Chili's 2008 Annual Report Download - page 22

Shortages or interruptions in the availability and delivery of food and other supplies may increase
costs or reduce revenues.
Possible shortages or interruptions in the supply of food items and other supplies to our restaurants
caused by inclement weather, natural disasters such as floods, drought and hurricanes, the inability of our
vendors to obtain credit in a tightened credit market, food safety warnings or advisories or the prospect of
such pronouncements (such as recent reports on tomatoes and jalapenos), or other conditions beyond our
control could adversely affect the availability, quality and cost of items we buy and the operations of our
restaurants. Our inability to effectively manage supply chain risk could increase our costs and limit the
availability of products critical to our restaurant operations.
Successful mergers, acquisitions, divestitures and other strategic transactions are important to our
future growth and profitability.
We evaluate potential mergers, acquisitions, franchisees of new and existing restaurants, joint venture
investments, and divestitures as part of our strategic planning initiative. These transactions involve various
inherent risks, including accurately assessing:
• the value, future growth potential, strengths, weaknesses, contingent and other liabilities and
potential profitability of acquisition candidates;
• our ability to achieve projected economic and operating synergies;
• unanticipated changes in business and economic conditions affecting an acquired business; and
• our ability to complete divestitures on acceptable terms and at or near the prices estimated as
attainable by us.
If we are unable to meet our growth plan, our profitability in the future may be adversely affected.
Our ability to meet our growth plan is dependent upon, among other things, our and our franchisees’
ability to:
• identify available, suitable and economically viable locations for new restaurants,
• identify adequate sources of capital to fund and finance strategic initiatives, including remodeling of
existing restaurants and new restaurant development,
• obtain all required governmental permits (including zoning approvals and liquor licenses) on a
timely basis,
• hire all necessary contractors and subcontractors and obtain construction materials at suitable
prices,
• meet construction schedules, and
• hire and train qualified managers and team members for the restaurants.
The costs related to restaurant and brand development include purchases and leases of land, buildings
and equipment and facility and equipment maintenance, repair and replacement. The labor and materials
costs involved vary geographically and are subject to general price increases. As a result, future capital
expenditure costs of restaurant development may increase, reducing profitability. We cannot assure you
that we will be able to expand our capacity in accordance with our growth objectives or that the new
restaurants and brands opened or acquired will be profitable.
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