Panera Bread 2013 Annual Report Download - page 19

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Although we have been able to successfully manage our growth to date, we may experience difficulties doing so in the
future.
Our growth strategy includes selectively opening bakery-cafes in Canada and urban areas where we may have limited operating
experience. Accordingly, there can be no assurance that a bakery-cafe opened in such areas will have similar operating results,
including average weekly net sales, as our existing bakery-cafes. New markets may not perform as expected or may take longer
to reach planned operating levels, if ever. Operating results or overall bakery-cafe performance in these areas could vary as a
result of higher construction, occupancy, or general operating costs, a lack of familiarity with our brand which may require us to
build local brand awareness, differing demographics, consumer tastes, and spending patterns, and variable competitive
environments. Additional expenses attributable to costs of delivery from our fresh dough facilities may exceed our expectations
in areas that are not currently served by those facilities.
Our growth strategy also includes opening bakery-cafes in existing markets to increase our penetration rate in those markets.
While we do not intend to open new bakery-cafes that substantially cannibalize the sales of existing bakery-cafes, there can be
no assurance that such sales impact will not occur or become more significant in the future as we increase our presence in existing
markets.
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 high-quality food and a memorable
experience with superior customer service. Our brands have been highly rated in annual consumer surveys and have received
high recognition in 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 and have an adverse effect on our business.
Customer preferences and traffic could be adversely impacted by health concerns about certain food products, reports of
food-borne illnesses or food safety issues, any of which could result in a decrease in demand for our products.
Customer preferences and traffic could be adversely impacted by health concerns or negative publicity about the consumption of
particular food products, which could cause a decline in demand for those products and adversely impact our sales. Additionally,
regardless of the source or cause, reports of food-borne illnesses or other food safety issues (including food tampering or
contamination) in the food service industry could cause customers to shift their preferences, result in negative publicity regarding
restaurants generally and adversely impact our sales. For example, past outbreaks of E. coli in certain beef products and outbreaks
of salmonella in cantaloupes, jalapeños and spinach caused consumers to avoid these products. These problems, other food-borne
illnesses (such as hepatitis A or trichinosis), and injuries caused by food tampering have in the past, and could in the future, require
us to temporarily close bakery-cafes. The occurrence of food-borne illnesses or food safety issues could also adversely affect the
price and availability of affected ingredients, resulting in higher costs and a decrease in customer traffic to our bakery-cafes.
Loss of senior management could adversely affect our future success.
Our success depends on the services of our senior management, 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.
Increased labor costs or difficulties in recruiting the right associates could adversely affect our future results.
Our success depends, in part, on our continuing ability to hire, train, motivate, and retain qualified associates in our bakery-cafes,
fresh dough facilities, and support centers in a competitive labor market. 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 have limited operating experience in Canada and 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.