Buffalo Wild Wings 2009 Annual Report Download - page 28

In certain states we are subject to “dram shop” statutes, which generally allow a person injured by an intoxicated person the
right to recover damages from an establishment that wrongfully served alcoholic beverages to the intoxicated person. Some dram shop
litigation against restaurant companies has resulted in significant judgments, including punitive damages.
Changes in employment laws or regulation could harm our performance.
Various federal and state labor laws govern our relationship with our employees and affect operating costs. These laws
include minimum wage requirements, overtime pay, unemployment tax rates, workers’ compensation rates, citizenship requirements,
and sales taxes. A number of factors could adversely affect our operating results, including additional government-imposed increases
in minimum wages, overtime pay, paid leaves of absence and mandated health benefits, mandated training for employees, increased
tax reporting and tax payment requirements for employees who receive tips, a reduction in the number of states that allow tips to be
credited toward minimum wage requirements, and increased employee litigation including claims relating to the Fair Labor Standards
Act.
The Americans with Disabilities Act is a federal law that prohibits discrimination on the basis of disability in public
accommodations and employment. Although our restaurants are designed to be accessible to the disabled, we could be required to
make modifications to our restaurants to provide service to, or make reasonable accommodations for disabled persons.
Changes in consumer preferences or discretionary consumer spending could harm our performance.
Our success depends, in part, upon the continued popularity of Buffalo, New York-style chicken wings, our other menu
items, sports bars and casual dining restaurant styles. We also depend on trends toward consumers eating away from home more often.
Shifts in these consumer preferences could negatively affect our future profitability. Such shifts could be based on health concerns
related to the cholesterol, carbohydrate, or fat content of certain food items, including items featured on our menu. Negative publicity
over the health aspects of such food items may adversely affect consumer demand for our menu items and could result in a decrease in
guest traffic to our restaurants, which could materially harm our business. Smoking bans imposed by state or local laws could also
adversely impact our restaurants’ performance. In addition, our success depends to a significant extent on numerous factors affecting
discretionary consumer spending, including economic conditions, disposable consumer income and consumer confidence. A decline in
consumer spending or in economic conditions could reduce guest traffic or impose practical limits on pricing, either of which could
harm our business, financial condition, operating results or cash flow.
Changes in public health concerns may impact our performance.
Changes in public health concerns may affect consumer preferences for our products. For example, if incidents of the avian
flu occur in the United States, consumer preferences for poultry products may be negatively impacted, resulting in a decline in demand
for our products. Similarly, public health concerns over smoking have seen a rise in smoking bans. Such smoking bans may adversely
affect our operations to the extent that such bans are imposed in specific locations, rather than state-wide, or that exceptions to the ban
are given to bars or other establishments, giving patrons the ability to choose nearby locations that have no such ban. Further, growing
movements to change laws relating to alcohol may result in a decline in alcohol consumption at our stores or increase the number of
dram shop claims made against us, either of which may negatively impact operations or result in the loss of liquor licenses. We are
carefully monitoring new laws regulating the use of transfats and requiring nutritional fact disclosures.
A regional or global health pandemic could severely affect our business.
A health pandemic is a disease outbreak that spreads rapidly and widely by infection and affects many individuals in an area
or population at the same time. If a regional or global health pandemic were to occur, depending upon its duration and severity, our
business could be severely affected. We have positioned our brand as a place where people can gather together. Customers might
avoid public gathering places in the event of a health pandemic, and local, regional or national governments might limit or ban public
gatherings to halt or delay the spread of disease. A regional or global health pandemic might also adversely impact our business by
disrupting or delaying production and delivery of materials and products in its supply chain and by causing staffing shortages in our
stores. The impact of a health pandemic might be disproportionately greater than on other companies that depend less on the gathering
of people together for the sale or use of their products and services.
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Source: BUFFALO WILD WINGS INC, 10-K, February 26, 2010 Powered by Morningstar® Document Research℠