Buffalo Wild Wings 2009 Annual Report Download - page 32

We may be subject to increased labor and insurance costs.
Our restaurant operations are subject to federal and state laws governing such matters as minimum wages, working
conditions, overtime, and tip credits. As federal and state minimum wage rates increase, we may need to increase not only the wages
of our minimum wage employees but also the wages paid to employees at wage rates that are above minimum wage. Labor shortages,
increased employee turnover, and health care mandates could also increase our labor costs. This in turn could lead us to increase
prices which could impact our sales. Conversely, if competitive pressures or other factors prevent us from offsetting increased labor
costs by increases in prices, our profitability may decline. In addition, the current premiums that we pay for our insurance (including
workers' compensation, general liability, property, health, and directors' and officers' liability) may increase at any time, thereby
further increasing our costs. The dollar amount of claims that we actually experience under our workers' compensation and general
liability insurance, for which we carry high per-claim deductibles, may also increase at any time, thereby further increasing our costs.
Further, the decreased availability of property and liability insurance has the potential to negatively impact the cost of premiums and
the magnitude of uninsured losses.
Our current insurance may not provide adequate levels of coverage against claims.
We currently maintain insurance customary for businesses of our size and type. However, there are types of losses we may
incur that cannot be insured against or that we believe are not economically reasonable to insure, such as losses due to natural
disasters. Such damages could have a material adverse effect on our business and results of operations.
We are dependent on information technology and any material failure of that technology could impair our ability to
efficiently operate our business.
We rely on information systems across our operations, including, for example, point-of-sale processing in our restaurants,
management of our supply chain, collection of cash, payment of obligations, and various other processes and procedures. Our ability
to efficiently manage our business depends significantly on the reliability and capacity of these systems. The failure of these systems
to operate effectively, problems with maintenance, upgrading or transitioning to replacement systems, or a breach in security of these
systems could cause delays in customer service and reduce efficiency in our operations. Significant capital investments might be
required to remediate any problems.
If we are unable to maintain our rights to use key technologies of third parties, our business may be harmed.
We rely on certain technology licensed from third parties, and may be required to license additional technology in the future
for use in managing our Internet sites and providing related services to users and advertising customers. These third-party technology
licenses may not continue to be available to us on acceptable commercial terms or at all. The inability to enter into and maintain any
of these technology licenses could significantly harm our business, financial condition and operating results.
We may not be able to protect our trademarks, service marks or trade secrets.
We place considerable value on our trademarks, service marks and trade secrets. We intend to actively enforce and defend
our marks and if violations are identified, to take appropriate action to preserve and protect our goodwill in our marks. We attempt to
protect our sauce recipes as trade secrets by, among other things, requiring confidentiality agreements with our sauce suppliers and
executive officers. However, we cannot be sure that we will be able to successfully enforce our rights under our marks or prevent
competitors from misappropriating our sauce recipes. We can also not be sure that: (i) our marks are valuable, (ii) using our marks
does not, or will not, violate others’ marks, (iii) the registrations of our marks would be upheld if challenged, or (iv) we would not be
prevented from using our marks in areas of the country where others might have already established rights to them. Any of these
uncertainties could have an adverse effect on us and our expansion strategy.
ITEM 1B. UNRESOLVED STAFF COMMENTS
Not applicable.
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Source: BUFFALO WILD WINGS INC, 10-K, February 26, 2010 Powered by Morningstar® Document Research℠