Irvine, Calif., March 27 - 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. 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."