Drama brews as 2 coffee chains fight for Salad and Go locations

Three weeks after dozens of Salad and Go locations served their last Cobbs, elote wraps and frozen strawberry lemonades to dismayed fans, the fate of those drive-thrus remains uncertain. 

Earlier this month, the homegrown healthy drive-thru chain abruptly announced it had filed for bankruptcy in Texas and would close all of its locations in Arizona and Nevada. The company, which got its start in Gilbert in 2013, had 70 drive-thrus in those states. When those final locations closed on Aug. 5, it marked the end of the chain, which expanded rapidly into Texas and Oklahoma after it was acquired by a private equity firm in 2021. 

In a flurry of court filings this month, a suitor for the majority of the restaurants emerged: Boersma Bros., the company behind the Oregon-born, Tempe-based coffee chain Dutch Bros. It offered $105 million for 65 locations spanning four states and made a $10 million deposit. More than 40 of those restaurants are located around the Valley.

Salad and Go’s board considered 16 potential buyers and found Dutch Bros to be the best fit, per court filings. Though that seemed like a conveniently tidy solution, it was far from a done deal. 

During an Aug. 7 court hearing, it became clear that another fast-growing coffee chain, the Arkansas-based 7 Brew, was on that list of suitors and still interested in buying these locations. 7 Brew’s legal team implored the judge to run an auction.

In an emergency hearing on Thursday, the legal team for Salad and Go asked the court to approve a “targeted auction process” between Dutch Bros and 7 Brew for all of Salad and Go’s locations where leases are still in effect, around 130 sites. 

Salad and Go’s attorney, Omar Alaniz, said he has assurances from both coffee companies that they’ll take part in the auction. Should 7 Brew win, Salad and Go would have to pay an estimated $5 million to Dutch Bros for nixing its sale contract and other fees. 

U.S. Bankruptcy Judge Alfredo Pérez approved the auction process suggested by Salad and Go, setting the stage for an auction between the two coffee chains to begin next week. 

Valley landlords object to sale

While these coffee chains duke it out over who gets to take over these Salad and Go locations, there’s another issue complicating the changeover. 

So far, three Valley landlords of shopping centers that already have drive-thru coffee shops have objected: the owners of a Gilbert shopping center on Germann and Power roads, Melrose Marketplace, a Phoenix strip mall on Indian School Road and Seventh Avenue, and the Aguilar Square Shopping Center in Laveen, at 35th Avenue and Baseline Road. 

The latter two shopping centers are currently home to a Scooter’s Coffee and a Black Rock Coffee Bar, respectively.  The sale to either coffee chain would effectively place two competing quick cafes within a few feet of each other. Both Valley landlords note they have exclusivity clauses with the current coffee bars, guaranteeing they’re the only spots in each center selling coffee and tea. 

If a new coffee shop moved in, these owners would violate their own leases. 

Selling or reassigning the Salad and Go lease at the Laveen shopping center isn’t the issue, attorneys for LJO Properties, a California company that owns the shopping center, wrote in its objection. 

“LJO objects to the sale or assignment to a direct competitor of Black Rock,” its attorneys wrote.

Davis Enterprises, the group that owns the Phoenix shopping center, told the court via its objection filing that the addition of Dutch Bros “disrupts the tenant mix.”

The legal team for Davis Enterprises, whose shopping center is located on a busy road, shared another concern in its filing with the bankruptcy court: “Dutch Bros Coffee is known for its long car lines and corresponding traffic which can be disruptive to the other tenants of the shopping center.”

Other landlords who have not formally filed an objection shared their concerns with the judge during the hearing. Alaniz said the auction process still allows landlords to voice their objections.

Madison Oberg, the attorney for LJO Properties, reiterated the company’s concerns that the landlord would be “much impacted by the potential of a second coffee shop entering the center,” she said during the hearing.