Panera Bread 2014 Annual Report Download - page 26

14
as those noted above, or require us to enter into royalty or licensing agreements. As a result, any such claim could have a material
adverse effect on our business, consolidated financial condition and results of operations.
We try to ensure that our franchisees maintain and protect our brand and our confidential and proprietary information. However,
since our franchisees are independent third parties that we do not control, if they do not operate their bakery-cafes in a manner
consistent with their agreements with us, our brand and reputation or the value of our confidential and proprietary information
could be harmed. If this occurs, our business and operating results could be adversely affected.
We rely heavily on information technology and any material failure, interruption, or security breach in our systems could
adversely affect our business.
We rely heavily on information technology systems across our operations, including for the order and delivery of fresh dough
from our fresh dough facilities, point-of-sale processing in our bakery-cafes, gift and loyalty cards, online business, and various
other processes and transactions, including the storage of employee and customer information. Our ability to effectively manage
our business and coordinate the production, distribution, and sale of our products depends significantly on the reliability and
capacity of these systems. The failure of these systems to operate effectively, problems with transitioning to upgraded or replacement
systems, or a breach in security of these systems could cause delays in product sales and reduced efficiency of our operations, and
significant capital investments could be required to remediate the problem.
We periodically acquire existing bakery-cafes from our franchisees or ownership interests in other restaurant or bakery-
cafe concepts, which could adversely affect our consolidated results of operations.
Periodically, we have acquired existing bakery-cafes from our franchisees either by negotiated agreement or exercise of our rights
of first refusal under the franchise and area development agreements. Any acquisition that we undertake involves risk, including:
• our ability to successfully achieve anticipated synergies, accurately assess contingent and other liabilities as well as
potential profitability;
• failure to successfully integrate the acquired entity’s operational and support activities;
• unanticipated changes in business and economic conditions;
• limited or no operational experience in the acquired bakery-cafe market;
• future impairment charges related to goodwill and other acquired intangible assets; and
• risks of dispute and litigation with the seller, the seller’s landlords, and vendors and other parties.
Any of these factors could strain our financial and management resources as well as negatively impact our consolidated results
of operations.
Unforeseen weather may disrupt our business.
Unforeseen natural events, such as earthquakes, hurricanes, or other adverse weather and climate conditions, could disrupt our
operations or those of our franchisees, or suppliers. For example, in 2012, Hurricane Sandy resulted in the temporary closing of
60 Company-owned bakery-cafes and 112 franchise-operated bakery-cafes along the east coast. These events could reduce traffic
in our bakery-cafes, make it difficult or impossible for bakery-cafes to receive deliveries of ingredients or other products, and
otherwise impede our or our franchisees’ ability to continue business operations in a manner consistent with the level and extent
of business activities prior to the occurrence of the unexpected weather, which in turn may materially and adversely impact our
business and operating results.
Our operating results fluctuate due to a number of factors, some of which may be beyond our control, and any of which
may adversely affect our consolidated financial condition.
Our operating results may fluctuate significantly from our forecasts, targets, or projections because of a number of factors, including
the following:
• changes in average weekly net sales and comparable net bakery-cafe sales due to:
• lower customer traffic or average check per transaction, including as a result of the introduction or removal of new
menu items;