TACOMA — Once known for bottomless cups of coffee and a vast array of pies, Shari’s Cafe & Pies is becoming synonymous with restaurant closures and legal battles across multiple Washington counties as well as in Idaho and Oregon.
A News Tribune analysis of court filings in Washington shows debt collection cases involving either Shari’s Management Corp. or Shari’s Non Oregon Holding LLC filed in at least 11 counties including Benton, Clark, King, Kitsap, Pierce, Skagit, Spokane, Thurston, Walla Walla, Whatcom and Yakima counties going back to 2020.
Since January 2024, more than 10 debt collection and/or unlawful detainers (commercial eviction cases) have been filed in the state, according to a review of online Superior Court case search portals.
Meanwhile, three tax warrants from the Washington State Department of Revenue were issued to Shari’s between October and December 2023: owing more than $708,000 in October, nearly $300,000 in November and more than $288,000 in December.
The Department of Revenue told The News Tribune in response to questions that while warrants filed with the court are disclosable, current amounts owed are not.
In Pierce County, there are lawsuits regarding four restaurants over unpaid rent at locations in Tacoma and Puyallup going back to early in the pandemic.
There’s also upheaval in neighboring Kitsap County, where the chain is facing eviction in Silverdale over unpaid rent.
On Monday, NBC affiliate KGW-TV in Portland reported that the Idaho State Tax Commission has six tax liens against Shari’s Management Corporation for roughly $220,000 in unpaid taxes, as well as owing various vendors including marketers, construction firms and plumbers and facing an eviction fight in Bend, Ore.
Attempts to reach attorneys and corporate representatives involved with Shari’s were unsuccessful. An automatic reply was received from the email listed in its corporate LLC filings that simply stated to “please expect a delay” in receiving a response.
The offices for Shari’s Management Corp. in Beaverton, Ore., are listed as “temporarily closed” online in its business listing on Google.
Shari’s has 14 restaurants in Washington, with just one restaurant left in Pierce County and three restaurants in Clark County.
In July, it closed its last Tacoma location at Tacoma Place shopping plaza in the South End. Its other Tacoma restaurant closed in January 2022. Another restaurant in Puyallup closed in 2021.
Elsewhere, closures have been seen in recent months at sites in Idaho and Washington.
For at least one industry consultant, none of this is surprising.
“Full-service concepts have had a difficult time raising money,” said Aaron Allen, founder of Aaron Allen & Associates, a global restaurant consulting firm.
Allen spoke with The News Tribune on Tuesday about the chain’s situation.
“You want to be able to maintain some sense of nostalgia and history, and so it’s hard when these places start to go away,” he added, listing older dining brands that catered to families with simple but numerous menu options — cafeterias such as Morrison’s or Piccadilly, or other chains such as Bennigan’s.
“In many cases that the costs of both labor and food and even occupancy, which are the three biggest costs for a restaurant, all three of those have gone up at rates that are faster than what they’re able to increase their menu prices,” he said.
For places like Shari’s, it’s also tough if you are dealing with an older clientele, he noted.
“When you have an older brand like (Shari’s), they have kind of a generational clientele, and there’s a bit of nostalgia, and there’s also a lot of price sensitivity, because we all kind of tend to lock into our mind what the cost of bread or whatever it might be from some historical point, and then you get sticker shock.”
Slow decline, then a pandemic
Shari’s Restaurants started in Hermiston, Ore., in 1978 as a family operation. It was acquired in 1999 by Fairmont Capital for $60 million. It had just under 100 sites across seven states.
Through the years, different investors bought into and later sold their interests in the chain, and eventually Gather Holdings LLC became Shari’s Management Corp.’s parent company, with Samuel Borgese at the helm.
Corporate filings with the state of Washington show that Shari’s Non Oregon Holdings, an entity based in Farmers Branch, Texas, and affiliated with Borgese, was registered with the state in April 2024, and also appears as the defendant in recent area debt cases.
Borgese has noted in court filings the effect the COVID-19 pandemic had on its sites, leading to the closures of many Shari’s locations.
In contrast, Shari’s Oregon presence appears to be hanging on via the Oregon Lottery.
Last year, Shari’s announced it received an undisclosed investment in Shari’s 42 Oregon restaurants from affiliates of MGG Investment Group to support the “video lottery gaming operations” at those sites.
Borgese said at the time that “we look forward to leveraging their expertise as we continue to provide the delicious meals and entertainment our loyal customers expect.”
Battles in Pierce County
The lease regarding the former Shari’s in Tacoma Central at 2323 S. Union Ave. has generated three years of litigation, culminating in a recent order to garnish payments from the company’s bank account in a debt-collection tool called “Confession of Judgment.”
Such confessions are agreed to by parties ahead of time, essentially to bolster terms of honoring an agreement by allowing for a fast-tracked debt collection in case of default.
“One party admits to liability and agrees to the entry of a judgment in a certain amount if a stated condition occurs,” explained Laura Coordes, a professor of law at the Sandra Day O’Connor College of Law at Arizona State University in Phoenix.
Coordes has spoken previously in interviews about businesses with accumulated debt facing different financial struggles post-pandemic.
In response to questions from The News Tribune, Coordes said that to enter into such confession agreements, “The idea is that you can avoid a later dispute about liability or amount by getting a party to agree on those things ahead of time.
“I would say on the whole that it’s a pretty extreme procedure rather than routine, although again, their usage varies from state to state,” she added, noting that some states do not allow them.
“I think they’re pretty controversial because they raise due-process concerns,” she added.
Allen said he saw the use of such a collection tool as evidence of “the sophistication level of the private equity firm backing them,” to avoid more litigation and/or bankruptcy filings.
In the Aug. 7-filed confession of judgment and judgment originally signed Jan. 31, 2024, by Borgese in the Tacoma Central case, the agreed-upon principal amount owed was listed at more than $178,000, with costs and attorneys’ fees still to be determined.
In the filing, it stated that both the debtor and creditor “have agreed that this confession of judgment and judgment may be filed and entered if the judgment debtor fails to meet the conditions” of the settlement agreement.
The Pierce County case goes back to January 2021 when its Tacoma Central shopping center landlord started formal eviction proceedings. That came after the site had been served a 10-day notice to pay rent or vacate in late September 2020, according to the original complaint.
Shari’s and the shopping center owner, an LLC affiliated with Bianco Properties of Creve Coeur, Mo., later worked out a stipulated agreement allowing the restaurant to stay, but in December 2021 the landlord moved to enforce the stipulation and seek restitution on past rent due and stipulation payments owed.
The Tacoma Central location shut down in January 2022, and debt collection continued.
The property owners in 2023 sought additional repayment to recover lost revenue resulting from the breach of the lease contract. Shari’s had originally signed on to operate at the Tacoma Central site through March 31, 2029, and a new tenant, IHOP, did not replace Shari’s until February 2023, according to the court filing.
The formula of the new amount owed came to more than $160,000, which was ultimately granted via a supplemental judgment award in the fall of 2023.
Shari’s attorney Drew Duggan and Borgese argued against the new amount, citing payoff of the initial judgment as well as additional garnished amount “from Shari’s bank account.”
Duggan also contended that the landlord presented “no evidence as to the reasonable steps it took to mitigate its damages and place a new tenant in the premises over the year it claims damages for.”
Cambria Queen, attorney for Bianco Properties, countered with an email from Bianco Properties’ general counsel listing tenants Bianco tried to land at the site. According to the email, those businesses included Denny’s, Mod Pizza, Hops & Drops, Aspen Dental and Chase Bank.
Issues also cited with the property included, “Repair and replacement delays caused by vandalism and theft in immediate vicinity and this location; and delay in having a committed new user for the premises.”
The Bianco email noted that “We also experienced damage to the rooftop HVAC units due to theft/vandalism where copper and motor parts were removed, and persons inside the building stealing during nighttime hours.”
Other lawsuits
Also on Aug. 7, a lawsuit emerged in Kitsap County Superior Court, with the chain facing eviction from overdue rent and tax debt at its Silverdale site.
Another Kitsap County site, Shari’s restaurant in Bremerton, now closed, also faced collection efforts over missed rent, which Shari’s contended was mailed to the wrong address, according to the Kitsap Sun.
Willows Pond Retail Center, 107 37th Ave. S.E. in Puyallup, started collection proceedings against Shari’s in February 2021, contending it had worked out a reduced-rent agreement in 2020 for the longtime tenant.
That case was dismissed in June 2021 and Shari’s closed the site that August.
Meanwhile, Sound Properties, owner of the other Puyallup Shari’s property at 10904 Canyon Road E., has gone to court three separate times in the past two years to collect past-due rent: once in March 2023, another in November 2023 and again in June of this year.
The March 2023 case sought debt collection and eviction for more than $130,000 of past-due rent. That case was dismissed in July 2023, after neither side appeared for a court review hearing.
In Sound Properties’ next case in November, attorneys said a fifth lease amendment had been reached, which included a confession of judgment and order for writ of restitution. That allowed the landlord to enter that agreement into court for collection if Shari’s defaulted again, similar to the Tacoma Central case.
In January, Sound Properties was granted the judgment to collect more than $70,000, to be collected through garnishment of funds.
The third case showed the standoff over eviction/debt collection had reached a new level of intensity with a lockout.
Sound Properties contended its legal papers were served correctly; Shari’s attorney argued that they were not.
“Suddenly and without warning, on July 1, 2024, Sound Properties locked Shari’s out of the premises,” wrote Shari’s attorney Whitny Norton in a July 15 filing. The action resulted in “serious loss of profits,” Norton added.
“Landlord has sought to resolve the defaults of defendant on numerous occasions over the last two years,” Sound Properties’ attorneys wrote in a July 16 filing.
“In each circumstance, defendant has waited until the 11th hour (or thereafter) to engage in meaningful resolution, and the fact that tenant did so here when it failed to answer the eviction summons was not out of the ordinary course of procedure in the history of the parties.”
The restaurant remains in operation as the case continues.
Back in Tacoma, Shari’s at 1901 S. 72nd St. in Tacoma’s South End closed July 22. In June, its landlord had launched its unlawful detainer (eviction) process in Pierce County Superior Court, as the result of unpaid rent going back to May.
On Aug. 23, the property owner filed an amended complaint for breach of contract and seeking damages over unpaid rent.
‘Change is tough’
At this point, industry consultant Allen isn’t sure of Shari’s path forward, predicting that the brand “will stay around, there will still be some units, if they don’t all totally shutter, but it will probably keep shrinking.”
Unlike the former video chain Blockbuster, the chain won’t vanish, he added, but likened it more to Sears’ slow withdrawal from the commercial landscape.
“People still have a reverence for the company name,” he said. “There are still always people who will continue to be supportive of them. But change is tough to deal with.”
That change has been harder for some than others.
Announcements of closures on social media have drawn a mix of harsh critiques of recent visits along with melancholy over what’s been lost, with some of the sites closing after decades of service.
“I’ve met some of my very favorite people at Shari’s, people I consider family,” wrote one commenter on Facebook to The News Tribune’s reporting of the 72nd Street Shari’s closing. “It’s always sad to see a business close, large or small. I don’t know about you but it makes me nervous that an industry appears to be dying and people are just … being mean.”
