Red Lobster 2012 Annual Report Download - page 35

Management’s Discussion and Analysis
of Financial Condition and Results of Operations
Darden
Darden Restaurants, Inc. 2012 Annual Report 31
risks and uncertainties of ordinary business obligations, and those described in
information incorporated into this report, the forward-looking statements contained
in this report are subject to the risks and uncertainties described in Part I, Item 1A
“Risk Factors” in our Annual Report on Form 10-K for the year ended May 27, 2012,
which are summarized as follows:
฀ •฀฀Food฀safety฀and฀food-borne฀illness฀concerns฀throughout฀the฀supply฀chain;
฀ •฀฀Litigation,฀including฀allegations฀of฀illegal,฀unfair฀or฀inconsistent฀
฀employment฀practices;
฀ •฀฀Unfavorable฀publicity,฀or฀a฀failure฀to฀respond฀effectively฀
to฀adverse฀publicity;
฀ •฀฀Risks฀relating฀to฀public฀policy฀changes฀and฀federal,฀state฀and฀local฀
regulation of our business, including in the areas of health care reform,
environmental matters, minimum wage, unionization, data privacy, menu
labeling,฀immigration฀requirements฀and฀taxes;
฀ •฀฀Labor฀and฀insurance฀costs;
฀ •฀฀Insufficient฀guest฀or฀employee฀facing฀technology,฀or฀a฀failure฀to฀maintain฀
a continuous and secure cyber network, free from material failure,
฀interruption฀or฀security฀breach;
฀ •฀฀Our฀inability฀or฀failure฀to฀execute฀a฀comprehensive฀business฀continuity฀
plan following a major natural disaster such as a hurricane or manmade
disaster,฀including฀terrorism;
฀ •฀฀Health฀concerns฀arising฀from฀food-related฀pandemics,฀outbreaks฀of฀flu฀
viruses฀or฀other฀diseases;
฀ •฀฀Intense฀competition,฀or฀an฀insufficient฀focus฀on฀competition฀and฀the฀
฀consumer฀landscape;
฀ •฀฀Our฀failure฀to฀drive฀both฀short-term฀and฀long-term฀profitable฀sales฀growth฀
through brand relevance, operating excellence, opening new restaurants
of฀existing฀brands฀and฀developing฀or฀acquiring฀new฀dining฀brands;
฀ •฀฀Failure฀to฀complete฀the฀acquisition฀of฀Yard฀House,฀or฀once฀completed,฀
to successfully integrate the Yard House business, and the additional
indebtedness฀incurred฀to฀finance฀the฀Yard฀House฀acquisition;
฀ •฀฀Our฀plans฀to฀expand฀our฀newer฀brands฀Bahama฀Breeze,฀Seasons฀52฀and฀
Eddie V’s, and the testing of synergy restaurants and other new business
ventures,฀that฀have฀not฀yet฀proven฀their฀long-term฀viability;
฀ •฀฀A฀lack฀of฀suitable฀new฀restaurant฀locations฀or฀a฀decline฀in฀the฀quality฀
of฀the฀locations฀of฀our฀current฀restaurants;
฀ •฀฀Higher-than-anticipated฀costs฀to฀open,฀close,฀relocate฀or฀
remodel฀restaurants;
฀ •฀฀A฀failure฀to฀identify฀and฀execute฀innovative฀marketing฀and฀customer฀
relationship tactics, ineffective or improper use of social media or other
marketing฀initiatives,฀and฀increased฀advertising฀and฀marketing฀costs;
฀ •฀฀A฀failure฀to฀develop฀and฀recruit฀effective฀leaders฀or฀the฀loss฀of฀key฀
฀personnel,฀or฀a฀significant฀shortage฀of฀high-quality฀restaurant฀employees;
฀ •฀฀A฀failure฀to฀address฀cost฀pressures,฀including฀rising฀costs฀for฀commodities,฀
health care and utilities used by our restaurants, and a failure to
effectively deliver cost management activities and achieve economies
of฀scale฀in฀purchasing;
฀ •฀฀The฀impact฀of฀shortages฀or฀interruptions฀in฀the฀delivery฀of฀food฀and฀other฀
products฀from฀third-party฀vendors฀and฀suppliers;
฀ •฀฀Adverse฀weather฀conditions฀and฀natural฀disasters;
฀ •฀฀Volatility฀in฀the฀market฀value฀of฀derivatives฀we฀use฀to฀hedge฀
commodity฀prices;
฀ •฀฀Economic฀and฀business฀factors฀specific฀to฀the฀restaurant฀industry฀and฀
other general macroeconomic factors including unemployment, energy
prices฀and฀interest฀rates฀that฀are฀largely฀out฀of฀our฀control;
฀ •฀฀Disruptions฀in฀the฀financial฀markets฀that฀may฀impact฀consumer฀spending฀
patterns, affect the availability and cost of credit and increase pension
plan฀expenses;
฀ •฀฀Risks฀associated฀with฀doing฀business฀with฀franchisees,฀business฀partners฀
and฀vendors฀in฀foreign฀markets;
฀ •฀฀Failure฀to฀protect฀our฀service฀marks฀or฀other฀intellectual฀property;
฀ •฀฀Impairment฀of฀the฀carrying฀value฀of฀our฀goodwill฀or฀other฀intangible฀
assets;฀and
฀ •฀฀A฀failure฀of฀our฀internal฀controls฀over฀financial฀reporting฀and฀future฀
changes in accounting standards.
Any of the risks described above or elsewhere in this report or our other
filings with the SEC could have a material impact on our business, financial
condition or results of operations. It is not possible to predict or identify all risk
factors. Additional risks and uncertainties not presently known to us or that
we currently believe to be immaterial may also impair our business operations.
Therefore, the above is not intended to be a complete discussion of all potential
risks or uncertainties.