Starbucks 2010 Annual Report Download - page 21

•The loss of key personnel or difficulties recruiting and retaining qualified personnel could adversely impact our
business and financial results.
Much of our future success depends on the continued availability and service of senior management personnel. The
loss of any of our executive officers or other key senior management personnel could harm our business. We must
continue to recruit, retain and motivate management and other employees sufficient both to maintain our current
business and to execute our strategic initiatives, some of which involve ongoing expansion in business channels
outside of our traditional company-operated store model. Our success also depends substantially on the contributions
and abilities of our retail store employees who we rely on to give customers a superior in-store experience.
Accordingly, our performance depends on our ability to recruit and retain high quality employees to work in and
manage our stores. If we are unable to recruit, retain and motivate employees sufficient to maintain our current
business and support our projected growth, our business and financial performance may be adversely affected.
•Adverse public or medical opinions about the health effects of consuming our products, as well as reports of
incidents involving food-borne illnesses or food tampering, whether or not accurate, could harm our business.
Some of our products contain caffeine, dairy products, sugar and other active compounds, the health effects of which
are the subject of public scrutiny, including the suggestion that excessive consumption of caffeine, dairy products,
sugar and other active compounds can lead to a variety of adverse health effects. Particularly in the US, there is
increasing consumer awareness of health risks, including obesity, due in part to increased publicity and attention
from health organizations, as well as increased consumer litigation based on alleged adverse health impacts of
consumption of various food products. While we have a variety of beverage and food items, including items that are
low in caffeine and calories, an unfavorable report on the health effects of caffeine or other compounds present in
our products, or negative publicity or litigation arising from certain health risks could significantly reduce the
demand for our beverages and food products.
Similarly, instances or reports, whether true or not, of unclean water supply, food-borne illnesses and food
tampering have in the past severely injured the reputations of companies in the food processing, grocery and quick-
service restaurant sectors and could in the future affect us as well. Any report linking us to the use of unclean water,
food-borne illnesses or food tampering could damage our brand value and severely hurt sales of our beverages and
food products, and possibly lead to product liability claims. Clean water is critical to the preparation of specialty
coffee beverages and our ability to ensure a clean water supply to our stores can be limited, particularly in some
international locations. If customers become ill from food-borne illnesses, we could also be forced to temporarily
close some stores. In addition, instances of food-borne illnesses or food tampering, even those occurring solely at the
restaurants or stores of competitors, could, by resulting in negative publicity about the foodservice industry,
adversely affect our sales on a regional or global basis. A decrease in customer traffic as a result of these health
concerns or negative publicity, or as a result of a temporary closure of any of our stores, could materially harm our
business and results of operations.
•Effectively managing growth is challenging and places significant strain on our management and employees
and our operational, financial, and other resources.
Effectively managing growth can be challenging, particularly as we continue to expand into new channels outside
the retail store model, increase our focus on our global consumer products business, and expand into new markets
internationally where we must balance the need for flexibility and a degree of autonomy for local management
against the need for consistency with our goals, philosophy and standards. Growth can make it increasingly difficult
to ensure a consistent supply of high quality raw materials, to locate and hire sufficient numbers of key employees to
meet our financial targets, to maintain an effective system of internal controls for a globally dispersed enterprise and
to train employees worldwide to deliver a consistently high quality product and customer experience.
15