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Starbucks gets cold reception after demanding rent breaks from landlords

Katherine Khashimova Long, The Seattle Times on

Published in Home and Consumer News

SEATTLE -- When Starbucks landlord Leon Brooks got a letter asking for at least a year's reduction in rent for the company's drive-thru store in San Clemente, California, the property owner knew his answer.

"I am highly disappointed, disgusted and angry," Brooks wrote back to the global coffee chain. "Shame on you."

Seattle-based Starbucks, citing the "staggering economic cost" of the pandemic, notified landlords in early May that it wanted to renegotiate rental arrangements across many of its 8,900 company-owned stores. The company has faced plummeting sales amid the temporary closure of many stores due to the outbreak of COVID-19.

"Effective June 1 and for at least a period of 12 consecutive months, Starbucks will require concessions to support modified operations and adjustments to lease terms and base rent structures," read the letter, signed by Starbucks Chief Operating Officer Roz Brewer. "This is the worst recession since the Great Depression and far more devastating than the global financial crisis."

Starbucks didn't respond to Brooks' letter. The company won't say how such negotiations are proceeding. Nor will it say just how many landlords got the letter asking for a break -- but commercial property owners from the tip of Florida to northwestern Washington received the letter.

Some landlords have said they won't play along.

 

Brooks' adobe-walled drive-thru has housed a Starbucks for just over a year, with 19 years left to go on the lease. Starbucks hasn't yet asked him for any specific concessions, he said -- but when it does, he plans to refuse.

"We have a contract and we will enforce the terms of the contract," Brooks said. "If they want to go into default, we will get our remedies from the court of law."

The tone of what appeared to be a form letter also rankled, landlords said.

"For a publicly traded company with a $90 billion dollar market cap to ask us for help? I was astounded," said landlord George Bean. Starbucks is a tenant in his small retail strip in Fort Myers, Florida.

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