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Diedrich Coffee exits retail, focuses on single-serve market sells Gloria Jeans U.S. franchises |
06.05.2009
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By Anna Wolfe
IRVINE, Calif.-Marking its exit from the coffee and tea retail, Diedrich Coffee Inc., based here, will wrap up the $3.1 million sale of its U.S. franchise locations to Praise International North American Inc. on June 12.
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Back in March, Diedrich Coffee announced a definitive agreement with Praise International North America, an affiliate of Gloria Jean's Coffees International, for the sale of the Gloria Jean's Coffees domestic franchise operations. Gloria Jean's Coffees International currently holds the rights to the Gloria Jean's Coffees brand outside of the United States and Puerto Rico.
The sale of the Gloria Jean's Coffees domestic franchise operations includes 102 franchise and company-operated locations in 24 states. The purchase price includes a five-year agreement for roasting services provided by Diedrich Coffee, and Diedrich Coffee keeps the rights to the Gloria Jean's Coffee brand names for wholesale and the Keurig K-Cup(r) product lines.
Diedrich Coffee's exit from retail has been in the works for years. Back in 2006, Diedrich Coffee sold most of its company-owned coffee shops to its top competitor Starbucks. "It's hard to compete in market coming in behind Starbucks," said Cody Slach, with Diedrich Coffee's investor relations firm Liolios Group Inc.
In 2007 Diedrich Coffee decided to turn its focus to the single-serve market. Today, it is one of four manufacturers of Keurig K-Cups. And 95 percent of Diedrich Coffee's business is in the K-Cup market, he said.
"Diedrich Coffee has seen a lot of success in piggybacking on the strengths of the single-serve market. They picked the right horse, in the right race at the right time," said Slach.
Diedrich Coffee specializes in sourcing, roasting and selling the world's highest quality coffees. The company's three brands are Diedrich Coffee, Gloria Jean's Coffees and Coffee People.
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