Mall of America sues Sugar Factory for more than $2M in unpaid rent

The owner of Mall of America is suing one of its restaurants, Sugar Factory, saying it owes it more than $2 million in back rent and related charges.

An eviction hearing is scheduled for April 9.

The suit, which was filed last week in Hennepin County District Court, names both the Sugar Factory and Lloyd Sugarman, a restaurant entrepreneur and franchise operator from Rhode Island who also co-founded Johnny Rockets.

Reached by phone on Thursday, Sugarman said there are some “rent discrepancies” with the mall, but declined to elaborate.

“I believe we’re going to work this out,” he said.

He added that he is a “great fan” of Mall of America and has been a tenant there since it opened in 1992 with a Johnny Rockets location he still operates. He said he has always had a “nice relationship” with the mall.

The Sugar Factory sells burgers, sandwiches and other entrees, decadent sweets such as milkshakes and sundaes and “candy goblets” or cocktails.

Sugarman initially opened a different restaurant, the Pizza Studio, in the Bloomington megamall in 2013, according to MOA.

“The Pizza Studio struggled, so Sugarman decided to convert the restaurant into a new concept — a Sugar Factory restaurant,” the lawsuit said.

The lease was amended accordingly in 2018, including that the Sugar Factory would be held liable for previous rent owed that had accrued when it was the Pizza Studio, the mall said. At that time, it had past due rent of about $142,000.

“Sugarman’s new concept, Sugar Factory, fared no better than the Pizza Studio,” the suit says. “Sugar Factory and Sugarman repeatedly defaulted on their rent obligations, and each time, [the mall’s owner] attempted to work with Sugarman, giving him repeated opportunities to cure the default.”

By November 2019, the past due balance had grown to more than $567,000. Sugarman and the Sugar Factory entered into several additional agreements and amendments with the mall.

By January 2023, they owed the mall more than $1.4 million, according to the suit. The mall “gave Sugar Factory one more chance, but failure to pay this time would result in the acceleration of all amounts due from the inception of the lease.”

The suit notes that the Sugar Factory continues to operate at the mall, earning revenue from sales without paying the mall.

Asked how the restaurant is doing, Sugarman said: “It’s coming back. It’s kind of complicated. That’s all I want to say for now.”

In the meantime, Sugarman has continued to open more restaurants around the U.S., including a Sugar Factory American Brasserie, which recently opened in Boston’s Faneuil Hall Marketplace.

Sugarman operates several Sugar Factory restaurants through licensing arrangements.

The Mall of America has sued several tenants in the past few years for unpaid rent as some started missing payments during the pandemic.

Last year, it sued a Dairy Queen franchisee saying it owed it $75,000 in back rent. That Dairy Queen location at the mall ended up closing.