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Seattle’s Best may lose Borders partnership

Coffee chain would see unit count drop by more than 200 if licensing deal ends

The bankrupt Borders bookstore chain is planning to end its long relationship with Seattle’s Best Coffee, a move that would leave the 336-unit coffee concept with fewer than 100 locations, a spokeswoman said.

Seattle’s Best began operating cafes in Borders stores in 2004, growing to more than 400 locations before the retailer filed for Chapter 11 bankruptcy protection in February and began closing bookstores. Seattle's Best lost an estimated 225 cafe outlets within the bookstores in the first wave of clsoures.

According to filings made this week in a U.S. bankruptcy court in New York, Borders said it planned to operate the cafes itself or through another provider as the company reorganizes, which would eliminate the licensing fees paid to Seattle’s Best Coffee, a division of Seattle-based Starbucks Coffee.

Borders said it would lose an estimated $10 million a year if the licensing agreement stayed in place. The royalties and cost of product and suppliers are “in excess of comparable products available from other suppliers and the [Seattle’s Best Coffee] stores are not profitable as a result,” the company said in its filings.

If court approves its plan, Borders said it would begin debranding the cafes as soon as 45 days after the ruling.

Jenny McCabe, a spokeswoman for Seattle’s Best, said in an interview Friday that its attorneys would be responding to the Borders motion. A hearing on the matter is scheduled for June 2.

In an official statement, however, she said: “We have considered Borders a valued customer since our relationship began seven years ago. We’ve enjoyed the opportunity to share our brand with thousands of customers in Borders cafes across the country. We look forward to continuing to serve the many fans we’ve made at Borders through the 50,000 other places where our coffee can now be found.”

The possible end of Seattle’s Best’s relationship with Borders comes as parent company Starbucks has been aggressively promoting its secondary brand as a more accessible alternative within the premium coffee segment across multiple channels

Last week, Seattle’s Best reached the milestone of offering its coffee in 50,000 points of distribution, ranging from Subway and Burger King restaurants to a line of vending machines.

Seattle’s Best also is testing a new store-within-a-store concept in four Walmart Supercenters in Canada, which, if successful, could launch a new retail-café partnership.

In the United States, there are eight corporate Seattle’s Best locations.

Contact Lisa Jennings at [email protected]
Follow her on Twitter: @livetodineout

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