Panera Bread 2007 Annual Report Download - page 20

Customer preferences and traffic could be negatively impacted by health concerns about the consump-
tion of certain products.
Customer preferences and traffic could be impacted by health concerns about the consumption of particular
food products and could cause a decline in our sales. Negative publicity about ingredients, poor food quality, food-
borne illness, injury, health concerns, allergens or nutritional content could cause customers to shift their
preferences. For example, Asian and European countries experienced outbreaks of avian flu. Negative publicity
concerning avian flu may adversely affect demand for our products because chicken and turkey are key ingredients
in many of our menu items and could cause an increase in our food costs as a result of potentially irregular supply
and demand of such products and a decrease in customer traffic to our bakery-cafes.
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.», Paradise Bakery & Café», Via Panera», Crispani», 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 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, our 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 operations.
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 guarantee that we will be successful in implementing the changes or that our profitability will not be
negatively impacted by them.
Loss of senior management or the inability to recruit and retain other associates could adversely affect
our future success.
Our success depends on the services of our senior management and other associates, 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.
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