Buffalo Wild Wings 2008 Annual Report Download - page 8

8
atmosphere of our restaurant, our flexible service model and the quality and distinctive flavor of our food enable us to
differentiate ourselves from our competitors. We believe we compete primarily with local and regional sports bars and casual
dining and quick casual establishments, and to a lesser extent with quick service restaurants such as wing-based take-out
concepts. Many of our direct and indirect competitors are well-established national, regional or local chains and some have
substantially greater financial and marketing resources than we do. We also compete with other restaurant and retail
establishments for site locations and restaurant employees.
Proprietary Rights
We own the rights to the “Buffalo Wild Wings®” service mark and to certain other service marks and trademarks used
in our system. We attempt to protect our sauce recipes as trade secrets by, among other things, requiring a confidentiality
agreement with our sauce supplier and executive officers. It is possible that competitors could develop recipes and procedures
that duplicate or closely resemble our recipes and procedures. We believe that our trademarks, service marks and other
proprietary rights have significant value and are important to our brand-building efforts and the marketing of our restaurant
concept. We vigorously protect our proprietary rights. We cannot predict, however, whether steps taken by us to protect our
proprietary rights will be adequate to prevent misappropriation of these rights or the use by others of restaurant features based
upon, or otherwise similar to, our concept. It may be difficult for us to prevent others from copying elements of our concept
and any litigation to enforce our rights will likely be costly and may not be successful. Although we believe that we have
sufficient rights to all of our trademarks and service marks, we may face claims of infringement that could interfere with our
ability to market our restaurants and promote our brand. Any such litigation may be costly and divert resources from our
business. Moreover, if we are unable to successfully defend against such claims, we may be prevented from using our
trademarks or service marks in the future and may be liable for damages.
Government Regulation
The restaurant industry is subject to numerous federal, state and local governmental regulations, including those
relating to the preparation and sale of food and alcoholic beverages, sanitation, public health, fire codes, zoning and building
requirements. Each restaurant requires appropriate licenses from regulatory authorities allowing it to sell liquor, beer and
wine, and each restaurant requires food service licenses from local health authorities. Our licenses to sell alcoholic beverages
must be renewed annually and may be suspended or revoked at any time for cause, including violation by us or our
employees of any law or regulation pertaining to alcoholic beverage control, such as those regulating the minimum age of
employees or patrons who may serve or be served alcoholic beverages, the serving of alcoholic beverages to visibly
intoxicated patrons, advertising, wholesale purchasing and inventory control. The failure of a restaurant to retain liquor or
food service licenses could have a material adverse effect on our operations. In order to reduce this risk, restaurant employees
are trained in standardized operating procedures designed to assure compliance with all applicable codes and regulations.
We and our franchisees are also subject to laws governing our relationships with employees, including laws and
regulations relating to benefits, wages, hours, workers’ compensation insurance, unemployment and other taxes, working and
safety conditions and citizenship or immigration status. We may also be subject in certain states to “dram-shop” statutes,
which generally allow a person injured by an intoxicated person to recover damages from an establishment that wrongfully
served alcoholic beverages to the intoxicated person. In addition, we are subject to various state and federal laws relating to
the offer and sale of franchises and the franchisor-franchisee relationship. In general, these laws and regulations impose
specific disclosure and registration requirements prior to the sale and marketing of franchises and regulate certain aspects of
the relationship between franchisor and franchisee.
Employees
As of December 28, 2008, we employed approximately 12,000 employees. We have 1,000 full-time and 10,800 part-
time employees working in our company-owned restaurants and 200 employees based out of our home office or field support
management positions. Our employees are not covered by any collective bargaining agreement, and we have never
experienced an organized work stoppage or strike. We believe that our working conditions and compensation packages are
competitive and consider our relations with our employees to be good.
Executive Officers
The following sets forth certain information about our executive officers:
Sally J. Smith, 51, has served as our Chief Executive Officer and President since July 1996 and as a director since
August 1996. She served as our Chief Financial Officer from 1994 to 1996. Prior to joining Buffalo Wild Wings, she was the
Chief Financial Officer of Dahlberg, Inc., the manufacturer and franchisor of Miracle-Ear hearing aids, from 1983 to 1994.