Diedrich Coffee CEO Steve Coffey Resigns

Russ Phillips Appointed as New CEO

IRVINE, Calif., Feb. 7 /PRNewswire-FirstCall/ -- Diedrich Coffee, Inc.
(Nasdaq: DDRX) today announced that Stephen V. Coffey has tendered his
resignation from his position as Chief Executive Officer. J. Russell Phillips
has been appointed by the Board of Directors to assume the Chief Executive
Officer position.
"On behalf of the entire Board, I would like to thank Steve Coffey for his
strong leadership and guidance over the last two years. I believe he has
successfully changed the direction of the Company and put it on track to
achieve profitability," said Paul Heeschen, Diedrich Coffee's Chairman. "Steve
was the driving force of both the strategy and execution in the shift of the
Company's focus from our unprofitable retail coffeehouse operations to that of
being a wholesale roaster of branded specialty coffees. Steve has successfully
completed the work that the Board had asked of him, transforming the Company
and positioning it for growth."
"It has been my pleasure to lead Diedrich Coffee through its
restructuring, putting it on a path to profitability and growth," said Mr.
Coffey. "With the successful turnaround and repositioning of the Company well
underway, the time is right for me to turn over the reins and pursue various
other business opportunities. I have known and worked with Russ Phillips for
many years. Having worked with the board to bring him into the Company, I am
confident he will grow Diedrich from the strong foundation that we have built
over the past two years," said Coffey.
Mr. Coffey has been CEO of Diedrich Coffee since December 13, 2005. During
his tenure, he successfully transformed the Company from an unprofitable
operator of local coffeehouses to a nationally known roaster and distributor
of branded specialty coffees.
Mr. Heeschen continued, "Under Steve's leadership and commitment to
position the Company for growth and profitability, the Company has increased
investment in our roasting plant to provide the cost effective manufacturing
capability required to allow Diedrich to be a strong competitor in the
specialty coffee business; dramatically cut our G&A costs; upgraded our
information systems; and increased our available cash while expanding our
sales channels and fostering product development."
"Our Gloria Jean's franchising system has also been strengthened by
implementing a dedicated management staff; enhancing concept design and
marketing while adding structure and discipline to lease management,
development and financial controls."
"We thank Steve for his many contributions in successfully bringing
Diedrich Coffee through a very difficult period and wish him the best in his
future endeavors," Mr. Heeschen said.
"I am very pleased that Russ Phillips has agreed to become Diedrich
Coffee's CEO," Heeschen continued. "He brings a wealth of operational and
management experience to the Company and is well suited to grow the Company
from its current position."
Mr. Phillips has served on the Company's Board of Directors since April
2007 and will remain as a member of the Board. Since 2004, Mr. Phillips has
served as Managing Principal of Transom Partners, an executive consultancy
group that facilitates and develops new strategies with CEOs and executive
teams. Prior to that, he served for ten years as the Chief Executive Officer
and President of SHURflo, a manufacturing company located in Cypress,
California.
"The Company has made the right moves under Steve's direction," said Mr.
Phillips. "I am excited about the opportunity to serve as CEO of Diedrich
Coffee, the Company is in a great position to service the needs of a changing
premium coffee market," said Phillips.
About Diedrich Coffee
With headquarters in Irvine, California, 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. Diedrich Coffee sells its coffees through wholesale accounts including
office coffee service distributors, restaurants and specialty retailers, and
via the Company's web stores. As of January 31, 2008, the Company also has 136
retail outlets, the majority of which are franchised, located in 30 states.
For more information about Diedrich Coffee, call 800/354-5282, or visit the
Company's web sites at www.diedrich.com or www.gloriajeans.com.
Forward Looking Statements
Statements in this news release that relate to future plans, financial
results or projections, events or performance are forward-looking statements
within the meaning of Section 27A of the Securities Act of 1933, as amended,
and Section 21E of the Securities Exchange Act of 1934, as amended, and fall
under the safe harbor. Actual results and financial position could differ
materially from those anticipated in the forward-looking statements as a
result of a number of factors, including, but not limited to, the financial
and operating performance of the Company's retail operations, the Company's
ability to maintain profitability over time, the successful execution of the
Company's growth strategies, franchisee's adherence to the Company's
practices, policies and procedures, the impact of competition, the
availability of working capital, and other risks and uncertainties described
in detail under "Risk Factors and Trends Affecting Diedrich Coffee and its
Business" in the Company's annual report on Form 10-K for the fiscal year
ended June 27, 2007 and subsequently filed quarterly reports on Form 10-Q.
Information Contact:
Sean McCarthy
Chief Financial Officer
(949) 260-6734

SOURCE Diedrich Coffee, Inc.

Sean McCarthy, Chief Financial Officer of Diedrich Coffee, Inc.,
+1-949-260-6734