Wendy's 2010 Annual Report Download - page 25

problems in production or distribution, disease or food-borne illnesses, inclement weather or other conditions could
adversely affect the availability, quality and cost of ingredients, which could lower our revenues, increase operating
costs, damage brand reputation and otherwise harm our business and the businesses of our franchisees.
Food safety events, including instances of food-borne illness (such as salmonella or E. Coli) involving Wendy’s or
Arby’s or their respective supply chains, could create negative publicity and adversely affect sales at either or both
brands.
Food safety is a top priority, and we dedicate substantial resources to ensure that our customers enjoy safe,
quality food products. However, food safety events, including instances of food-borne illness (such as salmonella or
E. Coli), have occurred in the food industry in the past, and could occur in the future.
Food safety events could adversely affect the price and availability of beef, poultry or other meats. As a result,
Wendy’s and/or Arby’s restaurants could experience a significant increase in food costs if there are food safety events
whether or not such events involve Wendy’s or Arby’s restaurants or restaurants of competitors.
In addition, food safety events, whether or not involving Wendy’s or Arby’s, could result in negative publicity
for Wendy’s and/or Arby’s or for the industry or market segments in which we operate. This negative publicity, as
well as any other negative publicity concerning types of food products Wendy’s or Arby’s serves, may reduce demand
for Wendy’s and/or Arby’s food and could result in a decrease in guest traffic to our restaurants as consumers shift
their preferences to other products or food types. A decrease in guest traffic to our restaurants as a result of these
health concerns or negative publicity could result in a decline in sales at company-owned restaurants or in royalties
from sales at franchised restaurants.
Consumer concerns regarding the nutritional aspects of beef, poultry, French fries or other products we sell or
concerns regarding the effects of disease outbreaks such as “mad cow disease” and avian influenza or “bird flu,”
could affect demand for our products.
Consumer concerns regarding the nutritional aspects of beef, poultry, French fries or other products we sell or
concerns regarding the effects of disease outbreaks such as “mad cow disease” and avian influenza or “bird flu,” could
result in less demand for our products and a decline in sales at company-owned restaurants and in the royalties that
we receive from franchisees.
Changes in consumer tastes and preferences, and in discretionary consumer spending, could result in a decline in
sales at company-owned restaurants and in the royalties that we receive from franchisees.
The quick service restaurant industry is 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. Our success depends to a significant extent on discretionary consumer
spending, which is influenced by general economic conditions and the availability of discretionary
income. Accordingly, we may experience declines in sales during economic downturns. Any material decline in the
amount of discretionary spending or a decline in consumer food-away-from-home spending could hurt our revenues,
results of operations, business and financial condition.
If company-owned and franchised restaurants are unable to adapt to changes in consumer preferences and
trends, company-owned and franchised restaurants may lose customers and the resulting revenues from company-
owned restaurants and the royalties that we receive from franchisees may decline.
The disruptions in the national and global economies and the financial markets may adversely impact our
revenues, results of operations, business and financial condition.
The disruptions in the national and global economies and financial markets, and the related reductions in the
availability of credit, have resulted in high unemployment rates and declines in consumer confidence and spending,
and have made it more difficult for businesses to obtain financing. If such conditions persist, then they may result in
significant declines in consumer food-away-from-home spending and customer traffic in our restaurants and those of
our franchisees. Such conditions may also adversely impact the ability of franchisees to build or purchase restaurants,
remodel existing restaurants, renew expiring franchise agreements and make timely royalty and other payments. There
can be no assurance that government responses to the disruptions in the financial markets will restore consumer
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