A senior 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 in its stores despite months of inflation.
Costco CFO Richard Galanti reiterated that the low price point for the fan-favorite deal will remain intact during the company’s fourth-quarter earnings call on Thursday.
One analyst asked if Costco was adjusting prices in its other businesses to maintain profit margins on sales of its hot dog and soda deals and other value products.
“Lightning just hit me,” Galanti joked when referring to the combination. Higher-margin businesses like gasoline and travel sales help Costco maintain its value deals, he added.
“Those things help us be more aggressive in other areas, or as you mentioned, keep the price of hot dogs and sodas longer — forever,” Galanti added.
Costco and other retailers have raised prices in the last year, passing on the higher costs of merchandise and merchandise to consumers. Inflation has fallen slightly in recent months, but still hovered at a higher-than-expected 8.3% in August.
Galanti estimated that Costco’s price inflation was around 8% in the fourth quarter, with “a slightly higher increase in food and groceries.”
Costco has no immediate plans to raise membership fees, the executive said. Annual membership fees for retailers currently start at $60.
Still, Galanti noted that membership prices could increase at some point in the future. Costco typically raises fees about every five to six years.
“Our view is whether we have confidence in our ability to do it, and at some point, we will. But it’s a question of when, not if,” Galanti said.
Despite the inflationary environment, Costco beat analysts’ expectations in the fourth quarter. The retailer reported quarterly revenue of $72.09 billion and earnings per share of $72.09 billion.
But shares were still down more than 4% on Friday after executives noticed a drop in gross margins.
Costco executives are known for avoiding price hikes in their food courts, especially for the hot dog and soda combo, no matter how the economy changes.
When asked on CNBC in July whether the deal took into account price changes, Costco CEO Craig Jelinek gave a one-word answer.
“No,” he said.