Irvine-based Diedrich Coffee Inc. said Thursday it plans to close coffee houses run by the company and sell them to Starbucks Corp.
The company is selling off its Diedrich Coffee and Coffee People stores for $13.5 million. Franchisees are expected to keep running coffee houses under the brands.
Diedrich plans to focus on selling coffee to restaurants, specialty stores and other customers. The company’s wholesale businesses accounted for 78% of coffee sold by Diedrich in the June quarter.
“The changes that we are announcing today allow us to utilize our core strength as the premier roaster of specialty coffee,” said Steve Coffey, chief executive of Diedrich.
The shift closes a chapter for Diedrich, which tried to take on Starbucks in the 1990s and at one time was the No. 2 coffeehouse operator.
In recent years, Diedrich has seen lackluster performance, restatements of financial results and restructuring.
In 2004, Diedrich sold the international operation of its Gloria Jean’s chain to Australia’s Jireh International Pty. Ltd. for $16 million and up to $7.3 million more during the next six years.
The store sale to Starbucks is set to close in the next few months.
The deal provided “the best solution for the company and its landlords,” Diedrich said in a statement.
“Most importantly it allowed the company to provide its employees with the smoothest transition possible,” the company said. “All non-management employees in good standing will be offered positions with Starbucks and managers will be provided the opportunity to interview for positions.”
Separately, Diedrich said director Peter Churm is retiring from its board and being replaced by Greg Palmer, who ran Aliso Viejo’s RemedyTemp Inc. before its sale this year to Select Personnel Services of Santa Barbara.
