two assistant managers, and a team of 6 sales associates on average. The store manager is responsible for managing and developing their team, ordering, restocking, serving and selling to customers, maintaining operating standards, and executing any in-store communication/marketing campaigns. A District Manager manages between six and eight stores and, in turn, reports to a Zone Manager who oversees 40 to 80 stores. The Zone Manager reports to the Regional Director who manages all aspects of his/her region.

All our products are presented in boxes, as delivered by our suppliers. We prefer, to the extent possible, to sell directly from pallets on lidless boxes. The order of the display of products is identical in each store. This convenient layout increases our productivity by reducing the number of employees needed to staff our stores, as we do not need employees to unpack individual packages or create and maintain merchandise displays. Additionally, the pallet stocking format allows us to restock our products quickly and easily.

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Store Unit Economics

The strength of our unit economics is a key element of what makes our business model attractive. By pursuing a target driven and disciplined expansion strategy we have been able to shorten our store sales ramp-up periods in real terms, where each new store vintage achieves a higher level of sales, adjusted by inflation, earlier than older vintages as shown below.

Source: Company information

Notes:

1. Sales Ramp-up Evolution by Vintage” measures, for stores of the same vintage, the median of such stores’ revenue from sales of merchandise during 12-month periods since the start of operation. When calculating this measure, we exclude the first calendar month of a store’s operations to account for stores that are not open for the entire month, as well as stores that have been permanently closed

2. 12-month period since opening, excludes month 1. i.e., period 1 is from month 2 through month 13 since opening

3. Median 12-month period sales of all stores opened in the corresponding vintage (excludes first month to “normalize” dates in which stores are operational since opening). Closed stores are excluded from median calculation

4. All figures in real Ps. terms as of December 2022, adjusted for inflation using Mexican National Consumer Price Index (Índice Nacional de Precios al Consumidor), as provided by INEGI and as published by the Mexican Central Bank

As part of our disciplined expansion strategy, we seek to open stores that will meet the following target unit economics by their 36th month of operations.

Target Unit Economics(1)
Sales per Store (Ps. thousands)	Ps.24,700
4-Wall Profitability Margin (%)	9.5	%
Average investment per store (Ps. thousands)	Ps.3,900
Payback period (months)	25 months
Cash-on-cash return (%)	60	%

(1) Reflects targets for the 36th month of operations on an annualized basis.

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These per store targets are based on the historical performance of our 2019 to 2023 vintages. As a reference, during 2022, our 2019 vintage stores, which is the most recent vintage with stores that have been operating for at least 36 months, achieved on a vintage basis, Ps.19,200 thousand of Sales per Store and a 4-Wall Profitability Margin of 8.4%. For each store, we target a 60.0% cash-on-cash return by the 36th month, based on a targeted average investment per store of Ps.3,900 thousand, which is slightly higher than our Average Investment per Store for our 2019 vintage to account for inflationary effects, expected slightly larger store sizes, additional refrigeration, increased air conditioning in tropical weather areas where we continue to expand and other improvements for new stores. Our goal is for each store to have a 25 month payback period. Based on our historical data, we believe that our targets are applicable to our stores generally, regardless of region or whether the store is in an urban, suburban or rural setting.

Notes:

1. The term “sales” refers to our revenue from sales of merchandise

2. “4-wall profitability” for a store is defined as revenue from sales of merchandise, minus cost of sales, plus discounts and rebates, plus differences with suppliers, minus private label packaging expenses, minus shrinkage, minus store expenses, which include store personnel expense, rent expenses, advertising, water, electricity, security, store and office equipment maintenance, building maintenance, stationery, waste and recyclable recollection services, and depreciation, among others

3. “Cash-on-Cash” is calculated by dividing the 4-wall profitability by the average investment per store

Our Products & Suppliers

Types of Products we Carry

Our stores carry the leading brand products in their most popular size, as well as our private label products that we believe are of equivalent or better quality but at a lower price. In addition, we offer spot products (similar to Aldi’s Aktuell/Special buys): these are quality food and non-food products such as clothing, electronics, household goods and others. We introduce an array of approximately 50 spot products every two weeks on average, that offer notably high value for money and higher gross profit margins. They add a treasure hunt factor to our stores. We call them “Los Irrepetibles” as they are offered at prices so low that they will not be “repeated” (replenished) once we sell out.

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Sourcing of Our Portfolio of Products

Each Tiendas 3B store carries on average 800 SKUs, as compared to 3,000 SKUs for a convenience store and approximately 10,000 or more SKUs for a conventional supermarket based on analysis of publicly available information. Our high purchasing power develops strong supplier relationships which in turn translates to better payment terms and lower purchasing costs that allow us to maintain our low prices, which in turn boosts sales. Our non-private label products are sourced directly form leading consumer good suppliers in Mexico. In 2022, we purchased from 293 suppliers, with our largest supplier’s products accounting for only 4.2% of our purchases, and the five largest suppliers accounting for only 18.4% of our purchases.

Our private label products are developed with local manufacturers’ partners. These are carefully selected for their ability to provide high-quality products and scale production to meet demand, their efficiency, and their belief in our business model. We seek to build long-term partnerships with transparent pricing, proactively planning future manufacturing capacity and consulting on improved technologies.

Our ongoing growth strategy relies on the continued development and increased sales of our private label products. Our private label products are developed and designed largely by our in-house purchasing team, who are fully responsible for all aspects of the product. Our purchasing team is integral to our operations, ensuring that our supply chain is efficient and scales with our growth. The team identifies the required or potential new product, identifies the potential supplier, develops specifications and tests samples, designs the packaging and image, and selects and registers the brand name. Before launching a private label, the team tests it or a proxy product to determine price elasticity and fine tune the design for maximum sales and performance. To launch a product, a marketing and communication campaign is prepared targeting both our clients and our store teams. The purchasing team is tasked with developing enduring partnerships with our private label product suppliers in order to ensure supply chain synchronization, quality consistency and costs efficiencies.

According to Euromonitor 2022 report on “Retailing in Mexico,” the perception of private label brands continues to improve. In the past, private labels were perceived as inferior to the branded alternatives. Nowadays, Euromonitor states that Tiendas 3B has the most developed private label offering in Mexico, with a combination of low prices and good quality.

Pricing

Our pricing policy is designed to attract new customers and retain existing ones. We endeavor to sell our products at the lowest possible prices. We minimize our operating costs throughout all aspects of the value chain, from site selection, store layout, merchandise selection, purchasing, staffing, distribution, and management. These savings are passed on to our customers by reducing the price of our products.

In order to ensure that our pricing remains competitive, we regularly monitor our competitors’ prices based on an index we have established for our top 100 SKUs by sales. We compare prices on average once every two weeks. Based on this index, our records suggest that during 2022, our prices were on average 13.9% below those of Bodega Aurrera, and 7.3% below those of Tiendas Neto. Moreover, we leverage our private label offering to offer tremendous value for money, typically pricing our products below the price of branded label alternatives in our competitor’s stores on a unit basis. For example, on a unit basis, based on a price check on January 4, 2024, our private label lentil beans were priced 47.0% cheaper than the leading brand alternative at a competing store. Similarly, our dairy formula LactiBu, was priced 38.0% cheaper than the leading brand alternative at a competing store.

We aim to keep our prices as stable as possible. We react rapidly to price changes by our competitors when warranted but we usually do not respond to short-term offers. We also endeavor to be the last retailer in the market to increase prices based on an increase in the cost of raw materials and the first retailer in the market to decrease prices based on a decrease in the cost of raw materials. Our goal is to gain customer trust and loyalty, especially from value-oriented customers.

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Prices are determined at a Product and Pricing Committee meeting that takes place once a week. The Director of Purchasing meets together with the members of our Operation Committee, the Chief Executive Officer, and the relevant purchasers. We adopt a standard price (based on the pricing of our competition and our analysis of price elasticity for each product we sell) for all our stores. When required we will create a special price list to deal with a specific regional requirement to remain the competitive option for our clients.

Typically, we revise the prices for only a limited number of SKUs at each Product and Pricing Committee meeting. If certain pricing decisions must be made quickly, we are able to call a special meeting to react rapidly.

Quality Control

Quality control is key to building trust in our private label products and cementing our reputation. We conduct regular laboratory tests to check that contracted specifications are met, relying on well-regarded laboratories in Mexico, such as Cencon and Biofleming. We audit the manufacturing facilities of our suppliers on a regular basis. We perform quality checks of our products when they arrive at our distribution centers and randomly select samples for further laboratory testing. We also keep samples of every lot received in case we need to investigate a quality-related issue or to send a product to test if it complies with the contracted quality standards.

Our Customers

Our customer base is largely composed of smart value shoppers—aligned with our slogan “tu despensa inteligente” or “your smart pantry choice.” We serve the low-to middle socioeconomic segments in Mexico, specifically those in the second to ninth income deciles. However, our broader target increasingly encompasses value shoppers across all income brackets. We define our typical customer as anyone who buys groceries, primarily focusing on those looking for value for money, a convenient and pleasant shopping experience, and minimizing transportation costs.

Almost 85.0% of our customers are women, primarily between the ages of 30 and 60. The majority are homemakers (46.0%), followed by employed individuals (28.0%) and small merchants or shopkeepers (15.0%). New customers initially buy in our stores because of the competitive pricing of our branded and spot products. Over time, however, as they become more familiar with our offering, customers begin to try our private label products, which eventually become their preferred choice for their mix of value and quality.

The shopping experience is typically localized, as most customers live within a 10-street (800-meter) radius of their favored store. They visit our stores three to four times a week, purchasing enough for a maximum of two days. For items we currently do not offer, like fresh fruits and vegetables, they complete their shopping needs within the neighborhood.

Sales and Marketing

We price our products at the lowest sustainable price and for simplicity maintain standard price lists across all our stores. Our products do not go on sale and any promotional activity does not involve changes in prices. The one exception being the end-of-life products that get heavily discounted.

We have a no-questions-asked no-receipt needed money-back return policy. To instill customer confidence in our product offering, we allow customers to return any product if they are dissatisfied with it, with no questions asked and without requiring a receipt. This marketing strategy allows customers to test our private label products and break ingrained consumption patterns associated with very traditional brands.

We do not engage in material levels of advertising. We prefer to invest in offering the lowest price possible for our customers. Our marketing strategy is low-cost and efficient, consisting mostly of in-store advertising

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using our radio channel and displaying posters with impactful messages. We selectively use flyers for new store openings and to promote seasonal products. We conduct activation campaigns where for two weeks we display a given private label product at the end of the check-out counter (without any additional discount). Taking advantage of unusually low rental rates during COVID-19, we have used billboards in Mexico City to position our brand and value proposition. We are present on all the important social media platforms. We have no plans to launch a loyalty program as we believe it to be complex and costly to implement successfully at this time. Our preference remains to skip initiatives that add costs and instead focus on lower prices to drive customer loyalty. Word of mouth remains our most potent marketing tool.

Seasonality

Since our products mostly consist of food staples, our sales are not generally affected by seasonality. Variations in our performance from quarter to quarter are generally a consequence of store openings and holidays. Therefore, the results for a given quarter may not be indicative of results expected for the entire year.

Logistics

Consistent with our efficiency focused operational ethos, we have built efficient distribution and fulfillment capabilities. Our decentralized organization is built around autonomous regions. Each region has a distribution center and its own truck fleet that serves its stores. This decentralization reduces complexity and therefore costs, including logistics costs.

Distribution Centers

We believe we are highly efficient with our logistics and distributions infrastructure without sacrificing service and speed. As of December 31, 2023, we operated 14 distribution centers. Each serves approximately 150 stores, with a capacity to stretch to serve 200 stores, within a 150-kilometer radius, within a capacity to stretch up to a 200-kilometer radius. When the number of total stores served by any given distribution center approaches the 150-store mark, we proceed to open a new distribution center nearby and redistribute the stores to optimize distances and routing.

A typical distribution center is 12,000 square meters, with additional space for a maneuvering yard. Each distribution center carries the vast majority of the SKUs we sell, including refrigerated items. Frozen items, a relatively new category, are being rolled out to all our stores gradually as we build frozen refrigeration in our distribution centers.

Our distribution centers are designed to be efficient and reduce the amount of man hours required to move our products. We make use of cross-docking, whenever possible, use an ABC layout, which allocates space depending on inventory turnover, and favor floor storage instead of racks, as it is more efficient for fast-moving SKUs.

The main operations and process of our distribution center consist of:

Receiving

After placing an order with our suppliers, a receiving appointment is made, with a receiving dock reserved, and a receiving team programmed to unload the order when it arrives. The process is designed to take up the least amount of time possible from the moment our supplier arrives at the distribution center to the moment it leaves.

Picking

Store orders are processed overnight and ready to pick up in the morning. Pickers receive their “pick lists” on their mobile devices, which tell them what to pick. Once an item is picked up, the order is updated and

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confirmed on the mobile device. This system, tailor-made to support our process, allows for accurate and quick picking. In addition, we incentivize efficient picking by giving picking speed and accuracy bonuses to our pickers.

Store fulfillment

Once the order of a store has been picked, it is checked and palletized ready to be loaded in the truck that will deliver the order to the store that same day.

The proximity of our distribution centers to our stores allows for optimal re-stocking frequency and route planning. Store restocking frequency is dynamic and ranges from twice a week to daily and depends on sales volumes. We fulfill store orders one day after an order is placed. A single truck can visit up to four stores per day.

As of September 30, 2023, we operated a fleet of 305 same-model trucks and over 799 utility vehicles for our District Managers. Our trucks are on average 3.1 years old and most have been acquired with credit with an average maturity of 36 months. Standardization simplifies truck management and operations thus reducing costs. For security and for key performance indicator management, we monitor our fleet through real-time geographic positioning, live video, and dual-way audio.

A fundamental part of our logistics operation is our drivers. We provide a comprehensive 385-hour training program where the operator is taught skills covering mechanics, driver education, regulations, and service culture. As of September 30, 2023, our academy had become compulsory for all our drivers to ensure better logistics efficiency, timeliness and safety.

Operations and Decision-Making

We have a decentralized and lean organizational structure built around autonomous regions, each led by a Regional Director. Each region consists of approximately 150 stores and a distribution center. A region has all the functional areas it needs to operate autonomously. These include human resources, real estate, logistics, IT and regional purchasing and accounting. All regions are similarly sized, organized and operated.

Sales and Operations

Each region typically has two Zone Managers, each of whom is responsible for 40 to 80 stores. The Zone Manager reports directly to the Regional Director on all matters related to store operations and sales. A Zone Manager is responsible for ensuring the efficient operations of stores and for their maintenance and must visit each of their stores at least once every two months. Each Zone Manager oversees six to 10 District Managers. A District Manager ensures that the stores’ operations are conducted in compliance with our procedures and rules. They are responsible for visiting each store at least twice a week and monitoring competition and general market conditions, controlling inventories and ordering procedures, and recruiting new store employees.

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Logistics

A Distribution Center manager reports directly to the Regional Director and oversees all logistics and fulfillment matters. Their direct reports consist of the heads of receiving, picking, and dispatching and they are responsible for maintaining an efficient and disciplined logistics operation.

Human Resources

Our regional human resources teams are responsible for recruiting, training, and developing all personnel their region. They monitor and enforce adherence to centrally set human performance indicators, such as turnover rates and specific development tracks for roles like Store Manager, District Manager, Zone Manager and Regional Director. Additionally, they manage the annual training plans and warehouse development programs. When a labor-related issue arises the team actively manages it. The team also assess workplace quality and metrics. Their role is pivotal in maintaining a balanced and effective workforce aligned with our culture and corporate objectives.

Real Estate

Our regional real estate team is tasked with securing and opening new stores. A significant part of their role is the negotiation of lease terms and ensuring compliance with our unit economic targets for each potential opening site. By maintaining a database of potential locations and competitor insights, they enable data-driven decision-making. The team maintains an open line of communication with district and zone managers, allowing real-time market analysis that informs our broader expansion strategy.

Administration and Accounting

Our regional administration and accounting teams primarily focus on operational finances. The team collaborates closely with Zone and District Managers to manage budgets and ensure operational efficiency. They track store-level financial performance indicators such as 4-Wall Profitability and capital expenditures. They assist in the planning and execution of initiatives like inventory control, labor costs, and expense management. Cash flow and basic accounting tasks are managed to ensure the region’s financial health. Their work acts as the financial backbone for the region, aiding in tactical decision-making while aligning with the company’s broader objectives.

Purchasing

The regional purchasing team is responsible for executing purchase orders based on demand forecasts and supplier lead times, as well as for maintaining optimum inventory levels in the region. To meet regional tastes, they manage a portfolio of up to 10 regional SKUs, and are responsible for negotiating, purchasing, and managing these products. The team actively participates in bi-weekly and monthly operational meetings to address concerns and propose improvements. Their activities are integral to ensuring smooth and cost-efficient operations.

IT Support

The regional IT Support team ensures the seamless operation of information and communication systems by resolving technical issues and incidents in computing equipment. The team performs remote and on-site troubleshooting. They also execute preventive maintenance and are in charge of any regional special projects.

Our Regional Directors meet with the members of our Operation Committee every quarter. At these meetings, the Regional Managers discuss issues affecting their regions and make decisions that will be applied across the company.

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Our Headquarters

Our central office (headquarters) is located in Mexico City and is home to our Chief Executive Officer, Chief Financial Officer and Investor Relations Officer, Director of Sales and Operations, Director of Purchasing, Director of Human Resources, Director of Information Technology and Director of Real Estate.

Our headquarters is also home to our Product and Pricing Committee, our Operation Committee, our Central Purchasing Department, our Finance and Administration Department, our Central Human Resources Department, and our Information Technology Department.

Our Central Purchasing Department is responsible for all decisions relating to our suppliers and purchasing prices. Our finance and administration department is responsible for financial reporting, treasury, taxes and budgeting. Our Information Technology department is responsible for ensuring the smooth and uninterrupted operations of all our systems as well as the development of all our future technology-driven capabilities. Our human resources department coordinates recruitment for our headquarters and managers and above levels in regions; they also shape culture and training efforts across the organization. Our real estate department oversees openings and negotiation of stores across the region, defines annual goals for new locations, and identifies and negotiates locations for distribution centers.

Committees

Our Product and Pricing Committee consists of our Director of Purchasing, our Director of Sales and Operations and our Chief Executive Officer. This committee discusses and makes decisions on all matters related to introducing new products, phasing out existing products, testing products, quality control issues and changing prices. It is also responsible of approving overall promotions and advertisements.

Our Operation Committee is responsible for overseeing our operations, as well as general company strategy. It is chaired by our Chief Executive Officer and includes our Chief Financial Officer and Investor Relations Officer, our Director of Sales and Operations and our Director of Human Resources.

Human Capital and Our Culture

At the heart of our corporate culture are our core values: trustworthiness, honesty, and modesty. We view these values as central to our past success and future aspirations. We strive to instill these values in all our employees and suppliers to improve the communities where we operate. As of September 30, 2023, of our approximately 21,950 employees, 3,200 were employed in our warehouses and distribution centers, 18,500 were employed at our stores and 250 were employed in our corporate offices. We endeavor to provide competitive compensation and benefits that attract and retain top-tier talent and are committed to promoting diversity among our teams through an inclusive culture that seeks to integrate people from different parts of the world that enrich and support efforts to meet business objectives.

We prioritize continuous learning and development for our employees. In 2018, we introduced “University 3B” (or “Universidad 3B”), an online training initiative. Our employees are automatically enrolled to the

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platform which offers over 100 courses, from theoretical insights to practical applications, covering key areas such as our business model, process protocols, safety guidelines, exclusive brand knowledge, and role-specific certifications.

In order to cultivate leadership, we have developed a specialized program to accelerate the growth of key-talent within our organization. This program has a 78-hour duration, during which we focus on skills relating to supervision, management decision-making, result focus, information and management and information analysis. This program is conducted twice a year with a local prestigious local university, the Escuela Bancaria y Comercial. This initiative has led to the promotion of over 50 employees to managerial positions between 2021 and 2022.

We champion career growth with a hands-on evaluation program, designed to propel employees’ career trajectories within the company. A key initiative of our training and employee development is our performance review process. Our digitalized process allows us to measure key employee metrics and competencies based on each employee’s position. We proactively analyze results and respond accordingly by generating a tailored action plan.

Employee growth and retention are at the forefront of our strategies. We diligently track metrics like applications, staffing, turnover, and internal promotions. Our comprehensive career plans coupled with a meritocratic advancement model, offer multidisciplinary career growth opportunities. During 2022, we promoted 4,300 of our collaborators, reflecting our commitment to career development and growth within our organization.

We recognize that our employees’ well-being is paramount to their professional success. To further our commitment, we have a toll-free telephone line handled by health professionals who provide psychological, nutritional, and medical advice. Some areas served by our experts are family violence, couples counseling, emotional conditions, self-care, healthy lifestyle, and eating habits. During 2021 and 2022, more than 400 employees received advice from this line.

Integral to our corporate culture is the value we place on open communication. We believe in empowering our employees and that they should have voice in company matters. For example, all employees have access to a platform with direct access to our Chief Executive Officer, all improvement proposals are heard and responded to through this platform. Proposals that we believe may add value to the business are analyzed in detail and implemented.

Regulatory Considerations

Our business and operations are subject to various laws and regulations as well as local governmental authorizations to open and operate our stores. Our subsidiaries’ operations are primarily governed by the Mexican Corporations Law and associated provisions, while real estate property leasing activities in Mexico are governed by the Mexican Constitution, state civil codes, and various laws and regulations, which provide a legal framework for the use, operation, and transfer of real estate properties in Mexico, including environmental matters.

We are also subject to the provisions contained in the Mexican Intellectual Property Law (Ley de Propiedad Industrial) with respect to the use of our trademarks, and to the Mexican General Health Law (Ley General de Salud) and the Mexican Official Standards (Normas Oficiales Mexicanas) for the health and safety practices involved in the preparation, distribution and sale of food products. Our failure to comply with any of these laws and norms may result in the imposition of administrative penalties, including fines and the temporary or permanent closure of our facilities. We believe that as of this date we are in substantial compliance with all such laws and norms.

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More specifically, we and the various properties we lease and which are used as stores or warehouses are primarily subject to the following Mexican laws and regulations:

• Mexican Constitution;

• Mexican Corporations Law;

• Federal Law on Economic Competition;

• Federal Law for Protection of the Consumer;

• Federal Law for the Protection of Industrial Property;

• Federal Roads, Bridges and Auto Transport Law;

• Civil codes of the states in which our stores and distribution centers are located and in which we operate;

• Civil Protection Law of the states in which our stores are located and in which we operate;

• General Law on Ecological Balance and Environmental Protection, and its implementing regulations;

• General Law for the Prevention and Comprehensive Management of Waste;

• Expropriation Law;

• National Waters Law;

• General Law on National Property;

• Local and municipal environmental, land-use, and zoning regulations, and tax legislation and implementing regulations; and

• Mexican Official Standards (NOMs), including with respect to food packaging and labeling.

Local Laws and Regulations

Our stores are subject to various local laws and regulatory requirements, including permitting and licensing requirements. Local regulations, including municipal or local ordinances, zoning restrictions and other restrictions imposed by local authorities or private community organizations may restrict the use of our properties and may require us to obtain approval from such bodies at any time with respect to our stores, including prior to developing such properties or when developing or undertaking renovations of our stores. As part of the development process, we are required to obtain the applicable land use certificates, construction permits, operating licenses and fire and safety approvals from the Civil Protection Office (Oficina de Protección Civil).

Expropriation

None of our stores have been expropriated to date. However, under the Expropriation Law, the government has the power to expropriate or temporarily occupy in whole or in part any land or real estate property inside Mexican territory. Expropriation may be carried out in the public interest or for national security reasons. In the event of expropriation, the owner is to be paid compensation, we as tenants would not have the right to directly receive any compensation if the land where a store is located is expropriated. If there is disagreement as to the amount payable as compensation, a judicial authority may be asked to determine such amount. There is no clear definition as to when a compensation payment for the expropriation of any of the properties would be made or as to the payment amount the owner or we as tenants would receive in such event.

Environmental Regulations

As of this date, we do not have environmental certifications of any kind. The construction and operation of our stores and distribution centers may be subject to the Mexican General Law on Ecological Balance and

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Environmental Protection (Ley General del Equilibrio Ecológico y la Protección al Ambiente, or the “Mexican General Environmental Law”) and the related implementing regulations, the General Law for the Prevention and Comprehensive Management of Waste (Ley General para la Prevención y Gestión Integral de los Residuos) and the related implementing regulations, the National Waters Law (Ley de Aguas Nacionales) and the related implementing regulations, the Regulations for Environmental Protection Against Noise Pollution (Reglamento para la Protección del Ambiente contra la Contaminación Originada por la Emisión de Ruido), the General Law for Sustainable Forest Development (Ley General de Desarrollo Forestal Sustentable), the General Law on Wildlife (Ley General de Vida Silvestre), the General Law on Climate Change (Ley General de Cambio Climático), numerous Mexican Official Standards (Normas Oficiales Mexicanas), and other federal, state and municipal environmental laws and regulations and agency agreements where our stores and/or facilities are located or could be developed (collectively, “Environmental Laws”).

The Mexican General Environmental Law generally sets forth the legal framework applicable to the environmental impact procedure as well as the release of contaminants into the environment. The regulations that have been issued pursuant to this law affect ecological planning, risk assessment and environmental impact, air pollution, protected natural areas, protection of flora and fauna, preservation and prudent use of natural resources and soil pollution, among others. Additionally, the Mexican General Law for the Prevention and Comprehensive Management of Waste regulates the generation and handling of hazardous waste and materials as well as the release of contaminants into the environment.

Non-compliance with the Environmental Laws may result in the imposition of administrative fines or sanctions, remedial actions, revocations of authorizations, licenses, or permits, administrative arrests, temporary or permanent closure of facilities, or imprisonment, when environmental violations are classified as criminal offenses.

In our process of developing stores and distribution centers, our approach is to adhere to an environmental management system and certain environmental guidelines. This does not mean that we have specific environmental policies or certificates, recognitions, or programs for environmental and natural resource protection, defense, or restoration. While we cannot assure you that in all cases, we are and will be in full compliance with all laws, we believe that the stores and distribution centers that we develop: (i) do not represent a significant environmental risk, (ii) have all relevant material permits and authorizations, and (iii) comply with all applicable Environmental Laws.

Compliance and Controls

We are fully committed to maintaining strong compliance and controls for financial reporting, as evidenced by the measures currently being implemented. The Company recognizes the significance of accurate and reliable financial information in building investor trust. To establish a robust internal control framework, Tiendas 3B is conducting a comprehensive assessment of potential risks and documenting them meticulously. Key control activities are being designed and implemented to mitigate these risks and ensure the integrity of financial reporting. In addition, information and communication channels are being strengthened to promote timely and accurate reporting. Tiendas 3B’s proactive approach to compliance and controls underscores its commitment to upholding high standards of transparency and adherence to relevant laws and regulatory requirements.

Legal and Administrative Proceedings

From time to time, we are or may become involved in disputes that arise in the ordinary course of our business. Any claims against us, whether meritorious or not, can be time-consuming, result in costly litigation, require significant management time and result in the diversion of significant operational resources. We are subject to several legal proceedings, including civil and labor claims, which we generally believe are common and incidental to business operations in Mexico.

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We record provisions, if any, based on our external and in-house counsel’s assessment of the likelihood of loss as well as the history of similar and related proceedings. Our financial statements reflect the provisions for legal proceedings in accordance with accounting rules when our external counsel advises that (i) an outflow of resources is probable to settle the obligation and (ii) a reliable estimate can be made of the amount of the obligation. Our provisions for probable losses arising from legal proceedings are estimated and periodically adjusted by management after consideration of the opinions of our external counsel.

As of September 30, 2023, we had not recorded any provisions in connection with legal proceedings based on probable loss. However, legal proceedings are inherently unpredictable and subject to significant uncertainties. If one or more cases result in a judgment against us in any reporting period for amounts that exceed our management’s expectations, the impact on our operating results or financial condition for that reporting period could be material. See “Risk Factors—Risks Relating to Our Business and Industry—Our operations are subject to the general risks of litigation.”

Intellectual Property

Our most important brands, slogans and logos are protected by trademarks in Mexico through registration with the Mexican Industrial Property Institute (Instituto Mexicano de la Propiedad Industrial). Protection of a trademark in Mexico continues for as long as the brand is registered and used. As of September 30, 2023, we had approximately 1,377 owned brand files and registries in Mexico. In addition, within Mexico our licensors register their own brands granting us the right to use them within the territory.

Properties

As of September 30, 2023, we only owned one property used in our operations. Our remaining 2,287 stores and office space is leased from a wide array of landlords. No landlord represents more than 5.0% of our lease expense. We believe that having a diffuse landlord base allows us to achieve better commercial lease terms. Each of our lease follows a standard form of Mexican law governed agreement, which includes a 10-year term with an automatic 10-year renewal and may be terminated at will by us. To minimize our initial store expenditures, we typically only advance two months of rent and give one month of rent as a security deposit. In some jurisdictions, the local civil code additionally requires that the landlord grant us a right of first refusal in the event they decide to sell the relevant property to a third party.

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MANAGEMENT

We are currently reviewing the composition of our board of directors, our committees and our corporate governance practices in light of this offering and applicable requirements of the SEC and the New York Stock Exchange. In subsequent filings with the SEC, we will update any relevant disclosure in this prospectus as appropriate.

Upon the consummation of this offering, we will be managed by our board of directors and by our senior management, pursuant to our memorandum and articles of association.

Board of Directors

Our memorandum and articles of association provide that the board of directors will be composed of a minimum of seven directors and a maximum of 15 directors, with the number of board seats being exclusively determined by a resolution of directors (and, for the avoidance of doubt, the size of the board of directors may not be changed by the shareholders of the Company at any time (whether by resolution of members, special resolution of members or otherwise)).

Upon the consummation of this offering, our board of directors will be composed of nine members. Our directors do not have a retirement age requirement under our memorandum and articles of association.

Our memorandum and articles of association provide that, subject to certain exceptions, directors are elected by resolution of our shareholders, which requires the affirmative vote of a plurality of the votes cast on the resolution by the shareholders entitled to vote who are present, in person or by proxy, at the meeting (notwithstanding that such votes may represent less than a majority of the votes represented at the meeting and entitled to vote). Each director is appointed and elected for such term as set out in our memorandum and articles of association or until his or her earlier death, resignation or removal.

Our memorandum and articles of association provide that our directors will be divided into three classes designated as the “Class I,” “Class II,” and “Class III” directors. Each director will serve for a term ending on the date of the third annual general meeting of the shareholders following the annual general meeting of the shareholders at which such director was elected (except that the terms of the Class I, Class II and Class III directors listed below expire at the annual meetings identified below), subject to the provisions of our memorandum and articles of association. The Class I directors to be put in place upon consummation of this offering will hold office until our next annual general meeting. It is expected that our directors will be divided among the three classes as follows:

• the initial Class I directors are expected to be Messrs. Le Ruyet and Gertsacov and Ms. Martinez, and their terms will expire at the annual general meeting of shareholders expected to be held no later than April 2025;

• the initial Class II directors are expected to be Messrs. Hatoum, Cappello and Meffre, and their terms will expire at the annual general meeting of the shareholders expected to be held no later than April 2026; and

• the initial Class III directors are expected to be Ms. Reich and Messrs. Fuster and Khouri, and their terms will expire at the annual general meeting of shareholders expected to be held no later than April 2027.

See “Description of Share Capital” for further information.

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The following table sets forth the current members of our board of directors and their ages as of December 31, 2023.

Name	Age		Position
K. Anthony Hatoum		60	Chairman
Nicole Reich		58	Independent Director
Dan Gertsacov		48	Independent Director
Jean-François Le Ruyet		55	Director
Alexander Fuster		58	Independent Director
Juan Pablo Cappello		56	Independent Director
Sami Khouri		72	Independent Director
Alexis Meffre		48	Director
Stephanie Martinez		47	Independent Director

The business address of our directors is Río Danubio 51, Col. Cuauhtémoc, Mexico City, Mexico 06500. The following sets forth biographical information for each of the members of our board of directors:

K. Anthony Hatoum

K. Anthony Hatoum is the founder, Chairman of the board of directors and Chief Executive Officer of the Issuer. Mr. Hatoum began his professional career in J.P. Morgan’s investment banking division in New York and later as a Senior Engagement Manager at McKinsey & Co. in New York. He later joined Merrill Lynch’s global private equity group as a Managing Director where he covered BIM, the Turkish hard-discount food retailer. Mr. Hatoum began his first of a series of entrepreneurial ventures in 1998, and he also co-founded Advantage Card, a leading credit card, consumer finance and loyalty program in Turkey and then went on to co-found E-bebek, a leading retailer of baby products in Turkey and among the first online retailer in Turkey. Mr. Hatoum holds a Bachelor’s Degree in Civil Engineering from Columbia University, a Master’s Degree in Civil Engineering from the Massachusetts Institute of Technology and an MBA from Stanford Graduate School of Business.

Nicole Reich

Nicole Reich has been a director of the Issuer since 2023. Ms. Reich is the President of the Board of BNP Paribas Cardif Mexico, the insurance arm of BNP Paribas in Mexico, where she previously served as chief executive officer for eight years. Ms. Reich has held other leadership positions in the financial sector, primarily across Latin America, including at The Bank of Nova Scotia and Citi. Ms. Reich also serves as president of the Risk and Audit Committees of multiple institutions. She has received numerous accolades, including “Woman of the Year” by the Mexican Senate. Ms. Reich holds a Bachelor’s Degree in Computer Science from the Instituto Tecnológico de Estudios Superiores de Monterrey and an MBA from the Instituto Tecnológico Autónomo de México (ITAM) with postgraduate studies at the Kellogg School of Business at Northwestern University.

Dan Gertsacov

Dan Gertsacov has been a director of the Issuer since 2023. Mr. Gertsacov is an executive with 25 years of experience in the technology, food and restaurant industries. His experience includes senior roles at Google, Arcos Dorados and Focus Brands. Mr. Gertsacov is a Senior Advisor at McKinsey & Company. He holds a Bachelor of Arts degree with Honors from the University of Richmond and an MBA from Harvard Business School.

Jean-François Le Ruyet

Jean-François Le Ruyet has been a director of the Issuer since 2023. Mr. Le Ruyet is a partner at Quilvest Capital Partners, where he is the co-manager of the global co-investment and fund programs with a focus on European buy-out funds. He also serves on Quilvest Capital Partner’s global investment committee and the

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co-investment investment committee. Prior to joining Quilvest Capital Partners in 2003, Mr. Le Ruyet was management and strategic consultant with Bain & Company and later with McKinsey & Company. At McKinsey, he worked with several European private equity sponsors with a focus on media and consumer goods and was involved with strategic and market due diligence as well as merger and acquisition valuation. Prior to his consulting career, he worked for two years at Société Générale in São Paulo, Brazil. Mr. Le Ruyet received his undergraduate degree from Ecole des Hautes Etudes Commerciales in Paris, France and an MBA from Columbia Business School.

Alexander Fuster

Alexander Fuster has been a director of the Issuer since 2015. Mr. Fuster is currently a private investor and heads a family office based in Miami, Florida. Prior to his current role, Mr. Fuster co-founded and led a series of privately-held healthcare investments in managed care, and medical services provider networks with an integrated pharmacy delivery system in Florida. He was a founding principal at Penske Capital Partners, a private equity firm in New York and also served as president of Leland Corporation, a private investor venture fund. Mr. Fuster was also a consultant at McKinsey & Company and an accountant at PricewaterhouseCoopers. He holds a Bachelor of Sciences in Business Administration degree with high honors from the University of Notre Dame and an MBA from Stanford University’s Graduate School of Business.

Juan Pablo Cappello

Juan Pablo Cappello has been a director of the Issuer since 2020. Mr. Cappello is the co-founder and partner of PAG Law and has been actively advising companies throughout Latin America for over thirty years since he began his legal career at one of the leading law firms in Santiago, Chile. His practice has focused on financial technology and digital assets, having served as the chief legal officer of Patagon.com, considered among the first financial technology business in Latin America, and led the in-house team in the sale to Santander. Mr. Cappello has since been involved in the co-founding of other business ventures, including NUE Life Health and Wonder.com. He is actively involved in the growth of development of Miami’s technology ecosystem, having founded LAB Miami, LAB Ventures and Miami Angels. PAG Law has been named Latin American Venture Capital Law Firm of the Year –2022 by Global 100. Mr. Cappello received his undergraduate degree from Duke University and his law degree from NYU Law School.

Sami Khouri

Sami Khouri has been a director of the Issuer since 2015. Mr. Khouri is the chief executive officer and a board member of United Investors Holding SAL, a Beirut-based group of distribution companies, that retail and distribute brands such as Nike, Converse and Levi’s. Since 1975,