Panera Bread 2010 Annual Report Download - page 15

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We are subject to various federal, state, and local environmental regulations. Compliance with applicable
environmental regulations is not believed to have a material effect on capital expenditures, consolidated financial
condition and results of operations, or our competitive position.
The Americans with Disabilities Act prohibits discrimination in employment and public accommodations on
the basis of disability. Under the Americans with Disabilities Act, we could be required to expend funds to modify
our Company-owned bakery-cafes to provide service to, or make reasonable accommodations for the employment
of, disabled persons. Compliance with the requirements of the Americans with Disabilities Act is not believed to
have a material effect on our consolidated financial condition or results of operations.
ITEM 1A. RISK FACTORS
The following risk factors could materially affect our business, financial condition and results of operations.
The risks and uncertainties described below are those that we have identified as material, but are not the only risks
and uncertainties facing us. Our business is also subject to general risks and uncertainties that affect many other
companies, including overall economic and industry conditions. Additional risks and uncertainties not currently
known to us or that we currently believe are not material also may impair our business, financial condition and
results of operations.
Disruptions in our bakery-cafe supply chain could adversely affect our profitability and operating
results.
Our Company-owned and franchise-operated bakery-cafes depend on frequent deliveries of ingredients and
other products. One company delivers the majority of our ingredients and other products to our bakery-cafes two or
three times per week. In addition, we supply Company-owned and franchise-operated bakery-cafes with fresh
dough and other products on a daily basis. These daily deliveries are particularly susceptible to supply volatility as a
result of weather conditions. Our dependence on frequent deliveries to our bakery-cafes could cause shortages or
supply interruptions that could adversely impact our operations.
Although many of our ingredients and products are prepared to our specifications, we believe that a majority of
the ingredients are generally available and could be obtained from alternative sources. In addition, we frequently
enter into annual and multi-year contracts for ingredients in order to decrease the risks of supply interruptions and
cost fluctuation. Antibiotic-free chicken is sold in most Company-owned and franchise-operated bakery-cafes and
we have introduced and tested the sale of other antibiotic-free proteins in our Company-owned and franchise-
operated bakery-cafes. Our antibiotic-free chicken is currently supplied to us by three different companies.
However, there are few producers of antibiotic-free chicken or other antibiotic-free proteins, which may make it
difficult or more costly for us to find alternative suppliers if necessary.
Generally, we believe that we have adequate sources of supply for our ingredients and products to support our
bakery-cafe operations or, if necessary, we could make menu adjustments to address material supply issues.
However, there are many factors which could cause shortages or interruptions in the supply of our ingredients and
products, including weather, unanticipated demand, labor, production or distribution problems, quality issues and
cost, and the financial health of our suppliers and distributor, some of which are beyond our control, and which
could have an adverse effect on our business and consolidated results of operations.
Changes in food and supply costs could adversely affect our consolidated results of operations.
Our profitability depends in part on our ability to anticipate and react to changes in food and supply costs. In
the past, we have been able to recover inflationary cost and commodity price increases for, among other things, fuel,
proteins, dairy, produce, wheat, tuna, and cream cheese through increased menu prices. There have been, and there
may be in the future, delays in implementing such menu price increases, and economic factors and competitive
pressures may limit our ability to recover such cost increases in their entirety. Historically, the effects of inflation on
our consolidated results of operations have not been materially adverse. However, increased volatility in certain
commodity markets, including those for wheat, produce, or proteins including chicken or turkey could have an
adverse effect on us depending upon whether we are able to increase menu prices to cover such increases.
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