Ann Arbor”s reputation as an endless row of coffee shops is about to take a hit this weekend.

Paul Wong
Caribou Coffee on South State Street is closing Sunday because its owners are unable to keep up with rent increases.<br><br>JEFF HURVITZ/Daily

Caribou Coffee plans to close Sunday because its owners are unable to continue paying the building”s rent.

“The owners and brokers have been trying to resolve the rent issue for a long time. The coffee business is sort of a nickel-and-dime operation and business here fluctuates depending on the number of students in town,” Caribou employee Patrick Pyne said.

“A business has only seven and a half months to make all the money for the year in this town, even though we pay rent for 12 months,” said Amer Bathish, owner of the Amer”s delis and Cava Java.

Pyne said the rent for Caribou”s space at 309 S. State St. is about $6,500 a month, much higher than a similar space in other towns.

“In the early “90s, rents were reasonable and a normal guy could afford to run a business in Ann Arbor. But rents have quadrupled since 1990. The people making the real money now are the landlords, and tenants have to raise the price of the product to make rent,” said Bathish.

Bathish said rents go up by 3 percent to 5 percent every year, and rates on State Street near campus can be as much as $15,000 per month, hurting entrepreneurs like himself.

Other campus businesses such as Burger King, Taco Bell and Tower Records have all left town because of high rent rates. Bathish said the buildings have a high turnover rate and landlords will lease their properties for at least as much as the previous tenants were paying.

“The landlords need to stop raising rents before they drive everyone entrepreneurs and franchises away,” Bathish said.

Caribou Coffee is the nation”s second largest non-franchised coffee company. Its headquarters in Minneapolis operate more than 130 stores nationwide.

Pyne said many professors and graduate student instructors are upset that the store is closing because they hold their office hours at Caribou.

“It would be nice to have the UniversiUniversity subsidize the building because so many students and professors use it,” he said.

“This is like the end of Ann Arbor. Caribou was my favorite place to study,” said Anna Skinner, an LSA freshman and employee at Einstein Bros. Bagels, located next to Caribou.

Skinner said business at Einstein would probably not increase following Caribou”s closing because the two shops attract different kinds of customers.

“I come here every day between classes and I”m really mad that they are closing. Other places don”t have coffee that”s nearly as good,” LSA sophomore Jynifer Warren said.

“Our profits this year are up from last year, even with Starbucks moving in down the street. Rent is the only reason we”re closing, and it is not a very good one,” Pyne said.

There are no concrete plans to reopen at another site, Pyne said.

“Even if they rented out a new place it wouldn”t open for a year. The owners would be looking at a lower-cost area to rent out, such as somewhere near I-94, and that wouldn”t be accessible to students,” Pyne said.

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