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WEDNESDAY, NOVEMBER 25, 2009
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Starbucks Looks to Cut Back on Rent

Coffee chain presses landlords for 20%-25% reductions

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(Newser) – Starbucks is asking some of its landlords for a venti favor: lower lease rates by as much as 25%, Bloomberg reports. With the real-estate market in decline, a rep says, “We’re taking advantage of the opportunity,” adding that most landlords foresee a “mutually beneficial situation.” Indeed, one analyst says many leasers are eager to keep tenants from leaving.

Starbucks began trying to cut renting costs in January, when it announced plans to shutter about 300 of its more than 7,000 shops and slash as many as 6,700 jobs—all part of a $195 million savings plan. But even if Starbucks closes stores, it could still be on the hook for rent in some cases, Bloomberg notes.

Starbucks is pushing some landlords for as much as a 25% reduction in lease rates.
Starbucks is pushing some landlords for as much as a 25% reduction in lease rates.   (AP Photo)
Starbucks is pushing some landlords for as much as a 25% reduction in lease rates.
Starbucks is pushing some landlords for as much as a 25% reduction in lease rates.   (AP Photo)
Starbucks is pushing some landlords for as much as a 25% reduction in lease rates.
Starbucks is pushing some landlords for as much as a 25% reduction in lease rates.   (AP Photo)
Starbucks is pushing some landlords for as much as a 25% reduction in lease rates.
Starbucks is pushing some landlords for as much as a 25% reduction in lease rates.   (AP Photo)
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In this recession, we do see developers and owners being much more willing to work with the operators to make sure the restaurant remains where it is. It’s much more of a partnership than it used to be. - Hudson Riehle, analyst

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4 comments
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Robert_Dada
May 29, 09 7:02 PM CDT
It's about time Starbucks suffers. Serves them right for pushing out the independent coffee shops whose service and product far surpassed anything Starbucks could brew. Reply
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IN RESPONSE:
paul123
May 30, 09 7:56 AM CDT
Dada, it's a free market. If the consumer wishes to go to starbucks vs another place, then so be it, even if the product elsewhere is superior. Why should anyone have to suffer for the consumer's choice? Shall we now impugn McDonalds for pushing out the small burger/hotdog business that existed in my hometown three years ago? Shall we now sneer at McDonalds because they are now offering gourmet coffee much like starbucks does? I guarantee you that an independant coffee shop is going to have better coffee than anything McDonalds does.
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+1
drlarrymitchell
May 30, 09 5:26 PM CDT
I don't like coffee, will never drink it, but I agree with Dada. Starbucks over-expanded and bullied their way into a large market share without regard for local business or economic health. It's too bad that their employees will suffer these jobs losses, and the bit about a “mutually beneficial situation” with the landlords is horseshit. They're taking advantage of people in yet another way, all in the name of $$$. Reply
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IN RESPONSE:
paul123
May 31, 09 7:28 AM CDT
How does buying property that is on the market for ANYONE to buy and develop, and building your business on it get to be considered "bullying your way onto the market"? No law existed that said, "You may buy this land, but it is illegal to put a Starbucks on it.". We live in a free market society boys, at least for now.
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