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Costco makes decision about $1.50 hot dog-and-soda combo as inflation soars

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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 at its 
stores despite months of decades-high inflation.

Costco CFO Richard Galanti reiterated the cheap price point on the fan-
favorite deal would stay in place during the company’s fourth-quarter 
earnings call on Thursday.

An analyst asked whether Costco was adjusting prices in other parts of its 
business to maintain sales margins for its hot dog-and-soda deal and other 
value offerings.

“Lightning just struck me,” Galanti joked when the combo was mentioned. He 
added that higher-margin businesses such as gas and travel sales help 
Costco maintain its value deals.

“Those things help us be more aggressive in other areas, or as you 
mentioned, hold the price on the hot dog and the soda a little longer – 
forever,” Galanti added.

Costco and other retailers have hiked prices over the last year, passing 
along the higher costs of commodities and goods to consumers. Inflation 
has slightly declined in recent months but was still hovering at a hotter-
than-expected 8.3% in August.

Galanti estimated that price inflation at Costco was about 8% during the 
fourth quarter, with increases “a little higher on the food and sundries 
side.”

Costco doesn’t have any immediate plans to hike its membership fees, 
according to the executive. Annual membership dues at the retailer 
currently start at $60.

Still, Galanti noted that membership price increases were likely at some 
point in the future. Costco has generally hiked its fees roughly every 
five to six years.

“Our view is, is we are confident in our ability to do so and at some 
point, we will. But it’s a question of when, not if,” Galanti said.

Despite the inflationary environment, Costco topped analysts’ expectations 
in the fourth quarter. The retailer posted quarterly revenue $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 hiking prices in their food 
courts, especially for the hot dog-and-soda combo, regardless of changes 
in the economy.

In July, Costco CEO Craig Jelinek delivered a one-word answer when asked 
on CNBC whether prices changes were being considered for the deal.

“No,” he said.

https://nypost.com/2022/09/23/costco-to-keep-1-50-hot-dog-and-soda-combo-
forever-despite-inflation-exec/

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Costco makes decision about $1.50 hot dog-and-soda combo as inflation soars zinn <zinn@reno.us> - 2022-10-01 06:49 +0000

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