Starbucks has reportedly asked landlords to give the company a break on rent for at least a year due to the impact of the COVID-19 pandemic, according The Seattle Times. The letter was sent on May 5, one day after CNBC saw a letter announcing that the retailer would reopen 85% of stores by the end of the week.
“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 a letter to landlords signed by Starbucks Chief Operating Officer Roz Brewer that was seen by The Seattle Times.
“This is the worst recession since the Great Depression and far more devastating than the global financial crisis,” wrote Brewer. “What lays ahead is daunting but by no means insurmountable with a shared commitment and a clear path forward.”
Starbucks closed approximately half of its U.S. stores in March and April due to the pandemic, but was still able to stay current on its rent, according to CFO Pat Grismer during a quarterly earnings call. The retailer indicated that it would ask for lease concessions on the same call.
“We are having ongoing conversations with our landlords in various markets regarding what may be commercially reasonable lease concessions in the current environment,” said Grismer. “We’ve not yet confirmed those arrangements and it’s really premature to indicate what that relief may look like.”
A Starbucks spokesperson declined to confirm which markets will be subject to lease negotiations, but The Seattle Times confirmed that landlords in Seattle and Tacoma, Wash. had received the letter from Brewer. However, none had received specific requests for rent relief.