Diedrich Coffee Inc. (Nasdaq: DDRX), announced that in light of yesterday’s stock price closing at a new 52-week low below $1.00, and recent discussions with Nasdaq, the company believes that Nasdaq will send a formal notice of deficiency and commence the delisting process from the Nasdaq National Market.

About Diedrich Coffee

Diedrich Coffee Inc. is the nation’s second largest retailer in the specialty coffee market with annual system-wide revenues in excess of $150 million through 381 retail locations in 38 states and 10 foreign countries. The company’s primary brands are Diedrich Coffee brand coffeehouses and Gloria Jean’s Coffees, the nation’s leading chain of mall-based coffee stores.

With headquarters in Irvine, Diedrich Coffee specializes in sourcing and custom roasting the world’s highest quality coffees and offering them to customers through its coffeehouses and mall stores and via wholesale, mail order and its Web site. For more information about Diedrich Coffee, call 800/354-5282, or visit the company’s Web site at www.diedrich.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 successful management of Diedrich Coffee’s growth strategy, 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 28, 2000.