Panera Bread 2005 Annual Report Download - page 15

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We depend on senior management and on the retention and recruiting of other personnel for our future success.
Our success depends on the services of our senior management and other personnel, all of whom are “at will” employees. The loss
of a member of senior management could have an adverse impact on our business or the financial market’s perception of our ability to
continue our growth.
Our success also depends on our continuing ability to hire, train, motivate and retain qualified personnel in our bakery-cafes, fresh
dough facilities and support centers. Our failure to do so could result in higher employee turnover and increased labor costs, and could
compromise the quality of our service, all of which could adversely affect our business.
Our failure or inability to protect our brand, trademarks or other proprietary rights could adversely affect our business and
competitive position.
We believe that our brand, intellectual property and our confidential and proprietary information is very important to our business
and our competitive position. Our primary trademarks, Panera®, Panera Bread®, Saint Louis Bread Co.®, Via Panera®, and Mother
Bread design, along with other trademarks, copyrights, service marks, trade secrets, confidential and proprietary information and other
intellectual property rights are key components of our operating and marketing strategies. Although we have taken steps to protect our
brand, intellectual property and confidential and proprietary information, the steps that we have taken may not be adequate.
Unauthorized usage or imitation by others could harm our image, brand or competitive position and, if we commence litigation to
enforce our rights, cause us to incur significant legal fees.
We are not aware of any assertions that our trademarks or menu offerings infringe upon the proprietary rights of third parties, but
we cannot assure you that third parties will not claim infringement by us in the future. Any such claim, whether or not it has merit,
could be time-consuming, result in costly litigation, cause delays in introducing new menu items in the future or require us to enter
into royalty or licensing agreements. As a result, any such claim could have a material adverse effect on our business, results of
operations and financial condition.
We try to ensure that our franchisees maintain and protect our brand and our confidential and proprietary information. However,
since our franchisees are independent third parties that we do not control, if they do not operate their bakery-cafes in a manner
consistent with their agreements with us, the Panera Bread brand and reputation or the value of our confidential and proprietary
information could be harmed. If this occurs, our business and operating results could be adversely affected.
Competition may adversely affect our operations and results of operation.
The restaurant industry is highly competitive with respect to location, environment, customer service, price, quality of products
and overall customer experience. We compete with specialty food, casual dining and quick service restaurant retailers including
national, regional and locally owned restaurants. Many of our competitors or potential competitors have substantially greater financial
and other resources than we do, which may allow them to react to changes in pricing, marketing and the casual dining restaurant
industry better than we can. Additionally, other companies may develop restaurants that operate with concepts similar to ours. We also
compete with other restaurant chains and other retail businesses for quality site locations and hourly employees. If we are unable to
successfully compete in our markets, we may be unable to sustain or increase our revenues and profitability.
Additionally, competition could cause us to modify or evolve our products, designs or strategies. If we do so, we cannot assure you
that we will be successful in implementing the changes or that our profitability will not be negatively impacted by them.
Rising insurance costs could negatively impact our profitability.
We self-insure a significant portion of our expected losses under our workers’ compensation, and health, general, auto and
property liability programs. The liabilities associated with the risks that are retained by us are estimated, in part, by considering our
historical claims experience and data from industry and other actuarial sources. The estimated accruals for these liabilities could be
affected if claims differ from these assumptions and historical trends. Unanticipated changes in the actuarial assumptions and
management estimates underlying our reserves of these losses could result in materially different amounts of expense under these
programs, which could have a material adverse effect on our financial condition and results of operation.