Chili's 2006 Annual Report Download - page 36

10
If we are unable to meet our growth plan, our profitability in the future may be adversely affected.
Our ability to meet our growth plan is dependent upon, among other things, our ability to:
•identify available, suitable and economically viable locations for new restaurants,
•obtain all required governmental permits (including zoning approvals and liquor licenses) on a
timely basis,
•hire all necessary contractors and subcontractors, and
•meet construction schedules.
The costs related to restaurant and brand development include purchases and leases of land, buildings
and equipment and facility and equipment maintenance, repair and replacement. The labor and materials
costs involved vary geographically and are subject to general price increases. As a result, future capital
expenditure costs of restaurant development may increase, reducing profitability. We cannot assure you
that we will be able to expand our capacity in accordance with our growth objectives or thatthe new
restaurants and brands opened or acquired will be profitable.
Unfavorable publicity relating to oneor more of our restaurantsin a particular brand may taint public
perception of the brand.
Multi-unit restaurant businesses can be adversely affected by publicity resulting from poor food
quality, illness or health concerns or operating issues stemming from one or a limited number of
restaurants. In particular, since we depend heavily on the Chili’s brand for a majority of our revenues,
unfavorable publicity relating to one or more Chili’s restaurants could have a material adverse effect on
the Chili’s brand, and consequently on our business, financial condition and results of operations.
Identification of material weakness in internal controlmay adversely affect our financial results.
We are subject to the ongoing internal control provisions of Section 404 of the Sarbanes-Oxley Act of
2002. Those provisions provide for the identification of material weaknesses in internal control. If such a
material weakness is identified, it could indicate a lack of adequate controls to generate accurate financial
statements. We routinely assess our internal controls, but we cannot assure you that we will be able to
timely remediate any material weaknesses that may be identified in future periods, or maintain all of the
controls necessary for continued compliance. Likewise, we cannot assure you thatwe will be able to retain
sufficient skilled finance and accounting personnel, especially in light of the increased demand for such
personnel among publicly traded companies.
Other risk factors may adversely affect our financial performance.
Other risk factors that could cause our actual results to differ materially from those indicated in the
forward-looking statements by affecting, among many things, pricing, consumer spending and consumer
confidence, include, without limitation, changes in economic conditions, increased fuel costs and
availability for our employees, customersand suppliers, health epidemics or pandemics or the prospects of
these events (such as recent reports on avian flu), consumer perceptions of food safety, changes in
consumer tastes and behaviors, governmental monetary policies, changesin demographic trends,
availability of employees, terrorist acts, energy shortages and rolling blackouts, and weather (including,
major hurricanes and regional snow storms) and other acts of God.
Item 1B. UNRESOLVED STAFF COMMENTS.
None.