Papa Johns 2015 Annual Report Download - page 25

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12
One of our competitive strengths is our Better Ingredients, Better Pizza brand promise. This means that
we may use ingredients which cost more than the ingredients some of our competitors may use. Because
of our investment in higher quality ingredients, we could have lower profit margins than some of our
competitors if we are not able to maintain premium pricing for our products.
Changes in consumer preferences or discretionary consumer spending could adversely impact our
results.
Changes in consumer preferences and trends (for example, changes in dietary preferences that could
cause consumers to avoid pizza or some of its ingredients in favor of foods that are perceived as more
healthful, lower-calorie or otherwise based on their ingredients or nutritional content) or preferences for a
dining experience such as fast casual pizza concepts, could adversely affect our restaurant business. Also,
our success depends to a significant extent on numerous factors affecting consumer confidence and
discretionary consumer income and spending, such as general economic conditions and the level of
employment. Any factors that could cause consumers to spend less on food or shift to lower-priced
products could reduce sales or inhibit our ability to maintain or increase pricing, either of which could
materially adversely affect our results of operations.
Food safety and quality concerns may negatively impact our business and profitability.
Incidents or reports of food- or water-borne illness or other food safety issues, investigations or other
actions by food safety regulators, food contamination or tampering, employee hygiene and cleanliness
failures, improper franchisee or employee conduct, or presence of communicable disease at our
Company-owned and franchised restaurants, QC Centers, or suppliers could lead to product liability or
other claims. If we were to experience any such incidents or reports, our brand and reputation could be
negatively impacted. This could result in a significant decrease in customer traffic and could negatively
impact our revenues and profits. Similar incidents or reports occurring at quick service restaurants
unrelated to us could likewise create negative publicity, which could negatively impact consumer
behavior towards us.
We rely on our domestic and international suppliers, as do our franchisees, to provide quality ingredients
and to comply with applicable laws and industry standards. A failure of one of our domestic or
international suppliers to meet our quality standards, or meet domestic or international food industry
standards, could result in a disruption in our supply chain and negatively impact our brand and our
business and profitability.
Our results depend upon our ability to differentiate our brand and our reputation for quality. Damage to
our brand or reputation could negatively impact our business and financial results. Our brand has been
highly rated in U.S. surveys, and we strive to build the value of our brand as we develop international
markets. The value of our brand and demand for our products could be damaged by any incidents that
harm consumer perceptions of the Company and our brand. As a result of the impact of social media, the
value of our brand and the demand for our products could be quickly and seriously damaged due to the
widespread publicity that can be associated with one or more of these incidents.
We may not be able to effectively market our products or maintain key marketing partnerships.
The success of our system-wide business depends on the effectiveness of our marketing and promotional
plans. We may not be able to effectively execute our national or local marketing plans, particularly if
lower sales result in reduced levels of funds from PJMF. Our marketing strategy utilizes relationships
with well-known sporting events, athletes, celebrity personalities and our brand spokesman to market our
products. Our business could suffer if we are not able to maintain key marketing relationships and
sponsorships, or if we are unable to do so at a reasonable cost, and could require additional investments in