Chili's 2012 Annual Report Download - page 21

Unfavorable publicity relating to one or more of our restaurants in a particular brand may taint public
perception of the brand.
Multi-unit restaurant businesses can be adversely affected by publicity resulting from poor food quality,
illness or health concerns or operating issues stemming from one or a limited number of restaurants. In particular,
since we depend heavily on the Chili’s brand for a majority of our revenues, unfavorable publicity relating to one
or more Chili’s restaurants could have a material adverse effect on the Chili’s brand, and consequently on our
business, financial condition and results of operations. The speed at which negative publicity (whether or not
accurate) can be disseminated has increased dramatically with the capabilities of electronic communication,
including social media. If we are unable to quickly and effectively respond to such reports, we may suffer
declines in guest traffic which could materially impact our financial performance.
Litigation could have a material adverse impact on our business and our financial performance.
We are subject to lawsuits, administrative proceedings and claims that arise in the regular course of
business. These matters typically involve claims by guests, team members and others regarding issues such as
food borne illness, food safety, premises liability, compliance with wage and hour requirements, work-related
injuries, discrimination, harassment, disability and other operational issues common to the foodservice industry,
as well as contract disputes and intellectual property infringement matters. We could be adversely affected by
negative publicity and litigation costs resulting from these claims, regardless of their validity. Significant legal
fees and costs in complex class action litigation or an adverse judgment or settlement that is not insured or is in
excess of insurance coverage could have a material adverse effect on our financial position and results of
operations.
We are dependent on information technology and any material failure of that technology or our ability to
execute a comprehensive business continuity plan could impair our ability to efficiently operate our
business.
We rely on information systems across our operations, including, for example, point-of-sale processing in
our restaurants, management of our supply chain, collection of cash, payment of obligations and various other
processes and procedures. Our ability to efficiently manage our business depends significantly on the reliability
and capacity of these systems. The failure of these systems to operate effectively, problems with maintenance,
upgrading or transitioning to replacement systems, or a breach in security of these systems could cause delays in
customer service and reduce efficiency in our operations. Significant capital investments might be required to
remediate any problems.
Additionally, our corporate systems and processes and corporate support for our restaurant operations are
handled primarily at our restaurant support center. We have disaster recovery procedures and business continuity
plans in place to address most events of a crisis nature, including tornadoes and other natural disasters, and back
up and off-site locations for recovery of electronic and other forms of data and information. However, if we are
unable to fully implement our disaster recover plans, we may experience delays in recovery of data, inability to
perform vital corporate functions, tardiness in required reporting and compliance, failures to adequately support
field operations and other breakdowns in normal communication and operating procedures that could have a
material adverse effect on our financial condition, results of operation and exposure to administrative and other
legal claims.
We outsource certain business processes to third-party vendors that subject us to risks, including
disruptions in business and increased costs.
Some business processes are currently outsourced to third parties. Such processes include gift card tracking
and authorization, credit card authorization and processing, insurance claims processing, certain payroll
processing, tax filings and other accounting processes. We also continue to evaluate our other business processes
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