Shari’s faces legal battles in WA, OR and Idaho as unpaid taxes pile up

By Debbie Cockrell The Idaho Statesman Once known for bottomless cups of coffee and a vast array of pies, Shari’s Cafe & Pies is becoming synonymous with restaurant closures, unpaid taxes and legal battles in Idaho, Oregon and Washington. The Idaho State Tax Commission has six active liens against Shari’s Management Corp., the Beaverton, Oregon, company that runs the restaurants. The liens are for unpaid state taxes. Meanwhile, an analysis of court filings in Washington by The News Tribune in Tacoma shows debt-collection cases involving either Shari’s Management Corp. or Shari’s Non Oregon Holding LLC filed in at least 11 counties going back to 2020. Since January, more than 10 debt collection and/or unlawful detainers (commercial eviction cases) have been filed in Washington, according to a review of online Superior Court case search portals. And three tax warrants from the Washington Department of Revenue show Shari’s owing nearly $1.3 million in back taxes to the state. In Pierce County, four restaurants face lawsuits over unpaid rent at locations in Tacoma and Puyallup going back to early in the pandemic. In Kitsap County, the chain faces eviction in Silverdale over unpaid rent. Attempts by The News Tribune 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 stated to “please expect a delay” in receiving a response. The offices for Shari’s Management Corp. in Beaverton are listed as “temporarily closed” in its business listing on Google. The chain has closed multiple restaurants in other states, too.

What’s open, what’s closed in Idaho

Shari’s has four restaurants left in Idaho, including three in the Treasure Valley and one in Twin Falls. It has closed at least three this year, including one at 8521 W. Franklin Road in Boise in April, one in Lewiston in May and one in Idaho Falls in July. All four were serving customers late Wednesday afternoon, and staffers told The Idaho Statesman that they’d heard nothing to suggest that the restaurants faced closure soon. 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. “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,” Allen told The News Tribune, 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 such as 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, Oregon, 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, 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. Borgese has noted in court filings the effect the pandemic had on its sites, leading to the closures of many Shari’s locations. 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.”

‘Change is tough’

At this point, Allen said he 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 Tacoma’s 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.” The Idaho liens were reported by KGW-TV in Portland, which said they represented $220,000 in unpaid taxes.

Shari’s faces legal battles in WA, OR and Idaho as unpaid taxes pile up