Simon Property Group Suing Starbucks Over Teavana Closures
Simon Property Group, the largest shopping mall operator in the U.S., is suing Starbucks Corp. over the coffee giant’s decision to close 78 Teavana stores within its malls. The lawsuit states that Starbucks is breaching its leases by closing the Teavana stores and “shirking its contractual obligations at the expense of Simon’s shopping centers and the dozens of communities they serve and support.” Simon is seeking temporary and permanent injunctions preventing Starbucks from closing the stores. Starbucks said that it will close most Teavana stores in the spring of 2018, however, Simon said only two of its Teavana leases expire before then — and 76 extend as far as 2027.
Total Retail’s Take: Starbucks bought Teavana in 2013 for $620 million. New Starbucks CEO Kevin Johnson, disappointed with the performance of the company's Teavana stores, blamed decreasing foot traffic in malls. That comment didn’t sit well with Simon Property Group. The mall landlord said the statement was made "to deflect blame from itself and avoid adverse investor reaction." Simon noted that just a year ago Starbucks had boasted that its tea business was growing rapidly. With this lawsuit Simon is sending a message to retailers that they cannot just close stores and break expensive leases. “Tenants that don't live up to their continuous operation obligations cause great upheaval for both Simon and their fellow tenants,” the lawsuit says.
