In the face of record-setting store closures, Simon Property Group is fighting back. An Indiana judge ruled in favor of the Indianapolis-based mall operator Monday, forcing Starbucks to keep 77 failing Teavana stores open and honoring their leases. The Seattle-based coffee chain announced it planned to close all 379 Teavana locations in July. In August, Simon malls countered with a lawsuit. Simon sought injunctions from the Indianapolis-based court, preventing the coffee company’s store closings by alleging Starbucks was “shirking its contractual obligations at the expense of Simon’s shopping centers and the dozens of communities they serve and support.”
Total Retail's Take: This ruling sets an interesting precedent for potential future cases involving retailer-landlord disputes. What isn't mentioned is whether Starbucks had worked a clause into its leases with Simon Property Group that allowed it to get out of its lease agreements early if certain criteria wasn't met — e.g., foot traffic, sales. Without such an agreement, I believe Simon Property Group is well within its rights to take Starbucks to court as a means to get the coffee giant to honor its lease agreements. Mall operators are dealing with record numbers of store closings, and are trying to protect themselves from future losses. Suing a seemingly successful brand like Starbucks in order to get it to honor its commitments, while not ideal, has become necessary.