Councils sue Caffè Nero over unpaid rent

Caffe Nero

Caffè Nero’s battle with its landlords is heating up after one lodged a court claim against the coffee shop chain.

The Local Authorities’ Mutual Investment Trust, which invests on behalf of councils, is claiming £135,389 unpaid rent on a Caffè Nero site in London. The move follows complaints from the property owner that the chain had refused to pay.

Caffè Nero is one of several operators to have clashed with landlords over rent payments during the pandemic. It has hired insolvency experts from KPMG and is reportedly examining a company voluntary arrangement (CVA) to cut rents and close cafés.

Restrictions on work and socialising have led to a crisis on the high street, as brands struggle to stay afloat in the wake of plunging footfall.

Rival Costa has warned that up to 1,650 jobs are at risk, while Pret A Manger is cutting thousands of posts.

Caffè Nero reported sales of £366m last year and a pre-tax loss of £30.2m. It employs 5,000 people and operates 660 cafés across the UK, most of which had reopened after the original lockdown ended in June.

Landlords, prevented from evicting restaurant and retail tenants due to a moratorium on enforcement action, have sought other legal routes to recover unpaid rents.

The Local Authorities’ Mutual Investment Trust accused Caffè Nero of breaking the terms of its lease, and is claiming 4% interest on unpaid rent. The law firm Hogan Lovells, which is representing the landlord, did not comment on the case. Caffè Nero also declined to comment.