Costco to keep $1.50 hot dog-and-soda combo ‘forever’ despite inflation: exec



A top Costco Wholesale executive confirmed that the big-box retailer has no plans to change the price of the $1.50 hot dog-and-soda combo at its store, despite Decades of High Inflation Months,

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

One 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 struck me” Galanti jokes When combo was mentioned. He added that high-margin businesses like gas and travel sales help Costco maintain its value deals.

“Those things help us be more aggressive in other areas, or as you mentioned, keep the price on hot dogs and sodas a little longer — forever,” Galanti said.

Costco and other retailers have raised prices over the past year, leaving consumers with higher costs of goods and accessories. Inflation has moderated slightly in recent months, but it was still hovering at a warmer-than-expected 8.3% in August.

Due to inflation, Costco has increased the prices of some items.
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Galanti estimated that price inflation at Costco was about 8% during the fourth quarter, with “a little more on the food and miscellaneous side” growth.

According to the executive, Costco has no immediate plans to increase membership fees. Annual subscription dues currently start at $60 at the retailer.

Costco has no immediate plans to increase membership fees.
SOPA Image / LightRocket via Ghetto

Still, Galanti noted that subscription price increases were likely at some point in the future. Costco typically increases its fees every five to six years.

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

Despite the inflationary environment, Costco topped analysts’ expectations in the fourth quarter. The retailer posted quarterly revenue of $72.09 billion and earnings per share.

Costco beat earnings expectations for the fourth quarter.
SOPA Image / LightRocket via Ghetto

But shares were down more than 4% in trading on Friday, as executives noted a drop in gross margin.

Costco executives have avoided raising prices in their food courts, especially for the hot dog-and-soda combo, regardless of changes in the economy.

In July, Craig Jellinek, CEO of Costco, gave a one-word answer. When asked on CNBC Whether a price change was being considered for the deal.

“No,” he said.


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