Mall Giant Sues Starbucks To Stop Planned Shutdown Of All Teavana Stores

Image courtesy of Kaleb Fulgham

Starbucks recently announced it would shut down all 379 locations of its boutique Teavana tea shops. Tea drinkers weren’t the only ones annoyed by the news. A huge shopping mall landlord whose properties currently house 1-in-5 Teavana stores is suing mad, taking Starbucks to court to halt the shutdown.

Simon Property Group, the nation’s largest mall operator, is asking an Indiana court to issue an injunction to put the brakes on the Teavana phase-out, which is slated to happen over the next year or so.

According to the Indianapolis Business Journal, only two of the Teavana stores in Simon malls have leases slated to end in the next year. The rest aren’t set to expire for years, with some agreements not ending until 2027.

“In order to successfully operate its shopping centers, Simon depends upon each tenant fulfilling the covenants in their respective leases,” the mall landlord said in its suit, which was filed in state court in Indiana last week. “Crucially, each of Simon’s tenants promises that it will open and operate continuously for the entire term of its lease.”

Starbucks cited decreased mall traffic and disappointing sales as the reason why it plans to close the Teavana retail operation. Simon, in its lawsuit, isn’t happy to see blame put solely on malls when a record number of retailers have filed for bankruptcy.

Other companies that have shuttered dozens or hundreds of stores across the country did so either after filing or to stave off bankruptcy. Think of Sears, JCPenney, Forever 21, RadioShack, hhgregg, and Wet Seal, which liquidated entirely, or shed stores for their financial health.

“That obviously is not the case with Starbucks, which is one of the largest and most recognized companies in the world,” Simon’s lawyers observed in the court filing. Starbucks as a whole is doing quite well, but it simply no longer wants to run Teavana.

Instead, it has integrated Teavana products into its café menus, and launched bottled iced tea products using the brand and its reputation for interesting tea blends. The company didn’t acquire Teavana to run hundreds of retail stores; it did so with an eye on the company’s products and tea expertise as Starbucks expanded more in Asia.