Popeye's 2014 Annual Report Download - page 25

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chicken to fluctuate, a rise in the prices of chicken products could expose us to cost increases. If we fail to anticipate and react to
increasing food costs by adjusting our purchasing practices or increasing our sales prices, our cost of sales may increase and our
operating results could be adversely affected.
Changes in consumer preferences and demographic trends could result in a loss of customers and reduce our revenues.
Food service businesses are often affected by changes in consumer tastes, national, regional and local economic conditions,
discretionary spending priorities, demographic trends, traffic patterns and the type, number and location of competing restaurants.
In addition, the restaurant industry is currently under heightened legal and legislative scrutiny related to menu labeling and resulting
from the perception that the practices of restaurant companies have contributed to nutritional, caloric intake, obesity, or other health
concerns of their guests. If we are unable to adapt to changes in consumer preferences and trends, we may lose customers and our
revenues may decline.
Because our operating results are closely tied to the success of our franchisees, the failure or loss of one or more franchisees,
operating a significant number of restaurants, could adversely affect our operating results.
Our operating results are dependent on our franchisees and, in some cases, on certain franchisees that operate a large number
of restaurants. How well our franchisees operate their restaurants and their desire to maintain their franchise relationship with us
is outside of our direct control. In addition, economic conditions and the availability of credit may have an adverse impact on our
franchisees. Any failure of these franchisees to operate their restaurants successfully or the loss of these franchisees could adversely
impact our operating results. As of December 28, 2014, we had 340 franchisees operating restaurants within the Popeyes system
and several preparing to become franchisee operators. The largest of our domestic franchisees operates 132 Popeyes restaurants;
and the largest of our international franchisees operates 109 Popeyes restaurants. Typically, each of our international franchisees
is responsible for the development of significantly more restaurants than our domestic franchisees. As a result, our international
operations are more closely tied to the success of a smaller number of franchisees than our domestic operations. There can be no
assurance that our domestic and international franchisees will operate their franchises successfully or continue to maintain their
franchise relationships with us.
Our operating results and same-store sales may fluctuate significantly and could fall below the expectations of securities
analysts and investors, which could cause the market price of our common stock to decline.
Our operating results and same-store sales have fluctuated significantly in the past and may fluctuate significantly in the future
as a result of a variety of factors, many of which are outside of our control. If our operating results or same-store sales fluctuate
or fall below the expectations of securities analysts and investors, the market price of our common stock could decline.
Factors that may cause our results or same-store sales to fluctuate include the following:
• the opening of new restaurants by us or our franchisees;
• the closing of restaurants by us or our franchisees;
• increases in the number of restaurant properties leased or sub-leased to franchisees under percentage rent arrangements;
• volatility of gasoline prices;
• increases in labor costs;
• increases in the cost of commodities and paper products;
• inclement weather patterns; and
• economic conditions generally, and in each of the markets in which we, or our franchisees, are located.
• the change in competitive factors
Accordingly, results for any one period are not indicative of the results to be expected for any other period or for the full year,
and same-store sales for any future period may decrease.
We are subject to government regulation, and our failure to comply with existing regulations or increased regulations could
adversely affect our business and operating results.
We are subject to numerous federal, state, local and foreign government laws and regulations, including those relating to:
• the preparation and sale of food;
• employee healthcare legislation;
• franchising;
• building and zoning requirements;
• environmental protection;