Chili's 2008 Annual Report Download - page 21

Changes in governmental regulation may adversely affect our ability to open new restaurants and to
maintain our existing and future operations.
Each of our restaurants is subject to licensing and regulation by alcoholic beverage control, health,
sanitation, safety and fire agencies in the state, county and/or municipality where the restaurant is located.
We generally have not encountered any material difficulties or failures in obtaining and maintaining the
required licenses and approvals that could delay or prevent the opening of a new restaurant, or impact the
continuing operations of an existing restaurant. Although we do not, at this time, anticipate any occurring
in the future, we cannot assure you that we will not experience material difficulties or failures that could
delay the opening of restaurants in the future, or impact the continuing operations of an existing
restaurant.
We are subject to the Fair Labor Standards Act (which governs such matters as minimum wages,
overtime and other working conditions), along with the Americans with Disabilities Act, the Immigration
Reform and Control Act of 1986, various family leave mandates and a variety of other laws enacted, or
rules and regulations promulgated by federal, state and local governmental authorities that govern these
and other employment matters. We expect increases in payroll expenses as a result of federal and state
mandated increases in the minimum wage and although such increases are not expected to be material, we
cannot assure you that there will not be material increases in the future. Enactment and enforcement of
various federal, state and local laws, rules and regulations on immigration and labor organizations may
adversely impact the availability and costs of labor for our restaurants in a particular area or across the
United States. Other labor shortages or increased team member turnover could also increase labor costs.
In addition, our vendors may be affected by higher minimum wage standards or availability of labor, which
may increase the price of goods and services they supply to us.
We are also subject to federal and state environmental regulations, and although these have not had a
material negative effect on our operations, we cannot ensure that there will not be a material negative
effect in the future. More stringent and varied requirements of local and state governmental bodies with
respect to zoning, land use and environmental factors could delay, prevent, or make cost prohibitive the
development of new restaurants in particular locations.
Inflation may increase our operating expenses.
We have experienced impact from inflation. Inflation has caused increased food, labor and benefits
costs and has increased our operating expenses. We may continue to experience increased food costs due
to the diversion of food crop production to non-traditional uses, as well as increased food costs due to
increased fuel costs for our vendors. As operating expenses increase, we, to the extent permitted by
competition, recover increased costs by increasing menu prices, or by reviewing, then implementing,
alternative products or processes, or by implementing other cost reduction procedures. We cannot ensure,
however, that we will be able to continue to recover increases in operating expenses due to inflation in this
manner.
Our profitability may be adversely affected by increases in energy costs.
Our success depends in part on our ability to absorb increases in utility costs, in particular electricity
and natural gas. Various regions of the United States in which we operate multiple restaurants have
experienced significant increases in utility prices. These increases have affected costs and if they continue
to occur, it would have further adverse effects on our profitability to the extent not otherwise recoverable
through price increases or alternative products, processes or cost reduction procedures.
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