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Oscar Farinetti, Eataly’s founder, co-owner and chairman, said a location in central Toronto had been found and that the Westons would have 52 per cent of the real estate and retail project, with Eataly taking the rest.MASSIMO PINCA/The Associated Press

Eataly, the upscale Italian food emporium that the Weston family wants to bring to Canada, has hit a stumbling block in its plan to launch its first megastore here in 2017.

Eataly is looking at rolling out its first location in the Manulife Centre on Toronto's Bloor Street West adjacent to the chichi Yorkville area, across from the Westons' luxury Holt Renfrew & Co. store, sources have said.

However, Bloor Street Diner Ltd., which operates in the Manulife Centre, last month won a court injunction that prohibits the centre from going ahead with major renovations. The revamp would make way for Eataly, sources said.

In granting the permanent injunction to the diner, Justice Elizabeth Stewart of the Ontario Superior Court said Manulife Centre's current construction plans violate the restaurant's lease provisions and "amount to trespass on the leased premises."

"It is always open to the parties to collaborate as they have done in the past and to negotiate a plan that will achieve their mutual objectives," Justice Stewart said.

Eataly, a high-profile international eatery and foodie shopping destination, has scouted a number of sites in Yorkville but is keen on the Manulife Centre location, industry sources have said. The injunction now throws a wrench in those plans and could force Eataly to look at other alternatives and potentially delay its arrival here.

Under Eataly's agreement with the Weston family, the Westons would have 52 per cent of the real estate and retail project, with Eataly taking the rest. The Westons are a major shareholder of grocer Loblaw Cos. Ltd., which has a supermarket in the Manulife Centre.

The centre, which is owned by Manufacturers Life Insurance Co., is in talks with the diner to try to find a solution, sources said.

Officials at Eataly could not be reached while those at the Weston family's holding company and George Weston Ltd., parent of Loblaw, declined to comment, as did lawyers for Manufacturers Life and Bloor Street Diner.

Susan McGibbon, president of consultancy Retail Lab who advises merchants in the Bloor/Yorkville area, said the Manulife Centre is the best location for Eataly because of parking availability, access to public transit and being part of Bloor Street's "Mink Mile" shopping district.

She said the renovated centre would have enough space to accommodate Eataly, which is much larger than a standard restaurant.

Two other options for Eataly would be 50 Bloor St. W., where the flagship Holt Renfrew store is located and which is to be redeveloped, or Cumberland Terrace, which is also being redeveloped, Ms. McGibbon said. "Neither of these are confirmed or have final plans and as such that would result in a much delayed entry of Eataly into Canada."

Fred Waks, chief executive officer of Trinity Development Group Inc., said the Yorkville area needs a food destination such as Eataly and the Manulife Centre is the best site for it.

"The Bloor Street Diner feels threatened by an international player like Eataly, and rightfully so," Mr. Waks said. "They're seeking what recourse they have under their lease to hopefully stop them from being a part of the Manulife Centre."

Eataly tends to attract big crowds with a wide range of high-end fresh and prepared fare and multiple restaurant concepts – often with celebrity chefs – all under the same roof.

Justice Stewart said Manulife's renovation plans would hurt the Bloor Street Diner, including its business on its outdoor patio.

"In addition, the noise and dust and disruption emanating from a major construction project such as this will inevitably drive away patrons of the Diner," the judge said. "Given the fickleness of the dining public and the competitiveness of the restaurant industry, those patrons may never return."

Justice Stewart said Manulife could carry out a renovation project as long as it doesn't deprive the diner of the "quiet enjoyment of the leased premises and is in conformity with the provisions … of the lease. Its present plan represents substantial interference that is of a grave and permanent nature … and therefore would be a breach of the lease."

Manulife's plans include almost 52,000 square feet of new retail space and a two-storey glass curtain façade spanning three sides of the centre, the ruling says. Manulife has already spent $3.2-million over several years on the project.

"I am satisfied that the current design's glass façade will have a permanent negative impact on the Diner's patio ambience and, hence, business, as well as its easy visibility from Bloor Street," the judge said. "The prolonged intrusion and trespass into the Diner's space would dramatically reduce its business, as would the unpleasant noise and dust of a lengthy construction project."

The portion of the centre's construction that would affect the diner is scheduled to take about eight months, between October, 2016, and May, 2017, the ruling says.

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