Panera Bread 2013 Annual Report Download - page 23

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A regional or global health pandemic could severely affect our business.
A health pandemic is a disease outbreak that spreads rapidly and widely by infection and affects many individuals in an area or
population at the same time. If a regional or global health pandemic occurs, depending upon its duration, location, and severity,
our business could be severely affected. Generally, we are viewed by our customers as a high-quality, friendly, all day destination
where people can gather with family, friends, and business colleagues. Customers may avoid public gathering places in the event
of a health pandemic, and local, regional, or national governments might limit or ban public gatherings to halt or delay the spread
of disease. A regional or global health pandemic might also adversely impact our business by disrupting or delaying production
and delivery of ingredients and products in our supply chain and by causing staffing shortages in our bakery-cafes.
Regional factors could negatively impact our consolidated results of operations.
There are several states in which we, our franchisees, or both, own and operate a significant number of bakery-cafes. As a result,
the economic conditions, state and local laws, government regulations, and weather conditions affecting those particular states,
or a geographic region generally, may have a material impact upon our consolidated results of operations.
If we are unable to continue to repurchase our stock consistent with investor expectations, our EPS growth rate and stock
price may be negatively affected.
The stock repurchase program could require the use of a significant portion of or exceed our cash flow. Our ability to repurchase
stock will depend on our ability to generate sufficient cash flows from operations in the future or to borrow money from available
lending sources. Any failure to repurchase stock following an announcement of our intention to do so could negatively impact
our earnings per share growth rate and potentially our stock price.
The pending implementation of recent changes to healthcare laws in the United States may significantly increase our
healthcare costs and negatively impact our financial results.
We offer eligible U.S. employees the opportunity to enroll in healthcare coverage subsidized by us. For various reasons, many
of our eligible employees currently choose not to participate in our healthcare plans. While recently delayed, the changes to the
U.S. healthcare laws, once effective, may lead some eligible employees who currently do not participate in our healthcare plans
to enroll for coverage and may result in some currently ineligible employees becoming eligible and enrolling for coverage. Such
changes in the law include the imposition of a penalty on an individual who does not obtain healthcare coverage, penalties for
employers who do not offer affordable coverage to certain employees and provisions making certain individuals who can obtain
employer coverage ineligible for healthcare premium tax subsidies that would otherwise be available in connection with the
purchase of coverage through an exchange. If a significant number of employees who do not currently participate in our subsidized
healthcare plans enroll as a result of the changes in law, our healthcare costs may increase significantly and negatively impact our
financial results.
ITEM 1B. UNRESOLVED STAFF COMMENTS
None.
ITEM 2. PROPERTIES
The average size of a Company-owned bakery-cafe as of December 31, 2013 was approximately 4,500 square feet. The square
footage of each of our fresh dough facilities is provided below. We lease nearly all of our bakery-cafe locations, fresh dough
facilities, and support centers. The reasonably assured lease term for most bakery-cafe and support center leases is the initial non-
cancelable lease term plus one renewal option period, which generally equates to an aggregate of 15 years. The reasonably assured
lease term for most fresh dough facility leases is the initial non-cancelable lease term plus one to two renewal periods, which
generally equates to an aggregate of 20 years. Lease terms generally require us to pay a proportionate share of real estate taxes,
insurance, common area maintenance, and other operating costs. Certain bakery-cafe leases provide for contingent rental (i.e.,
percentage rent) payments based on sales in excess of specified amounts, scheduled rent increases during the lease terms, and/or
rental payments commencing at a date other than the date of initial occupancy. See Note 2 to the consolidated financial statements
for further information on our accounting for leases.