A subsidiary of The Cheesecake Factory has been hit with a $2.7M lawsuit over the sudden closure of a large restaurant in the Brickworks redevelopment.

Culinary Dropout closed in the Brickworks development in West Midtown Atlanta in January, less than two years after it opened.

Asana Partners filed a lawsuit in Fulton County Superior Court on April 14 against an affiliate of Phoenix-based Fox Restaurant Concepts after it shuttered the Culinary Dropout eatery in January. The suit says Asana is owed millions in unpaid rent and build-out costs.

The lawsuit names CDO Holding Co. LLC, which is registered to Fox Restaurant Concepts, as a defendant, claiming it guaranteed the 11-year lease for nearly 12K SF at 1000 Marietta St. FRC founder Sam Fox signed the guarantee for the lease, which was filed as an exhibit in the lawsuit.

Culinary Dropout signed the lease in October 2021, opened in fall 2023 and closed Jan. 15, one of nearly a dozen restaurants to fold in West Midtown in recent months.

Asana, which is being represented by Arnall Golden Gregory attorneys Knox Withers and Kelsey O’Neill, claims FRC owes nearly $2.7M, including nearly $1.9M for unamortized tenant improvement allowances and $463K in leasing commissions. Culinary Dropout owes $50K a month for the lease, which will continue to accrue and includes escalation clauses, the lawsuit says.

“Tenant breached the lease by ceasing its business operations in the premises and by failing to pay certain monetary charges when they became due that are tenant’s obligations under the lease,” the suit says. 

FRC hadn’t filed an answer to the lawsuit as of press time, nor did it or The Cheesecake Factory return messages seeking comment. Asana Managing Partner Terry Brown declined to comment.

In addition to Culinary Dropout, Ford Fry’s Superica, Postino WineCafe, West Egg Cafe, Humble Pie and Snooze A.M. Eatery have all called it quits since the start of 2024 in what has been one of the hottest foodie destinations in Metro Atlanta. 

Expensive parking, high rents and fewer-than-expected office workers have all contributed to the struggles for eateries in the area, Bisnow previously reported.

“Rents are too high, the population is too low, and parking is tough. I think a lot of landlords are signing leases for the sake of signing leases,” Peter Kruskamp, president of retail brokerage The Shumacher Group, previously told Bisnow.

Charlotte-based Asana, in a Jan. 13 letter sent from AGG to Culinary Dropout and filed with the suit, demanded that the restaurant operator send it recent financial statements. It was unclear if FRC complied.

FRC, which also owns restaurant chains Flower Child, Zinburger and The Arrogant Butcher, should be required to pay the difference in rents if Asana leases its space to a new tenant for less than what Culinary Dropout was paying, the suit says.

FRC continues to operate a Culinary Dropout in Dunwoody.

The Cheesecake Factory purchased FRC in 2019 for more than $350M. The chain acts as Cheesecake Factory’s “incubation engine, innovating new food, dining and hospitality experiences to create fresh, exciting concepts,” the company said on its website. In 2024, FRC reported full-year sales of $6.4M per location, or around $1,100 per SF.

The retail building at 1065 Wisconsin Ave. NW in Georgetown

A retailer that opened last year in Georgetown is looking to use the coronavirus pandemic as a reason to terminate its lease.

The Candle Bar filed a lawsuit Aug. 14 against an affiliate of Bethesda-based Cascade Realty Partners, its landlord at 1065 Wisconsin Ave. NW, after notifying the landlord it was terminating the lease. 

The lawsuit, filed in the U.S. District Court for the District of Columbia, asks the court to declare that the retailer is discharged from its obligations under the lease. It says it has the right to terminate the lease because its performance as a tenant has been made impossible by the coronavirus and the ensuing government regulations on nonessential businesses. 

The Nashville-based retailer signed a 2,111 SF lease on the second floor of the building in January 2019. The building, sitting near the prime intersection of Wisconsin and M streets NW, is also occupied by apparel retailer South Moon Under.

The Cascade Realty Partners affiliate, 1065 Wisc LLC, acquired the building in 2016 for $7.3M, property records show. Cascade didn’t respond to requests for comment on the lawsuit. 

Before opening in D.C., The Candle Bar operated two locations in Nashville and one in Charlotte. It also signed a lease last year to open in Reston Town Center. In addition to selling candles, the retailer hosts candle-making classes.

The retailer was unable to operate its D.C. location after the mayor ordered the closure of nonessential businesses March 24, and it was also unable to open when Phase 1 began May 29, according to the lawsuit. The second phase of reopening June 11 allowed The Candle Bar to reopen, but it says the restriction to 50% capacity has made its operations “impracticable.”

The Candle Bar reached an agreement with its landlord June 1 that included a temporary rent abatement through October, according to the lawsuit. But it says the pandemic and related restrictions still made its ability to operate its business impossible. 

“Throughout the shutdown, and subsequently limited reopening, it has been impossible and commercially impracticable for TCB to engage in its retail business, including its custom-making candle classes,” the retailer’s attorney, Dykema Gossett Senior Counsel Charles Chotvacs, wrote in the lawsuit.

The tenant notified the landlord Aug. 11 it was terminating the lease as of Aug. 14, and the landlord maintained that The Candle Bar wasn’t discharged from its lease obligations. The lawsuit also includes Designworks Investments as a plaintiff, as the investor is the guarantor of The Candle Bar’s performance under the lease. It is asking the court to discharge it from that guarantee. 

This is not the first case of a retail tenant citing the pandemic as a reason to terminate its lease. Multiple retailers in New York City, including Victoria’s Secret, have sought to get out of lease agreements for the same reason. But a New York judge ruled one Manhattan tenant couldn’t legally avoid its obligations, and one attorney told Bisnow she saw the strategy as a “Hail Mary.”