Stop & Shop drops Dunkin’ shops
Stop & Shop Supermarket Co. will replace Dunkin’ Donuts outlets with Starbucks counters in as many as 130 stores next year, according to a franchisee group.
The decision comes as Stop & Shop and Starbucks negotiate a settlement in a federal lawsuit that Stop & Shop filed in June after Starbucks threatened to abruptly close all 90 of its shops in the Quincy supermarket chain’s stores.
Now, according to a Dunkin’ franchise group, Stop & Shop has decided to not renew an agreement for Dunkin’ shops in 130 other stores so they can be replaced with Starbucks shops. Dunkin’ Brands Inc. has a master agreement in place until next year for the supermarket spaces, which it franchised to local Dunkin’ franchisees.
Mark Dubinsky, president of the Dunkin’ Donuts Independent Franchise Owners Association, said no explanation has been given for Stop & Shop’s decision to switch coffee partners.
“It’s kind of mysterious. It’s a negotiation between Dunkin’ corporate and Stop & Shop,” Dubinsky said.
Dunkin’ Donuts, of Canton, began opening shops inside Stop & Shop supermarkets in 2001. Although the Dunkin’ shops in those supermarkets are operated by Dunkin’ franchisees, they are staffed by Stop & Shop employees, Dubinsky said.
Starbucks began opening licensed shops inside other Stop & Shop stores in 2006.
Stop & Shop spent $120 million renovating store space to house the Starbucks cafes and $400,000 to train 720 employees, according to testimony in the lawsuit by Stop & Shop senior vice president James Sylvia.
The dispute began in December when Starbucks informed Stop & Shop that it wanted to open a Starbucks-owned store at a Maryland shopping center that contained a Stop & Shop with a Starbucks.
Stop & Shop provided a waiver of its exclusivity clause barring competing locations. But in a May 7 letter to Stop & Shop, Starbucks legal counsel Adam Ekberg stated the terms were insufficient.
Ekberg said Starbucks intended to terminate the licensing agreement on all 90 shops. Stop & Shop filed a lawsuit seeking an injunction to block the action.
“The sudden shutdown of the licensed sites would seriously damage our customer goodwill,” Sylvia stated in the court filing. “Not only would we lose a differentiator between us and our competition – that is, that our shoppers can buy Starbucks coffee while they shop – we would also have vacant or ‘dark’ space in prominent areas of over 90 different stores.”
On June 17, without giving a reason, Stop & Shop withdrew its motion for the injunction. The two sides are now in discussions to resolve the dispute, according to a filing on Monday by Stop & Shop’s attorneys.
Stop & Shop spokesman Robert Keane declined to comment on the lawsuit but confirmed the Dunkin’ Donuts deal expires next year.
Stephen Caldeira, spokesman for Dunkin’ Donuts, declined to comment on the company’s future relationship with Stop & Shop or other supermarket chains.
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