Diedrich Coffee Agrees to Sell U.S. Gloria Jean's Coffees Franchisee Operations
March 27 2009 - 9:28PM
PR Newswire (US)
IRVINE, Calif., March 27 /PRNewswire-FirstCall/ -- As part of its
strategy to capitalize on the growth of the wholesale specialty
coffee market and its strength as a premier roaster and distributor
of the world's finest coffees, Diedrich Coffee, Inc. (NASDAQ:DDRX)
today announced that it has signed a definitive agreement with
Praise International North America, Inc., an affiliate of Gloria
Jean's Coffees International, for the sale of its Gloria Jean's
Coffees domestic franchise operations. Gloria Jean's Coffees
International holds the rights to the Gloria Jean's Coffees brand
for all international countries excluding the U.S. and Puerto Rico.
The sale of the Gloria Jean's Coffees domestic franchise operations
to Praise International North America includes a total of 102
franchise and company-operated locations in 24 states. The purchase
price is approximately $3.1 million and the transaction is
anticipated to close within 60 days. Terms of the sale include a
five-year roasting agreement and rights to use the Gloria Jean's
Coffee brand names in perpetuity in the Company's various wholesale
business channels and Keurig K-cup product lines. "In late 2006,
Diedrich Coffee announced the sale of certain company-operated
Diedrich Coffee and Coffee People retail stores as part of our plan
to expand our wholesale business and focus the retail side of our
business on our Gloria Jean's franchise operations. With the
transaction announced today, we will take that strategy one step
further and focus primarily on the sale of specialty coffees in our
wholesale business channels," said J. Russell Phillips, president
and chief executive officer of the Company. "With demands for
specialty coffees for restaurants, offices and specialty retail
stores continuing to trend up, Diedrich Coffee has experienced
significant growth in its wholesale business especially in the sale
of Keurig K-cups." Mr. Phillips said the Company believes that the
Gloria Jean's franchisees will embrace the new opportunities
available to them as a result of the sale to Praise International
North America as part of the Gloria Jean's International franchise
system. Following the 2005 sale of the international franchising
operations to Gloria Jean's Coffees International, they have grown
considerably and have proven to be a solid franchisor in the retail
specialty coffee segment. "In looking at Gloria Jean's
International's results as a franchisor, their commitment to each
franchisee and the Gloria Jean's brand, Praise International North
America was the obvious successor and is in the best position to
serve our Gloria Jean's franchise community," Mr. Phillips
commented. "Our franchisees will benefit from the vast support,
experience and resources Praise International North America's
management brings to their businesses. In addition, with more than
1000 locations across 35 countries worldwide, Gloria Jean's Coffees
International is one of the largest, most experienced franchise
coffee companies in the world." Nabi Saleh, a principal in Praise
International North America and executive chairman of Gloria Jean's
Coffees International, said, "The acquisition of the franchising
rights in the U.S. and the U.S. retail operations of Gloria Jean's
Coffees is the next step in the expansion of the Gloria Jean's
Coffees brand and franchise business. Since 1998, we have seen
exponential growth in our retail business in Australia and other
countries. We see a great potential in the North American market."
About Praise International North America, Inc. Praise International
North America, Inc. has been established to be the U.S. master
franchisee of Gloria Jean's Coffees International, the Australian
operator of more than 1000 coffee houses worldwide. With locations
in 35 countries, Gloria Jean's Coffees is a leading specialty
coffee retailer and one of the fastest growing franchise
organizations in the world. Gloria Jean's Coffees provides
consumers with a large range of specialty coffee including estate,
origins and delicious flavored coffees, and a complete menu of
espresso-based beverages such as lattes, cappuccinos, chillers,
cocoas and gourmet teas through its retail stores. For more
information about Gloria Jean's Coffees International, call +61 2
9894 2177, or visit the Gloria Jean's Coffees International
websites at http://www.gloriajeanscoffees.com.au/. About Diedrich
Coffee With headquarters in Irvine, California, Diedrich Coffee
specializes in sourcing, roasting and selling the world's highest
quality coffees. The Company roasts and packages coffees under
three brands - Diedrich Coffee, Coffee People and Gloria Jean's
Coffees. Diedrich Coffee sells its coffees through wholesale
accounts including office coffee service distributors, restaurants
and specialty retailers, and via the Company's web stores. For more
information about Diedrich Coffee, call 800/354-5282, or visit the
Company's websites at http://www.diedrich.com/,
http://www.coffeepeople.com/ or http://www.coffeeteastore.com/.
Forward Looking Statements Statements in this news release that
relate to future plans, financial results or projections, events or
performance are forward-looking statements within the meaning of
Section 27A of the Securities Act of 1933, as amended, and Section
21E of the Securities Exchange Act of 1934, as amended, and fall
under the safe harbor. Actual results and financial position could
differ materially from those anticipated in the forward-looking
statements as a result of a number of factors, including, but not
limited to, the financial and operating performance of the
Company's wholesale operations, the Company's ability to maintain
profitability over time, the successful execution of the Company's
growth strategies, franchisee's adherence to the Company's
practices, policies and procedures, the impact of competition, the
availability of working capital, and other risks and uncertainties
described in detail under "Risk Factors and Trends Affecting
Diedrich Coffee and its Business" in the Company's annual report on
Form 10-K for the fiscal year ended June 25, 2008. Except where
required by law, the Company does not undertake an obligation to
revise or update any forward-looking statements, whether as a
result of new information, future events or changed circumstances.
Information Contact: J. Russell Phillips President & Chief
Executive Officer (949) 260-1600 Sean McCarthy Chief Financial
Officer (949) 260-6734 DATASOURCE: Diedrich Coffee, Inc. CONTACT:
J. Russell Phillips, President & Chief Executive Officer,
+1-949-260-1600, or Sean McCarthy, Chief Financial Officer,
+1-949-260-6734, both for Diedrich Coffee, Inc. Web Site:
http://www.diedrich.com/
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