Red Lobster 2016 Annual Report Download - page 25

MANAGEMENT’S DISCUSSION AND ANALYSIS
OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
DARDEN
DARDEN RESTAURANTS, INC. • 2016 ANNUAL REPORT 21
FORWARD-LOOKING STATEMENTS
Statements set forth in or incorporated into this report regarding the
expected net increase in the number of our restaurants, U.S. same-
restaurant sales, total sales growth, diluted net earnings per share growth,
and capital expenditures in fiscal 2017, and all other statements that are
not historical facts, including without limitation statements with respect
to the financial condition, results of operations, plans, objectives, future
performance and business of Darden Restaurants, Inc. and its subsidiaries
that are preceded by, followed by or that include words such as “may,”
“will,” “expect,” “intend,” “anticipate,” “continue,” “estimate,” “project,”
“believe,” “plan,” “outlook” or similar expressions, are forward-looking
statements within the meaning of the Private Securities Litigation Reform
Act of 1995 and are included, along with this statement, for purposes of
complying with the safe harbor provisions of that Act. Any forward-looking
statements speak only as of the date on which such statements are made,
and we undertake no obligation to update such statements for any reason
to reflect events or circumstances arising after such date. By their nature,
forward-looking statements involve risks and uncertainties that could cause
actual results to differ materially from those set forth in or implied by such
forward-looking statements. In addition to the 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 29,
2016, which are summarized as follows:
• 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;
• 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 environmental
matters, minimum wage, unionization, data privacy, menu labeling,
immigration requirements and taxes;
• The inability to cancel long-term, non-cancelable leases that we may
want to cancel or the inability to renew the leases that we may want
to extend at the end of their terms;
• Labor and insurance costs;
• 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;
• Our plans to expand our smaller brands Bahama Breeze, Seasons 52
and Eddie V’s, and the testing of 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 guest
relationship tactics and ineffective or improper use of social media or
other marketing initiatives;
• A failure to recruit, develop and retain effective leaders or the loss
or shortage of key personnel, or an inability to adequately monitor
and respond to employee dissatisfaction;
• 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 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 intellectual property;
• Impairment of the carrying value of our goodwill or other
intangible assets;
• A failure of our internal controls over financial reporting and future
changes in accounting standards; and
• An inability or failure to recognize, respond to and effectively manage
the accelerated impact of social media.
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.