Pizza Hut 2008 Annual Report Download - page 135

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Health concerns arising from outbreaks of Avian Flu may have an adverse effect on our business.
Asian and European countries have experienced outbreaks of Avian Flu, and some commentators have hypothesized that
further outbreaks could occur and reach pandemic levels. While fully-cooked chicken has been determined to be safe for
consumption, and while we have taken and continue to take measures to prepare for and minimize the effect of these
outbreaks on our business, future outbreaks could adversely affect the price and availability of poultry and cause
customers to eat less chicken. In addition, outbreaks on a widespread basis could also affect our ability to attract and
retain employees.
We may not attain our target development goals.
Our growth strategy depends in large part on our ability to increase our net restaurant count in markets outside the United
States. The successful development of new units will depend in large part on our ability and the ability of our franchisees
to open new restaurants, upgrade existing restaurants, and to operate these restaurants on a profitable basis. We cannot
guarantee that we, or our franchisees, will be able to achieve our expansion goals or that new, upgraded or converted
restaurants will be operated profitably. Further, there is no assurance that any restaurant we open or convert will produce
operating results similar to those of our existing restaurants. Other risks which could impact our ability to increase our net
restaurant count include prevailing economic conditions and our, or our franchisees’, ability to obtain suitable restaurant
locations, obtain required permits and approvals and hire and train qualified personnel.
Our franchisees also frequently depend upon financing from banks and other financial institutions in order to construct
and open new restaurants. Disruptions in credit markets may make financing more difficult or expensive to obtain. If it
becomes more difficult or expensive for our franchisees to obtain financing to develop new restaurants, our planned
growth could slow and our future revenue and cash flows could be adversely impacted.
Our business may be adversely impacted by economic conditions.
Our results of operations are dependent upon discretionary spending by consumers, which may be affected by general
economic conditions and the current global financial crisis. Worldwide economic conditions and consumer spending have
recently deteriorated significantly and may remain depressed for some time. Some of the factors that are having an
impact on discretionary consumer spending include increased unemployment, reductions in disposable income as a result
of recent severe market declines and declines in residential real estate values, credit availability and consumer confidence.
These and other macroeconomic factors could have an adverse effect on our sales and development plans, which could
harm our financial condition and operating results.
In addition, the current financial crisis has resulted in diminished liquidity and credit availability, and the recent or future
turmoil in the financial markets could make it more difficult for us to refinance our existing indebtedness (if necessary) or
incur additional indebtedness and could impact the ability of banks to honor draws on our existing credit facilities.
The current credit crisis is also having a significant negative impact on businesses around the world, and the impact of this
crisis on our suppliers cannot be predicted. The inability of suppliers to access financing, or the insolvency of suppliers,
could lead to disruptions in our supply chain which could adversely impact our sales and financial condition.
Changes in governmental regulations may adversely affect our business operations.
We and our franchisees are subject to various federal, state and local regulations. Each of our restaurants is subject to
state and local licensing and regulation by health, sanitation, food, workplace safety, fire and other agencies.
Requirements of local authorities with respect to zoning, land use, licensing, permitting and environmental standards
could delay or prevent development of new restaurants in particular locations. In addition, we face risks arising from
compliance with and enforcement of increasingly complex federal and state immigration laws and regulations.
Form 10-K