other conditions could adversely affect the availability, quality and cost of our ingredients, which could harm our operations. If any of our distributors or suppliers performs inadequately, or our
distribution or supply relationships are disrupted for any reason, our business, financial condition, results of operations or cash flows could be adversely affected. We currently depend on three or
four suppliers for our pork, chicken and beef supplies. It could be more difficult to replace our pork suppliers if we were no longer able to rely on them. We do not have long-term
contracts with any of our suppliers. In addition, we've relied on the McDonald's distribution network. As we begin to increase our independence from McDonald's, we may have to seek new suppliers and
service providers. If we cannot replace or engage distributors or suppliers who meet our specifications in a short period of time, that could increase our expenses and cause shortages of food and
other items at our stores, which could cause a store to remove items from its menu. If that were to happen, affected stores could experience significant reductions in sales during the shortage or
thereafter, if our customers change their dining habits as a result. Our focus on a limited menu would make the consequences of a shortage of a key ingredient more severe.
addition, our approach to competing in the restaurant industry depends in large part on our continued ability to adhere to the principle of "food with integrity." We use a substantial
amount of naturally raised and sustainably grown ingredients, and try to make our food as fresh as we can, in light of pricing considerations. As we increase our use of these ingredients, the ability
of our suppliers to expand output or otherwise increase their supplies to meet our needs may be constrained. Our inability to obtain a sufficient and consistent supply of these ingredients on a
cost-effective basis, or at all, could cause us difficulties in aligning our brand with the principle of "food with integrity." That could make us less popular among our customers and
cause sales to decline.
Our quarterly operating results may fluctuate significantly and could fall below the expectations of securities analysts and investors due to various factors.
quarterly operating results may fluctuate significantly because of various factors, including:
impact of inclement weather, natural disasters and other calamities, such as hurricanes Katrina and Rita in 2005;
timing of new store openings and related revenues and expenses;
costs at our newly opened stores, which are often materially greater during the first several months of operation;
availability and wages of store management and crew;
of our stores, especially in new markets;
in comp store sales and customer visits, including as a result of the introduction of new menu items;
in general economic conditions, including those relating to changes in gasoline prices;
publicity about the ingredients we use or the occurrence of food-borne illnesses or other problems at our stores;
in consumer preferences and discretionary spending;
in infrastructure costs; and
in supply prices.
factors also cause our revenue to fluctuate from quarter to quarter. Our revenue is typically lower during the winter months and the holiday season and during periods of
inclement weather (because fewer people are eating out) and higher during the spring, summer and fall months (for the opposite