Wal-Mart Goes Upscale with Coffee Shops

Wal-Mart Stores Inc., whose stores appeal largely to cost-conscious shoppers, is testing a new concept – in-store coffee shops called Cafe Tostino.

The coffee will be about 30 percent cheaper than Starbucks, says Rafael Guerrero, president and CEO of Tostino Coffee Roasters Inc. of Tucson, Ariz., which owns Cafe Tostino. But at $2.25 per latte, it’s still a novel concept for Wal-Mart shoppers.

“The beautiful thing about gourmet coffee is that it’s still an affordable luxury,” Guerrero says. He notes that a 12-ounce cup of coffee at Cafe Tostino is only 79 cents.

Tostino Coffee Roasters was supplying coffee to Wal-Mart stores in Mexico when the Bentonville-based company asked Guerrero in 1996 to open a cafe in the Wal-Mart Supercenter in Mexico City. Since then, Guerrero has opened seven more 500-SF cafes in Supercenters in Mexico.

With the Mexican Cafe Tostinos experiencing 100 percent sales growth per year, Guerrero asked Wal-Mart in 1998 if he could branch out into U.S. Superstores. Three were opened last spring in Superstores in Indiana, and three more are in the works: two in Indiana and one in Illinois.

Guerrero says he plans to open 20 Cafe Tostinos in U.S. Supercenters before the end of the year. He hopes to have 50 to 70 of them in operation by the end of 2000. So far, there are no plans to open one in Arkansas, but Guerrero says he would like to have a Cafe Tostino near the corporate office in Bentonville.

“We honestly believe the Wal-Mart customer has been ignored as far as gourmet coffee goes,” Guerrero says.