Rouse deal at food court in mall leaves bad taste

November 03, 1998|By MICHAEL OLESKER

AT THE OWINGS Mills Mall, Steve Bond sits idly in front of his Ocean City Fries booth, with time to kill. Susan Leeming, manager of Burke Bagels next door to Bond, same thing: No customers around, so there's plenty of time to kill. The question is: Who, exactly, should they kill?

The two of them gaze murderously across the mall's food court, to a line that never seems to end at the new McDonald's carry-out. Once, such lines belonged to Ocean City Fries and Burke's Bagels, but no longer, not since the opening of McDonald's at the mall last June.

But their real killer instincts are elsewhere, personified by a $15 million lawsuit they've filed. It's against Rouse Co., operator of Owings Mills Mall, which Bond and Leeming say defrauded them into renewing their leases while secretly working out a deal to bring in McDonald's with its cheaper food, its faster service and its infinitely more aggressive advertising and marketing.

"They sell price and speed," says Bond, whose Ocean City Fries also specializes in a variety of custom-made burgers and other foods. "You want four burgers or 40, they've got 'em right away. We're a $5 meal. And it takes us a little longer. It's better food, but the lady walking past with her 8-year old kid, who's impatient, she's not thinking about better, she's thinking she's in a hurry to please her kid. We can't compete with that, and Rouse knew it when they brought 'em in behind our backs."

"There are four other McDonald's within six miles of this mall," says Leeming, whose mother, Lois Burke, owns Burke Bagels and filed suit with Bond. They serve a variety of sandwiches and drinks. "Why do they need another McDonald's here when they know what it's doing to their established food people?"

What it's doing, both Bond and Leeming say, is wiping them out. And, says their lawsuit, they're being wiped out because Rouse officials explicitly assured them there was no McDonald's on the way.

"Isn't that something?" says Gerson Mehlman, the plaintiffs' attorney. "Here's the Rouse Co., known for its humanistic approach to business, and they bring in a McDonald's knowing their existing tenants can't compete with a discounter.

"Rouse used to worry about the little tenant. Now, the attitude is: If you can survive, you survive. If you can't, too bad. What's worse, they knew this was coming, and they didn't tell the truth, and now we have a disaster on our hands."

Both Bond and Leeming, longtime tenants at the mall, say there were frequent rumors of a McDonald's deal when they were scheduled to sign new leases. They insist they asked Rouse officials if the rumors were true.

"Rumors were flying," Bond says. "And each and every time I asked, they denied they were talking to McDonald's and denied they were coming."

"We heard the same rumors," says Leeming. "Everybody did. So my mom called the mall manager, John Johnson, who denied it adamantly. Because we weren't gonna stay if McDonald's moved in. But he denied it and denied it, and we took him at his word. And we sign our new lease, and McDonald's moves in."

Yesterday, Johnson, the Rouse Co.'s vice president of retail operations, said, "It's very sad," but then referred all further questions to corporate attorney Bernard Justice. Justice did not return several phone calls. Rouse corporate spokesman David Tripp yesterday declared, "We don't discuss such matters in public."

Meanwhile, Bond and Leeming says the arrival of McDonald's has ruined their businesses.

"This is a mall where they're bringing in all these new businesses, Lord & Taylor, Sears, 18 movie houses," says Bond, a tenant here for 10 years. "There's tremendous growth. Two years ago, they told us all to remodel, so we did. I spent $50,000. Business was great. Now, with these new stores, business should be up another 20 percent. Instead, it's down more than 30 percent.

"In the first 90 days after McDonald's opened, we were off $20,000. I had to get a second job, and I still can't pay my rent here. I haven't paid it in three months, and I'm working 75 hours week between my two jobs. I had to put my house up for sale and take my daughter out of private school."

"In 12 years here," says Leeming, "we never had a problem. They wanted us to remodel, we remodeled. We spent $80,000 on it. My mom took out a second mortgage on her house to do it.

"We said, 'Are you sure McDonald's isn't moving in?' They said, 'No, they're not. No McDonald's, no national food people.' They knew they were lying to us when they said it. A month after we renewed our lease, they told us, 'By the way, we're negotiating with McDonald's.' A few weeks later, they confirmed that McDonald's was coming. And now they expect us to believe they weren't dealing all along."

"One good thing," says attorney Mehlman. "Even though neither of my clients has been able to pay their rent in three months, Rouse hasn't closed them down. I think it's because they don't want any empty spaces in the mall. Which is probably why they didn't tell them the truth in the first place."

Pub Date: 11/03/98

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