Panera Bread 2010 Annual Report Download - page 20

• nutritional content labeling and disclosure requirements;
• management and protection of the personal data of our employees and customers; and
• environmental matters.
Our bakery-cafes and fresh dough facilities are licensed and subject to regulation under federal, state, and local
laws, including business, health, fire, and safety codes.
Various federal, state, and local labor laws govern our operations and our relationship with our associates,
including prevailing wages, overtime, accommodation and working conditions, benefits, citizenship requirements,
insurance matters, workers’ compensation, disability laws such as the Federal Americans with Disabilities Act,
child labor laws, and anti-discrimination laws.
While we believe we operate in substantial compliance with these laws, they are complex and vary from
location to location, which complicates monitoring and compliance. As a result, regulatory risks are inherent in our
operation. Although we believe that compliance with these laws has not had a material effect on our operations to
date, we may experience material difficulties or failures with respect to compliance in the future. Our failure to
comply with these laws could result in required renovations to our facilities, litigation, fines, penalties, judgments,
or other sanctions including the temporary suspension of bakery-cafe or fresh dough facility operations or a delay in
construction or opening of a bakery-cafe, any of which could adversely affect our business, operations and our
reputation.
Regulatory changes in and customer focus on nutrition and advertising practices could adversely affect
our business.
In recent years, there has been increased consumer emphasis on and regulatory scrutiny of restaurants
operating in the quick-service and fast-casual segments, with respect to nutrition and advertising practices. While
we have taken steps to respond to these developments by updating our menu boards and printed menus to include
caloric information in all of our Company-owned bakery-cafes, we may become subject to other initiatives in the
area of nutrition disclosure or advertising which would require us to make certain additional nutritional information
available to guests or restrict the sales of certain types of ingredients. We may experience higher costs associated
with the implementation and oversight of such changes that could have an adverse impact on our business.
Rising insurance costs could negatively impact our profitability.
We self-insure a significant portion of potential losses under our workers’ compensation, medical, 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 consolidated financial condition and results of operations.
Additionally, the costs of insurance and medical care have risen significantly over the past few years and are
expected to continue to increase. These increases, as well as existing or potential legislation changes, such as the
recently enacted legislation, which requires employers to provide health insurance to employees, could negatively
impact our operating results.
We are subject to complaints and litigation that could have an adverse effect on our business.
In the ordinary course of our business we may become subject to complaints and litigation alleging that we are
responsible for a customer illness or injury suffered at or after a visit to one of our bakery-cafes or to one of our
franchise-operated bakery-cafes, including allegations of poor food quality, food-borne illness, adverse health
effects, nutritional content, advertising claims, allergens, personal injury, or other concerns. In addition, we are
subject to litigation by employees, investors, franchisees, and others through private actions, class actions or other
forums. For example, in January 2008, a purported class action lawsuit was filed against us and three of our current
or former executive officers by investors alleging violations of the Exchange Act and the rules promulgated
thereunder. While we believe we have meritorious defenses to each of the claims in this lawsuit and we are
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