Panera Bread 2013 Annual Report Download - page 17

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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, including due to weather conditions, technical
or labor difficulties, destruction of, or damage to the vehicle fleet or facilities, could result in a shortage of fresh dough and other
products at our bakery-cafes, and, depending on its extent and duration, have a material adverse effect on our business and
consolidated results of operations.
Additionally, given that we rely on trucks for the delivery of items from our fresh dough facilities, any increased costs and
distribution issues related to fuel could also materially adversely impact our business and consolidated results of operations.
Our Franklin, Massachusetts fresh dough facility manufactures and supplies through its distributors all of the cream cheese and
tuna used in most of our Company-owned and franchise-operated bakery-cafes in the United States. Additionally, we distribute
a number of fresh produce products provided from our suppliers through our fresh dough facility system. Although we believe
we have adopted adequate quality assurance and other procedures to ensure the production and distribution of quality products
and ingredients, we may be subject to allegations regarding quality, health, or other similar concerns that could have a negative
impact on our operations, whether or not the allegations are valid or we are liable. Additionally, defending against such claims
or litigation could be costly and the results uncertain.
Security breaches of confidential customer information or personal employee information may adversely affect our
business.
Each year, we engage in millions of transactions with our customers. The majority of our bakery-cafe sales are by credit or debit
cards. In connection with credit card sales, we and our franchisees transmit confidential credit card information by way of secure
private retail networks. Although we use private networks, third parties may have the technology or know-how to breach the
security of the customer information transmitted in connection with credit card sales, and we and our franchisees' security measures
and those of our technology vendors may not effectively prohibit others from obtaining improper access to this information. If a
third party is able to circumvent these security measures, he or she could destroy or steal information or disrupt our operations.
Other restaurants and retailers have experienced security breaches in which credit and debit card information of their customers
has been stolen. If we or our franchisees are unable to protect our customers' credit card data, we or our franchisees could be
exposed to data loss, litigation, and liability, and our reputation could be significantly harmed.
We also maintain certain personal information regarding our employees. If a third party is able to circumvent the security measures
intended to protect our customer or employee private data, he or she could destroy or steal information or disrupt our operations,
which could significantly harm our reputation or result in litigation against us or the imposition of penalties.
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 or that these strategic initiatives will deliver
on their intended results, which could in turn adversely affect our business.
These strategic initiatives include:
• introducing 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;
• identifying alternative formats for our bakery-cafes to enable us to open locations in more diverse locations;
• investing in technology and systems designed to enable our managers to focus their energy on the customer and improve
the customer experience in our bakery-cafes;
• increasing brand awareness through greater investment in marketing and advertising, including increased digital
advertising and national television advertising and continued leveraging of our MyPanera loyalty program;