The operators of an Upper Crust takeaway at Edinburgh’s Waverley station have failed to secure a one-year lease renewal, after Network Rail preferred to have market leader Costa Coffee on board as the sole outlet for customers during a planned redevelopment.
The decision, made earlier this month, will be of concern to the owners and operators of coffee shops, restaurants and other outlets at railway stations.
Sheriff Morrison QC dismissed an application by Select Service Partner for a one-year renewal of the lease for its Upper Crust outlet under section 1 of the Tenancy of Shops (Scotland) Act 1949.
He found it was “reasonable” for Network Rail to seek to lease the premises, on the western concourse, to Costa Coffee ahead of a planned redevelopment of the main booking hall, during which the premises will be the sole outlet available to customers.
Select Service Partner has leased the premises since 2006, but served notice to quit in October last year.
Describing the reason, the sheriff said: “The main booking hall is to be redeveloped. As a consequence, all the outlets in the booking hall, of which the pursuer owns or has the franchise of four, will be closed for up to two years during the redevelopment. There is an intervening development, called EGIP, which is the platform extension scheme on the south side of the station for longer trains operating between Edinburgh and Glasgow. It is proposed to start that development in mid-2016.”
“While the booking hall redevelopment is taking place, there will be only one coffee outlet in the station and that will be at the site currently occupied by the pursuer’s Upper Crust food-based outlet on the western concourse. The area around that site must be one of the busiest places in the station.”
He continued: “The defender would like to have what it describes as a well-known and readily recognized retailer of specialist coffee and related foodstuffs for railway travellers on the site currently leased by the pursuer on the western concourse. The defender considers that the pursuer’s Upper Crust operation does not meet that need. The defender has identified Costa Coffee as the market leader.”
The sheriff accepted the evidence that Costa Coffee is a market leader and added: “I think it probable that the defender could obtain a larger income from Costa Coffee as a market leader than from Upper Crust.”
He rejected Select Service Partner’s claims that the “substantial” loss of revenue that would result meant hardship should lead to a one-year renewal of the tenancy under the Act. He said that it is a “very large multi-million pound company” that “will not face significant financial loss in losing one outlet”. He also did not find it credible that all 17 of the branch’s employees would have to be made redundant.
He said: “I do not think that a multi-million-pound company such as the pursuer can argue hardship from the loss of one outlet of one of its brands at one location.”
In addition, he found that it was “reasonable” to give Costa Coffee a lead-in time ahead of the redevelopment taking place.
He concluded: “I think it is reasonable in all the circumstances that the application be dismissed. I do not think that a suitable alternative site can be offered to the pursuer; there will not be a loss of revenue to the pursuer that is even significant for an organisation of its size; there will be no loss of goodwill; and no hardship to the pursuer. I do not think that it reasonable that the lease should be renewed in case another location becomes available; it is not evident where such a location would be until after the end of the redevelopment of the booking hall.
“I think that it is reasonable for the defender to seek to have a leading brand coffee-based outlet at the site when there will be no coffee-based outlet, and, indeed, no food-based outlet, for up to two years in the station during the redevelopments and no other site for such an outlet during that time.”
The judge said that Select Service Partner has a revenue of almost £2bn, operating in 29 countries, with more than 300 brands including Upper Crust and Starbucks franchises, operating in the UK mainly in railway stations and airports.
Select Service Partner Ltd v Network Rail Infrastructure Ltd The Sheriffdom of Lothian and Borders at Edinburgh (Sheriff Morrison QC) 8 April 2015
