From the entire Diedrich Coffee family...
Wed Sep 20th 2006, 10:14pm
Today while buying a cup of coffee and a blended mocha at my local Trabuco Hills Diedrich Coffee House I noticed a strange flyer next to the cash register. "Yes, you can still get Diedrich Coffee" it was entitled. Huh?
Q: Why are you closing your Diedrich Coffee coffeehouses?

A: We have decided as a company to focus on our core strength, the premium roasting of specialty coffee and fulfilling our promise to sell great coffee to the widest possible market through our wholesale channel. ...

Q: What will happen to my local Diedrich coffeehouse? Is it closing? When?

A: We've reached an agreement to sell most of our retail locations... This means that most Diedrich coffeehouses will close for a brief period of time and re-open as Starbucks.
What the heck? And then it all came crashing down on me. My favorite coffee establishment, one I'd frequented and considered myself a fan of for 18 years--in fact, the place I'd started drinking coffee--had fallen victim to the great Starbucks juggernaut and was closing its doors. And then... a brief moment of guilt set in. So many times recently, while suffering agonizingly long wait times for my drinks, I'd wished to myself that the high school kids and freshly pierced barista trainees of the week at Diedrich's could crank out the blended mochas as fast as the expedient, no-nonsense, and even downright unfriendly Starbucks' worker bees could. And then a voice in my head chimed in with the old adage: careful what you wish for.

The flyer went on to say, "From the entire Diedrich Coffee family, we have enjoyed serving you over the years and look forward to seeing you online." Great.

A little more information is available in this SEC filing.

Update 9:19pm: My wife informs me that Starbucks--without an apostrophe--is the correct way to refer to the dominating coffee chain, by their insistence. I've updated the above article. Argh, how annoying. Another reason to boycott them.

Visitor comments
On Thu Sep 21st 2006, 12:22pm, srehorn posted:
Mr Kehlet, I feel your pain. I too have always loved Diedrich's and I was really saddened to hear they were selling the retail locations to Starbucks. The press release I saw about the transaction really minimized this aspect-- the prominent feature of the story was how they were going to focus on the wholesale part of the business, and then about 6 paragraphs into it, there was an aside like "and oh yeah, we'll sell our locations to starbucks".

But starbucks must win again (alas!): boycotting is rough because I don't much like Coffee Bean for brewed coffee (although their version Chai is the best), and I don't like Daily Grind either. People in the restaurant biz have observed that Starbucks has already won the location race; certainly for me location counts more than half the time.

I have long been complaining about Diedrich's service including several emails to their management as well as frequent comments to local managers. It's clear why they are selling that part of the business-- they are no good at it! Starbucks is like McDonalds in so many ways: it may not be the best in town, but you have a very high probability of getting a predictable product. The ability to apply the right practices in a Big Corporate system to create that predictability/repeatability is what makes it possible for them to have so many stores that actually make money. DDRX hasn't been able to make money on their standalone stores, maybe ever.

There is a Peet's in Aliso Viejo somewhere, so that may be the better option. I'll see you there...

On Fri Sep 22nd 2006, 9:11am, Visitor posted:
I think this is the place I visited with you 2 different times. Once was a trip I made in high-school. The other was sometime during college.

Sorry to hear they're going out of business. It's been so long I honestly don't remember how good the drinks were, but it's always a bummer to lose a local business.

The only other coffee place I remember from my trip out there was Cafe Auto Spa. That place always made me laugh. I remember coming back home and thinking how 'California' that place was. ;)

On Fri Sep 22nd 2006, 9:12am, Clay posted:
Drat, above comment was mine.

On Wed Oct 4th 2006, 12:27pm, Visitor posted:
There is a great site to discuss this train wreck with Diedrich Coffee here:

Diedrich cannot open anymore branded stores for a period of three years under the terms of the sale. They plan to franchise the concept after that time has expired, but right now the focus will be on Gloria Jean's.

I understand your issues about service, and it really disturbs me. Gloria Jean's was one of their big distractions, and it was losing money. Maybe if they can get that house in order they can someday run a profitable Diedrich franchise.

Bring your comments! All views are welcome!

On Thu Oct 5th 2006, 3:35pm, Steve Kehlet posted:
Scott: I agree, it'll be impossible to boycott Starbucks, there are just too many, and in fact there's one all-too-conveniently located near where I work. I agree, I am on the lookout for alternatives. The Kean I found in Newport is great but too far for frequent visits, I'll see you at Peet's!

Clay: yeah, that's the place! It is an end to an era for sure. I always feel very comfortable at any Diedrich's I visit, and I've never felt that way at any Starbucks--I'd feel too awkward to even sit down. Not sure why, it's just a whole different culture or something. And speaking of culture, haha, yes, the Cafe Auto Spa is definitely a California trademark.

Visitor: thanks for the pointer to the yahoo group. I would definitely urge all now-disenfranchised Diedrich's fans to visit the Kean's in Newport Beach. Uhh, if they're in the area, that is.