Panera Bread 2012 Annual Report Download - page 18

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We may not be successful in implementing important strategic initiatives, which may have an adverse impact on our
business and consolidated financial results.
Our business depends upon our ability to continue to grow and evolve through various important strategic initiatives. There can
be no assurance that we will be able to implement these important strategic initiatives, which could in turn adversely affect our
business. These strategic initiatives include:
• introducing desirable new menu items and improving existing items consistent with customer tastes and expectations;
• balancing unit growth while meeting target returns on invested capital for locations;
• increasing same store sales and gross profit per transaction through investments in areas such as category management,
catering, and technology in an effort to increase overall traffic and transaction count; and
• increasing brand awareness through greater investment in multi-channel marketing and advertising, including digital
advertising and national cable television advertising.
Damage to our brands or reputation could negatively impact our business.
Our success depends substantially on the value of our brands and our reputation for offering a memorable experience with superior
customer service. Our brands have been highly rated in annual consumer studies and have received high recognition in several
industry publications. We believe that we must protect and grow the value of our brands through our Concept Essence to differentiate
ourselves from our competitors and continue our success. Any incident that erodes consumer trust in or affinity for our brands
could significantly reduce their value. If consumers do not continue to perceive us as a company that customers can trust to serve
high quality food in a warm, friendly, comfortable environment, our brand value could suffer, which could have an adverse effect
on our business.
The market in which we compete is highly competitive, and we may not be able to compete effectively.
The restaurant industry is highly competitive with respect to location, customer service, price, taste, quality of products, and overall
customer experience. We compete with specialty food, casual dining, and quick-service restaurant retailers, including national,
regional, and locally owned restaurants. Many of our competitors or potential competitors have greater financial and other resources
than we do, which may allow them to react to changes in pricing, marketing, and trends in the restaurant industry more quickly
or effectively than we can. Additionally, given our recent success other companies may develop restaurants that operate with
concepts similar to ours or that try to replicate the things we do well. We also compete with other restaurant chains and other retail
businesses for quality site locations and hourly employees. If we are unable to successfully compete in our markets, we may be
unable to sustain or increase our revenues and profitability.
Additionally, competition could cause us to modify or evolve our products, designs, or strategies. If we do so, we cannot guarantee
that we will be successful in implementing the changes or that our profitability will not be negatively impacted.
Loss of senior management or the inability to recruit and retain associates could adversely affect our future success.
Our success depends on the services of our senior management and associates, all of whom are “at will” employees. The loss of
a member of senior management could have an adverse impact on our business or the financial market’s perception of our ability
to continue to grow.
Our success also depends on our continuing ability to hire, train, motivate, and retain qualified associates in our bakery-cafes,
fresh dough facilities, and support centers. Our failure to do so could result in higher associate turnover and increased labor costs,
and could compromise the quality of our service, all of which could adversely affect our business.
We operate in Canada and therefore, we may be exposed to uncertainties and risks that could negatively impact our
consolidated results of operations.
We expanded our Company-owned and franchise-operated operations into Canadian markets. Our expansion into Canada has
made us subject to Canadian economic conditions, particularly currency exchange rate fluctuations, increased regulations, quotas,
tariffs, and political factors, any of which could have a material adverse effect on our consolidated financial condition and results
of operations as our Canadian operations continue to expand. Further, we may be exposed to new forms of competition not present
in our domestic markets, as well as subject to potentially different demographic tastes and preferences for our products.