Panera Bread 2010 Annual Report Download - page 22

•negative publicity about the ingredients we use or the occurrence of food-borne illnesses or other
problems at our bakery-cafes; and
•seasonality, including as a result of inclement weather.
• cost increases due to:
•changes in our operating costs;
•labor availability and increased labor costs, including wages of management and associates, compen-
sation, insurance, and health care; and
•changes in business strategy including concept evolution and new designs.
• profitability of new bakery-cafes, especially in new markets;
• delays in new bakery-cafe openings;
• fluctuations in supply costs, shortages, or interruptions; and
• natural disasters and other calamities.
Increased advertising and marketing costs could adversely affect our consolidated results of operations.
We expect our advertising expenses to continue to increase and to dedicate greater resources to advertising and
marketing than in previous years. If new advertising and other marketing programs, including our MyPanera loyalty
program, do not drive increased net bakery-cafe sales or if the costs of advertising, media, or marketing increase
greater than expected, our consolidated financial results could be materially adversely affected.
Our federal, state, and local tax returns have been and may in the future be selected for audit by the
taxing authorities, which may result in tax assessments or penalties that could have a material adverse
impact on our consolidated financial position and results of operations.
We are subject to federal, state, and local taxes in the United States and Canada including sales, use, and other
applicable taxes. Significant judgment is required in determining the provision for taxes. Although we believe our
tax estimates are reasonable, if the Internal Revenue Service or another taxing authority disagrees with the positions
we have taken on our tax returns, we could have additional tax liability, including interest and penalties. If material,
payment of such additional amounts upon final adjudication of any disputes could have a material impact on our
consolidated financial position and results of operations.
A regional or global health pandemic could severely affect our business.
A health pandemic is a disease outbreak that spreads rapidly and widely by infection and affects many
individuals in an area or population at the same time. If a regional or global health pandemic occurs, depending upon
its duration, location, and severity, our business could be severely affected. Generally, we are viewed by our
customers as an “everyday oasis”, a friendly, all day destination where people can gather with friends and business
colleagues. Customers might avoid public gathering places in the event of a health pandemic, and local, regional, or
national governments might limit or ban public gatherings to halt or delay the spread of disease. A regional or global
health pandemic might also adversely impact our business by disrupting or delaying production and delivery of
ingredients and products in our supply chain and by causing staffing shortages in our bakery-cafes. The impact of a
health pandemic might be disproportionately greater on us than on other companies that depend less on the
gathering of people for the sale of their products.
Regional factors could negatively impact our consolidated results of operations.
There are several states in which we, our franchisees, or both own and operate a significant number of bakery-
cafes. As a result, the economic conditions, state and local laws, government regulations, and weather conditions
affecting those particular states, or a geographic region generally, may have a material impact upon our consol-
idated results of operations.
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