New World Coffee-Manhattan Bagel, Inc. announced today that it has recaptured 13 franchised Manhattan Bagel stores in the Buffalo, NY market. The Company, which expects the acquisition to be accretive to earnings immediately, intends to sell the stores to new franchisees. Collectively, the Buffalo stores generated in excess of $6.2 million in sales during 1999.

The stores' assets, previously owned by former Manhattan Bagel franchisees, were acquired pursuant to a Chapter 11 Plan of Reorganization, jointly proposed by New World and the debtor, and approved by the Bankruptcy Court from the Western District of New York. The Company also received non-competition agreements from the former franchisees' principals, who originally operated the stores under the Bagel Brothers name before becoming Manhattan Bagel franchisees in 1996.

Following the recapture, all 13 locations will use bagel dough and cream cheese produced in Manhattan Bagel's Eatontown, NJ factory, with the bagels boiled and freshly baked at the stores throughout the day. Additionally, all of the stores will convert to a new proprietary premium coffee program developed at New World's plant in Branford, CT.

"Now that this favorable settlement has been completed, we look forward to re-franchising the stores and resuming our efforts to increase our market share in Buffalo and the surrounding areas," said Ramin Kamfar, New World chairman and CEO. "The Buffalo area has been a strong market for Manhattan Bagel, as underscored by the strong sales this group of stores has experienced since the first one opened 24 years ago."

New World Coffee-Manhattan Bagel, Inc. currently franchises, licenses or owns stores under its four brands in 28 states and Washington, D.C. The Company is vertically integrated in bagel dough and cream cheese manufacturing, and coffee roasting, with plants in New Jersey, California and Connecticut.

Certain statements in this press release constitute forward-looking statements or statements which may be deemed or construed to be forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. The words "forecast," "estimate," "project," "intend," "expect," "should," "would" and similar expressions and all statements which are not historical facts are intended to identify forward-looking statements. These forward-looking statements involve and are subject to known and unknown risks, uncertainties and other factors which could cause the Company's actual results, performance (financial or operating), or achievements to differ from the future results, performance (financial or operating), or achievements expressed or implied by such forward-looking statements. The above factors are more fully discussed in the Company's SEC filings.