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Starbucks, Chipotle, and Shake Shack seek rent relief

A growing number of national restaurant and cafe operators say that social-distancing guidelines restrict them to 25% to 50% capacity, forcing them to modify their operations and cut expenses to stay in business. Even blue-chip names that made rent payments in April and May are now asking for relief, including StarbucksChipotle Mexican Grill, and Shake Shack, according to the Wall Street Journal. Franchisees for Dunkin’ Brands Global, Applebee’s, and Yum Brands are also negotiating with their landlords.

  • Why it matters: Landlords are generally reluctant to cut rent because accounting rules still allow them to book income if rent is deferred as long as it isn’t reduced. Temporary rent forgiveness or discounts would also reduce their property valuations, which could hurt an owner’s ability to get a loan.
  • How it’s playing out: Some restaurant owners say their requests for rent reductions were greeted with threats of default notices… Landlords are trying to work out deals that allow tenants to extend leases in exchange for deferred rent to be forgiven. [WSJ]

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