Buffalo Wild Wings 2009 Annual Report Download - page 15

We are currently implementing an automated kitchen management system that provides automation and reporting of cook
line performance, including speed-of-service and order accuracy. Beginning in 2010, we will pilot test a new generation of restaurant
technology focused on further optimizing costs and simplifying restaurant operations.
Competition
The restaurant industry is intensely competitive. We compete on the basis of the taste, quality and price of food offered, guest
service, ambience, location, and overall dining experience. We believe that our attractive price-value relationship, the 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 team members.
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.
Because of gaming operations in our Nevada facilities, the ownership and operation of those facilities are subject to the
Nevada Gaming Control Act and the regulations promulgated thereunder, as well as various local regulations related to gaming. Our
gaming operations are also subject to the licensing and regulatory control of the Nevada Gaming Commission, the Nevada State
Source: BUFFALO WILD WINGS INC, 10-K, February 26, 2010 Powered by Morningstar® Document Research℠