Panera Bread 2010 Annual Report Download - page 18

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Although we have been able to successfully manage our growth to date, we may experience difficulties
doing so in the future.
Our growth strategy includes opening bakery-cafes in new markets where we may have little or no operating
experience. Accordingly, there can be no assurance that a bakery-cafe opened in a new market will have similar
operating results, including average weekly net sales, as our existing bakery-cafes. Bakery-cafes opened in new
markets may not perform as expected or may take longer to reach planned operating levels, if at all. Operating
results or overall bakery-cafe performance could vary as a result of higher construction, occupancy, or general
operating costs, a lack of familiarity with our brand which may require us to build local brand awareness, differing
demographics, consumer tastes, and spending patterns, and variable competitive environments. Additional
expenses attributable to costs of delivery from our fresh dough facilities may exceed our expectations in areas
not currently served by those facilities.
Our growth strategy also includes opening bakery-cafes in existing markets to increase the penetration rate of
our bakery-cafes in those markets. There can be no assurance we will be successful in operating bakery-cafes
profitably in new markets or further penetrating existing markets.
We may not be successful in implementing important strategic initiatives, which may have an adverse
impact on our business and financial results.
Our business depends upon our ability to continue to grow and evolve through various important strategic
initiatives. There can be no assurance that we will be able to implement these important strategic initiatives, which
could in turn adversely affect our business. These strategic initiatives include:
• introducing desirable new menu items and improving existing items consistent with customer tastes and
expectations;
• balancing unit growth while meeting target returns on invested capital for locations;
• increasing same store sales and gross profit per transaction through investments in areas such as category
management, catering, and technology in an effort to increase overall traffic and transaction count; and
• increasing brand awareness through greater investment in multi-channel marketing and advertising,
including our MyPanera loyalty program.
Our failure or inability to protect our trademarks or other proprietary rights could adversely affect our
business and competitive position.
We believe that our intellectual property and confidential and proprietary information is very important to our
business and competitive position. Our primary trademarks,
Panera», Panera Bread», Saint Louis Bread Co.», Panera Catering», You Pick Two», Paradise Bakery»,
Paradise Bakery & Café», the Mother Bread»design, and MyPanera
TM
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, these steps 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 third parties may 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 marketing or 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, consolidated results of operations, and consolidated 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
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