Pizza Hut 2010 Annual Report Download - page 111

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Our success depends substantially on the value and perception of our brands.
Our success is dependent in large part upon our ability to maintain and enhance the value of our brands and our
customers’ connection to our brands. Brand value is based in part on consumer perceptions on a variety of subjective
qualities, and even isolated business incidents can erode brand value and consumer trust, particularly if the incidents
receive considerable publicity or result in litigation. For example, our brands could be damaged by claims or perceptions
about the quality of our products regardless of whether such claims or perceptions are accurate. Consumer demand for
our products and our brand value could diminish significantly if any such incidents or other matters erode consumer
confidence in us or our products, which would likely result in lower sales and, ultimately, profits.
Our business may be adversely impacted by general economic conditions.
Our results of operations are dependent upon discretionary spending by consumers, which may be affected by general
economic conditions globally or in one or more of the markets we serve. Some of the factors that impact discretionary
consumer spending include unemployment, disposable income and consumer confidence. These and other
macroeconomic factors could have an adverse effect on our sales mix, profitability or development plans, which could
harm our financial condition and operating results.
The impact of potentially limited credit availability on third party vendors such as our suppliers cannot be predicted. The
inability of our 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.
Our Concepts and their franchisees are subject to numerous laws and regulations around the world. Our restaurants are
subject to state and local licensing and regulation by health, sanitation, food, workplace safety, fire and other agencies. In
addition, we face risks arising from compliance with and enforcement of increasingly complex federal and state
immigration laws and regulations in the U.S.
We are also subject to the Americans with Disabilities Act in the U.S. and similar state laws that give civil rights
protections to individuals with disabilities in the context of employment, public accommodations and other areas. The
expenses associated with any facilities modifications required by these laws could be material. Our operations in the U.S.
are also subject to the U.S. Fair Labor Standards Act, which governs such matters as minimum wages, overtime and other
working conditions, family leave mandates and a variety of similar state laws that govern these and other employment law
matters. The compliance costs associated with these laws and evolving regulations could be substantial, and any failure or
alleged failure to comply with these laws could lead to litigation, which could adversely affect our financial condition.
We also face risks from new or changing laws and regulations relating to nutritional content, nutritional labeling, product
safety and menu labeling. Compliance with these laws and regulations can be costly and can increase our exposure to
litigation or governmental investigations or proceedings. New or changing laws and regulations relating to union
organizing rights and activities may impact our operations at the restaurant level and increase our cost of labor. In
addition, we are subject to laws relating to information security, privacy, cashless payments and consumer credit,
protection and fraud, and any failure or perceived failure to comply with those laws could harm our reputation or lead to
litigation, which could adversely affect our financial condition.
Form 10-K