IRVINE Calif. Diedrich Coffee Inc. has agreed to sell the domestic franchise operations for the Gloria Jean’s Coffees brand for $3.1 million to Praise International North America Inc., the U.S. master franchisee for the brand.
The company said Monday that the transaction is expected to close within 60 days. It is part of an ongoing strategy by Diedrich Coffee to focus exclusively on the expansion of its specialty coffee wholesale business, officials with the Irvine, Calif.-based coffee roasting company said.
“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, Diedrich president and chief executive. “With demands for specialty coffees for restaurants, office 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.”
For Diedrich’s second quarter ended Dec. 10, the company reported a nearly 32 percent increase in wholesale revenue to $3.3 million.
The Gloria Jean’s sale includes 102 franchised and corporate locations in 24 states, as well as a five-year roasting agreement and rights to use the Gloria Jean’s Coffee brand names and the single-service “Keurig K-cup” product lines.
Diedrich acquired the Gloria Jean’s brand in 1999 with the purchase of parent company Coffee People, operator and franchisor of a then 315-unit chain that also included the Coffee People and Coffee Plantation brands. In 2005, however, Diedrich officials decided to phase out its café operations, selling the international franchise rights for the Gloria Jean’s brand to a former master franchisee in Australia, which today is Gloria Jean’s International. That operation totals more than 1,000 franchise locations in 35 countries.
In 2007, Diedrich sold 39 of its corporate coffeehouses under the Diedrich Coffee and Coffee People brand names to Starbucks Corp. and other buyers. As of December 2008, the company still owned 10 cafes.
Contact Lisa Jennings at [email protected].