Burger King 2012 Annual Report Download - page 24

Table of Contents
The occurrence of food-borne illnesses or food safety issues could also adversely affect the price and availability of affected ingredients, which could
result in disruptions in our supply chain, significantly increase our costs and/or lower margins for us and our franchisees. In addition, our industry has long
been subject to the threat of food tampering by suppliers, employees or guests, such as the addition of foreign objects in the food that we sell. Reports, whether
or not true, of injuries caused by food tampering have in the past severely injured the reputations of restaurant chains in the quick service restaurant segment
and could affect us in the future as well.

Unforeseen events, such as adverse weather conditions, natural disasters or catastrophic events, can adversely impact our restaurant sales. Natural
disasters such as earthquakes, hurricanes, and severe adverse weather conditions and health pandemics, such as the outbreak of the H1N1 flu, whether
occurring in the United States or abroad, can keep customers in the affected area from dining out and result in lost opportunities for our restaurants. Because a
significant portion of our restaurant operating costs is fixed or semi-fixed in nature, the loss of sales during these periods hurts our operating margins and can
result in restaurant operating losses.

We and our franchisees are dependent upon third parties to make frequent deliveries of perishable food products that meet our specifications. Shortages
or interruptions in the supply of food items and other supplies to our restaurants could adversely affect the availability, quality and cost of items we buy and
the operations of our restaurants. Such shortages or disruptions could be caused by inclement weather, natural disasters such as floods, drought and
hurricanes, increased demand, problems in production or distribution, the inability of our vendors to obtain credit, food safety warnings or advisories or the
prospect of such pronouncements, or other conditions beyond our control. A shortage or interruption in the availability of certain food products or supplies
could increase costs and limit the availability of products critical to restaurant operations.
Four distributors service approximately 85% of our U.S. system restaurants and in many of our international markets, we have a single distributor that
delivers products to all of our restaurants. Our distributors operate in a competitive and low-margin business environment. If one of our principal distributors
is in financial distress and therefore unable to continue to supply us and our franchisees with needed products, we may need to take steps to ensure the
continued supply of products to restaurants in the affected markets, which could result in increased costs to distribute needed products. If a principal
distributor for our Company restaurants and/or our franchisees fails to meet its service requirements for any reason, it could lead to a disruption of service or
supply until a new distributor is engaged, which could have an adverse effect on our business.


We are dependent on the efforts and abilities of our senior management, and our success will also depend on our ability to attract and retain additional
qualified employees. Failure to attract personnel sufficiently qualified to execute our strategy, or to retain existing key personnel, could have a material adverse
effect on our business.

We are subject to income and other taxes in the United States and numerous foreign jurisdictions. Our federal income tax returns for fiscal years 2009,
2010, the period from July 1, 2010 to October 18, 2010 and the period from October 19, 2010 to December 31, 2010 are currently under audit by the Internal
Revenue Service
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Source: Burger King Worldwide, Inc., 10-K, February 22, 2013 Powered by Morningstar® Document Research℠
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