Chili's 2015 Annual Report Download - page 21

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.
Failure to protect the integrity and security of individually identifiable data of our guests and teammates
and confidential and proprietary information of the company could damage our reputation and expose us
to loss of revenues and litigation.
We receive and maintain certain personal information about our guests and team members in our
information technology systems, such as point-of-sale, web and mobile platforms, including our rewards
program. Additionally our systems contain proprietary and confidential information related to our business. Use
of this information is regulated at the federal and state levels, as well as by certain third party contracts. If our or
our business associates’ information systems are compromised as a result of a cyber attack or other external or
internal method, or we fail to comply with applicable laws and regulations, it could result in a violation of the
laws and regulations, and an adverse and material impact on our reputation, operations, results of operations and
financial condition. Such security breaches could also result in litigation or governmental investigation against us
or the imposition of penalties. These impacts could also occur if we are perceived either to have had an attack,
failure or to have failed to properly respond to an incident. Like many other retail companies, we experience
frequent attempts to compromise our systems but none have resulted in a material breach. As privacy and
information security laws and regulations change or cyber risks evolve pertaining to data, we may incur
additional costs in technology, third party services and personnel to remain in compliance and maintain systems
designed to anticipate and prevent cyber attacks. Our security frameworks prevent breaches of our systems and
data loss, but these measures cannot provide assurance that we will be successful in preventing such breaches or
data loss.
Failure to protect our service marks or other intellectual property could harm our business.
We regard our Chili’s®and Maggiano’s®service marks, and other service marks and trademarks related to
our restaurant businesses, as having significant value and being important to our marketing efforts. We rely on a
combination of protections provided by contracts, copyrights, patents, trademarks, service marks and other
common law rights, such as trade secret and unfair competition laws, to protect our restaurants and services from
infringement. We have registered certain trademarks and service marks in the United States and foreign
jurisdictions. However, we are aware of names and marks identical or similar to our service marks being used
from time to time by other persons. Although our policy is to oppose any such infringement, further or unknown
unauthorized uses or other misappropriation of our trademarks or service marks could diminish the value of our
brands and adversely affect our business. In addition, effective intellectual property protection may not be
available in every country in which we have or intend to open or franchise a restaurant. Although we believe we
have taken appropriate measures to protect our intellectual property, there can be no assurance that these
protections will be adequate, and defending or enforcing our service marks and other intellectual property could
result in the expenditure of significant resources.
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 certain
information technology processes, 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 to determine if additional outsourcing is a viable option to
accomplish our goals. We make a diligent effort to ensure that all providers of outsourced services are observing
proper internal control practices, such as redundant processing facilities and adequate security frameworks to
guard against breaches or data loss; however, there are no guarantees that failures will not occur. Failure of third
parties to provide adequate services could have an adverse effect on our results of operations, financial condition
or ability to accomplish our financial and management reporting.
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