Borders to end cafe deal with Seattle's Best Coffee
Ann Arbor-based Borders Group Inc. is asking a bankruptcy court judge for the right to exit its contract with Starbucks Corp.'s Seattle's Best Coffee, the brand name for the bookstore chain's cafes.
The move comes as Borders is examining all of its contracts in an effort to save costs and identify a profitable business model that would allow the company to emerge from Chapter 11 bankruptcy.
"This change will allow Borders to operate its own cafe program, enabling us to reduce the licensing fees we pay, generate significant cost savings, and boost cafe profitability," Borders spokeswoman Mary Davis said in a statement. "The change will also provide us with the opportunity to tailor menu items and the cafe experience based on our customers’ preferences.”
Borders also filed a motion with the U.S. Bankruptcy Court's Southern District of New York asking the court to allow the company to file its official request to reject the Seattle's Best contract under seal. Under bankruptcy code, companies have wide leeway to reject or renegotiate previous business agreements, including leases and contracts.
Lawyers filed a motion saying the motion should stay private "to protect the confidentiality of the sensitive commercial information" involved with the Seattle's Best agreement.
Starbucks stock (NASDAQ: SBUX) was up 1.34 percent to $37.11 at 12:28 p.m. today.
Borders signed a deal with Starbucks in August 2004 to integrate Seattle's Best into its superstores.
Since its bankruptcy filing in February, Borders has closed nearly 230 superstores, slightly less than half of its large-format locations.
The company is currently trying to convince publishers to agree to new terms on product shipments, which Borders views as critical to the company's long-term viability.
Borders employs fewer than 400 workers at its Ann Arbor headquarters.
Contact AnnArbor.com's Nathan Bomey at (734) 623-2587 or nathanbomey@annarbor.com. You can also follow him on Twitter or subscribe to AnnArbor.com's newsletters.
Comments
Terrin
Sat, May 28, 2011 : 4:12 a.m.
The only problem with Borders' argument is Borders used to have its own coffee joint. It was pretty nice. Borders, however, thought it too expensive to run, or not a viable business, and dumped it in favor of Seattle's Best. Probably thought it had to be more like Barnes and Nobles. I am disappointed to learn Seattle's Best is owned by Starbucks.
CynicA2
Thu, May 19, 2011 : 7:17 p.m.
Maybe they'll hire a new crew to clean those scuzzy bathrooms, too.
loves_fall
Thu, May 19, 2011 : 6:11 p.m.
Good, SB was ridiculously expensive.
MyOpinion
Thu, May 19, 2011 : 5:18 p.m.
Methinks going the local route - each Borders store running its own coffee shop is going to end badly. By the way, does Borders have a national cleaning contract as well or is it up to each store to come up with a local cleaning crew?
Moonmaiden
Thu, May 19, 2011 : 6:27 p.m.
Hope they start in the woman's bathroom!
Tom Joad
Thu, May 19, 2011 : 5:10 p.m.
Good move...to paraphrase the Grapes of Wrath...give a Borders customer a 'bad cup of coffee and they're off the joint'