Trim off excess fat from Bacon (3 slice) and dice the Shallot (1). Heat them in a frying pan until cooked & lightly brown for 4 to 5 minutes. Set aside.
Combine the Water (1 3/4 cup) and Milk (1/4 cup) and heat to a rolling boil in a small saucepan over high heat.
Reduce heat to low, stir in the Polenta Grits (1/2 cup), bacon and shallot. Cover and continue cooking for 5 minutes, stirring occasionally to prevent sticking, until the grits have thickened.
While the grits are cooking, heat a drizzle of Olive Oil (1/2 teaspoon) in a non-stick skillet over medium-low heat. Crack the Egg (2) into the pan, season with Salt and Pepper (to taste) and cover. Cook over medium until the whites are set.
Remove the grits from the heat. Stir in the Shredded Italian Blend Cheese (2/3 cup) and Arugula (1 handful). Season with salt and pepper to taste.
Spoon the grits into two shallow bowls. Top each bowl with a fried egg.