Panera Bread 2012 Annual Report Download - page 15

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We are subject to the informational requirements of the Exchange Act, and, accordingly, we file reports, proxy statements, and
other information with the SEC. Such reports, proxy statements, and other information are publicly available and can be read and
copied at the reference facilities maintained by the SEC at the Public Reference Room, 100 F Street, NE, Room 1580, Washington,
D.C. 20549. Information regarding the operation of the Public Reference Room may be obtained by calling the SEC at 1-800-
SEC-0330. The SEC maintains a web site (www.sec.gov) that contains reports, proxy and information statements, and other
information regarding issuers that file electronically with the SEC.
Our Internet address is www.panerabread.com. We make available at this address, free of charge, press releases, annual reports
on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and amendments to those reports filed or furnished
pursuant to Section 13(a) or 15(d) of the Exchange Act as soon as reasonably practicable after electronically filing such material
with, or furnishing it to, the SEC. In addition, we provide periodic investor relations updates and our corporate governance materials
at our Internet address.
ITEM 1A. RISK FACTORS
The following risk factors could materially affect our business, consolidated financial condition and results of operations. The
risks and uncertainties described below are those that we have identified as material, but are not the only risks and uncertainties
we face. Our business is also subject to general risks and uncertainties that affect many other companies, including overall economic
and industry conditions. Additional risks and uncertainties not currently known to us or that we currently believe are not material
also may impair our business, consolidated financial condition and results of operations.
Disruptions in our bakery-cafe supply chain could adversely affect our profitability and operating results.
Our Company-owned and franchise-operated bakery-cafes depend on frequent deliveries of ingredients and other products. Our
bakery-cafes rely on one supplier to deliver the majority of our non-dough ingredients and other products two or three times per
week, and we supply our bakery-cafes with fresh dough and certain other products on a daily basis. These frequent deliveries are
susceptible to supply volatility as a result of adverse weather conditions, and any supply shortages or interruptions could adversely
impact our operations. Additionally, while antibiotic-free chicken, which is sold in most Company-owned and franchise-operated
bakery-cafes, is currently supplied to us by three different suppliers, there are few producers of antibiotic-free chicken or other
antibiotic-free proteins and it may be difficult or more costly for us to find alternative suppliers if necessary.
Generally, we believe that we have adequate sources of supply for our ingredients and products to support our bakery-cafe operations
or, if necessary, we could make menu adjustments to address material supply issues. In addition, we frequently enter into annual
and multi-year contracts for ingredients in order to decrease the risks of supply interruptions and cost fluctuation. However, there
are many factors which could cause shortages or interruptions in the supply of our ingredients and products, including adverse
weather, unanticipated demand, labor or distribution problems, food safety issues by our suppliers or distributors, cost, and the
financial health of our suppliers and distributors. Any disruptions in our bakery-cafe supply chain could adversely affect our
profitability and operating results.
Changes in food and supply costs could adversely affect our consolidated results of operations.
Our profitability depends in part on our ability to anticipate and react to changes in food and supply costs. In the past, we have
generally been able to recover inflationary cost and commodity price increases for, among other things, fuel, proteins, dairy,
produce, wheat, tuna, and cream cheese through increased menu prices. There have been, and there may be in the future, delays
in implementing such menu price increases, and economic factors and competitive pressures may limit our ability to recover fully
such cost increases. Historically, the effects of inflation on our consolidated results of operations have not been materially adverse.
However, increased volatility in certain commodity markets, including those for wheat, produce, or proteins, could have an adverse
effect on our consolidated results of operations if we are unable to increase menu prices to cover such ingredient price increases.
Disruptions or supply issues in our fresh dough facilities could adversely affect our business and consolidated results of
operations.
We operate 22 Company-owned fresh dough facilities, which service substantially all of our Company-owned and franchise-
operated bakery-cafes. Our fresh dough and other product distribution system delivers fresh dough and other products daily to the
bakery-cafes through a leased fleet of temperature controlled vehicles. The optimal maximum distribution range is approximately
300 miles; although, when necessary, the distribution range may reach up to 500 miles. As a result, any prolonged disruption in
the operations of or distribution from any of our fresh dough facilities, due to weather conditions, technical or labor difficulties,
destruction of, or damage to the vehicle fleet or facility, or other reasons, could cause a shortage of fresh dough and other products
at our bakery-cafes. Such a shortage of fresh dough and other products could, depending on the extent and duration, have a material
adverse effect on our business and consolidated results of operations.