Panera Bread 2011 Annual Report Download - page 20

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In addition, 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.
There continues to be 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, 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 Company-owned 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, of which the outcome of litigation is difficult to assess and
quantify and the defense against such claims or actions can be costly. In addition to decreasing sales and profitability and diverting
financial and management resources, we may suffer from adverse publicity that could harm our brand, regardless of whether the
allegations are valid or whether we are liable. Moreover, we are subject to the same risks of adverse publicity resulting from
allegations even if the claim involves one of our franchisees. A judgment significantly in excess of our insurance coverage for any
claims could materially and adversely affect our consolidated financial condition or results of operations. Additionally, publicity
about these claims may harm our reputation or prospects and adversely affect our results.