Panera Bread 2011 Annual Report Download - page 21

Download and view the complete annual report

Please find page 21 of the 2011 Panera Bread annual report below. You can navigate through the pages in the report by either clicking on the pages listed below, or by using the keyword search tool below to find specific information within the annual report.

Page out of 96

  • 1
  • 2
  • 3
  • 4
  • 5
  • 6
  • 7
  • 8
  • 9
  • 10
  • 11
  • 12
  • 13
  • 14
  • 15
  • 16
  • 17
  • 18
  • 19
  • 20
  • 21
  • 22
  • 23
  • 24
  • 25
  • 26
  • 27
  • 28
  • 29
  • 30
  • 31
  • 32
  • 33
  • 34
  • 35
  • 36
  • 37
  • 38
  • 39
  • 40
  • 41
  • 42
  • 43
  • 44
  • 45
  • 46
  • 47
  • 48
  • 49
  • 50
  • 51
  • 52
  • 53
  • 54
  • 55
  • 56
  • 57
  • 58
  • 59
  • 60
  • 61
  • 62
  • 63
  • 64
  • 65
  • 66
  • 67
  • 68
  • 69
  • 70
  • 71
  • 72
  • 73
  • 74
  • 75
  • 76
  • 77
  • 78
  • 79
  • 80
  • 81
  • 82
  • 83
  • 84
  • 85
  • 86
  • 87
  • 88
  • 89
  • 90
  • 91
  • 92
  • 93
  • 94
  • 95
  • 96

13
We rely heavily on information technology and any material failure, interruption, or security breach in our systems could
adversely affect our business.
We rely heavily on information technology systems across our operations, including for the order and delivery of fresh dough
from our fresh dough facilities, point-of-sale processing in our bakery-cafes, gift and loyalty cards, online business, and various
other processes and transactions. Our ability to effectively manage our business and coordinate the production, distribution, and
sale of our products depends significantly on the reliability and capacity of these systems. The failure of these systems to operate
effectively, problems with transitioning to upgraded or replacement systems, or a breach in security of these systems could cause
delays in product sales and reduced efficiency of our operations, and significant capital investments could be required to remediate
the problem. Additionally, if a person is able to circumvent the security measures intended to protect our employee or customer
private data, he or she could destroy or steal valuable information or disrupt our operations, which could significantly harm our
reputation or result in litigation against us or the imposition of penalties.
We periodically acquire existing bakery-cafes from our franchisees or ownership interests in other restaurant or bakery-
cafe concepts, which could adversely affect our consolidated results of operations.
We have historically acquired existing bakery-cafes and development rights from our franchisees either by negotiated agreement
or exercise of our rights of first refusal under the franchise and area development agreements. Any acquisition that we undertake
involves risk, including:
• our ability to successfully achieve anticipated synergies, accurately assess contingent and other liabilities as well as
potential profitability;
• failure to successfully integrate the acquired entity’s operational and support activities;
• unanticipated changes in business and economic conditions;
• limited or no operational experience in the acquired bakery-cafe market;
• future impairment charges related to goodwill and other acquired intangible assets; and
• risks of dispute and litigation with the seller, the seller’s landlords, and vendors and other parties.
Any of these factors could strain our financial and management resources as well as negatively impact our consolidated results
of operations.
Our operating results fluctuate due to a number of factors, some of which may be beyond our control, and any of which
may adversely affect our consolidated financial condition.
Our operating results may fluctuate significantly from our forecasts, targets, or projections because of a number of factors, including
the following:
• changes in average weekly net sales and comparable net bakery-cafe sales due to:
• lower customer traffic or average check per transaction, including as a result of the introduction or removal of new
menu items;
• changes in demographics, consumer preferences, and discretionary spending;
• 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, compensation, insurance,
and health care; and
• changes in business strategy including concept evolution and new designs.