New World Coffee-Manhattan Bagel, Inc.

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International Guild of Hospitality & Restaurant Managers

Business Summary
Nasdaq: NWCI

Financial Summary

New World Coffee-Manhattan Bagel owns, operates and franchises coffee bars, bagel bakeries and integrated coffee bar/bagel bakeries in 26 states and internationally. For the fiscal year ended 12/31/00, revenues increased 15% to $45.7 million. Net income applicable to Common before extraordinary item rose 78% to $3.9 million. Revenues reflect the acquisions of additional Company owned stores and the Chesapeake Bagel Bakery. Earnings also reflect increased margins and income tax benefits.

Recent Earnings Announcement
For the 3 months ended 04/01/2001, revenues were 10,475; after tax earnings were 250. (Preliminary; reported in thousands of dollars.)

Expanded Business Summary

New World Coffee - Manhattan Bagel, Inc. is the largest franchisor of bagel bakeries and coffee bars in the United States. It operates and franchises bagel bakeries and coffee bars in 26 states throughout the United States and the District of Columbia. The first Company-owned New World Coffee store opened in 1993 and the first franchised New World Coffee store opened in 1997. On November 24, 1998, the Company acquired the stock of Manhattan Bagel, Company, Inc. (MBC) resulting in the addition of 6 Company-owned and 285 franchised and licensed Manhattan Bagel stores. On August 31, 1999, the Company acquired the assets of Chesapeake Bagel Bakery (CBB) resulting in the addition of 80 franchised and licensed Chesapeake Bagel Bakery stores. At December 26, 1999, the Company's retail system consisted of approximately 377 stores, including 15 Company-owned and 362 franchised and licensed stores.

The Company is vertically integrated with bagel dough and cream cheese manufacturing plants in Eatontown, NJ and Los Angeles, CA, and a coffee roasting plant in Branford, CT. The Company's products are sold to franchised, licensed and Company-owned stores as well as to wholesale, supermarket and non-traditional outlets.

Manhattan Bagel

Manhattan Bagel stores are designed to combine the authentic tastes of a bagel bakery with the comfortable setting of a neighborhood meeting place. Manhattan Bagel's prototypical store blends function, style and customer comfort with the Company's traditional red and blue color scheme and simple furnishings in a relaxed social atmosphere. Walls are covered with murals designed to relate to the Manhattan Bagel brand. Manhattan Bagel stores are typically in leased locations of approximately 1,500 square feet with ample parking and indoor seating for 30 - 40 customers. During 1999, the Company redesigned its prototype store to emphasize its lunch offerings, specialty coffee drinks and cool blended drinks menu.

Manhattan Bagel stores offer, over the course of any given year, more than 23 varieties of fresh baked bagels, as well as bagel sticks and bialys. Manhattan's bagels are baked fresh throughout the day using a traditional boil and bake process to create a light, "crunchy on the outside, chewy on the inside" bagel. Manhattan Bagel stores also offer 18 flavors of cream cheese, and an extensive variety of breakfast and lunch sandwiches, coffee, soft drinks, salads, muffins and soups. In 1998, the Company introduced a program, "Bagel, Wrapp or Roll," under which it now offers all sandwiches, previously only available on bagels, on alternative carriers, such as french rolls or wrapps, in order to enhance its lunch business. The Company expects to continue to emphasize its lunch business going forward. In 1999, the Company continued to expand its product offerings to include cool blended drinks.

Chesapeake Bagel Bakery

Chesapeake Bagel Bakery stores offer a variety of freshly-baked bagels as well as other baked goods and dessert items. The bagels are "authentic" New York style bagels prepared fresh each day in the stores. The Chesapeake stores also offer an extensive variety of breakfast and lunch sandwiches, coffee, salads and soups.

New World Coffee

New World Coffee stores are designed to be conducive to capturing all three dayparts. In addition, the store atmosphere is designed to be a comfortable and inviting cafe setting through the use of natural materials, warm lighting, appropriate music and a comfortable seating area to promote the stores use as neighborhood gathering places. The Company's prototype store averages 1,400 - 1,800 square feet.

New World Coffee stores offer, over the course of any given year, up to 30 varieties and blends of fresh roasted coffee, in brewed and whole bean format, from coffee producing countries around the world. Regular and decaffeinated "Coffees of the Day" are fresh brewed daily with strict brewing and freshness standards. The stores also offer a broad range of Italian-style beverages such as espresso, cappuccino, caffe latte, caffe mocha and espresso machiato. New World Coffee stores offer a selection of black, herbal and fruit teas, with one selection offered as the fresh brewed "Iced Tea of the Day," and also offer freshly squeezed orange and grapefruit juice. New World Coffee stores also offer a broad and deep variety of fresh, high quality food items. Breakfast offerings include bagels, croissants, muffins, danishes and scones; lunch offerings include Italian panini sandwiches and soups; dessert items include various cakes and cookies, dessert muffins, brownies and biscotti. Management is consistently working with its suppliers to develop a selection of quality food items which will complement beverage sales.

The coffee and bagel industries are intensely competitive and there are many well established competitors with substantially greater financial and other resources than the Company. Although competition in the specialty coffee market is currently fragmented, the Company competes and, in the future will increasingly compete with Starbucks, the market's leading retailer. Although competition in the bagel market is fragmented, the Company competes and, in the future will increasingly compete with Dunkin' Donuts, Einstein/Noah Bagel Corp., and Bruegger's Bagels.

In May of 2000, New World Coffee-Manhattan Bagel Inc. completed the acquisition of the leases and store operating assets of 17 Company-owned New York Bagel stores in Oklahoma and Kansas from New York Bagel Enterprises, Inc., a Chapter 11 debtor.

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