Costco to keep $1.50 hot dog-and-soda combo ‘forever’ despite inflation: exec
A top Costco Wholesale executive confirmed the big-box retailer has no plans to change the price of its $1.50 hot dog and soda combo in stores despite months of decades of high inflation.
Costco CFO Richard Galanti reiterated that the cheap price point on the fan-favorite deal would remain in place during the company’s fourth-quarter earnings call Thursday.
An analyst asked if Costco adjusted prices in other parts of the business to maintain sales margins for the hot dog and soda deal and other value offerings.
“Lightning struck me,” Galanti joked when the combination was mentioned. He added that higher-margin businesses like gas and travel sales help Costco maintain its value deals.
“These things help us be more aggressive in other areas, or as you mentioned, keep the price of the hot dog and soda a little bit longer — forever,”[ads1]; Galanti added.
Costco and other retailers have raised prices over the past year, passing on the higher costs of raw materials and goods to consumers. Inflation has eased slightly in recent months, but remained at a warmer than expected 8.3% in August.
Galanti estimated that price growth at Costco was about 8% during the fourth quarter, with increases “a little higher on the food and miscellaneous side.”
Costco has no immediate plans to increase membership fees, according to the director. Annual membership fees with the retailer currently start at $60.
Still, Galanti noted that membership price increases were likely at some point in the future. Costco has generally increased its fees about every five to six years.
“Our view is that we’re confident in our ability to do that, and at some point we will. But it’s a matter of when, not if,” Galanti said.
Despite the inflationary environment, Costco topped analysts’ expectations in the fourth quarter. The retailer had quarterly revenue of $72.09 billion and earnings per share.
But shares still fell more than 4% in trading Friday after executives noted a decline in gross margins.
Costco executives have famously avoided price increases in their food halls, especially for the hot dog-and-soda combo, regardless of changes in the economy.
In July, Costco CEO Craig Jelinek delivered a one-word response when asked on CNBC if price changes were being considered for the deal.
“No,” he said.