Some good news for inflation-weary Americans: There will be no price increase on Costco’s hot dogs.
In an interview Monday on CNBC’s “Squawk on the Street,” CEO Craig Jelinek gave a one-word answer when asked if he would raise the price of the signature meal item: “No.”
Costco continues to post strong sales, even as other retailers say consumers are becoming more budget-conscious and spending more on services instead of goods. It also avoids another recent problem for many retailers: the excess inventory that has accumulated in warehouses and stores that now has to be packed or marked.
Yet amid nearly four decades of high inflation, Costco has raised prices on some staple food items. Earlier this month, the price of chicken jumped from $2.99 to $3.99, and a 20-ounce soda rose 10 cents to 69 cents. This led to speculation that the hot dog’s super low price could also be due to a spike. The hot dog and soda combo has been selling for $1.50 for decades and was the subject of a 2018 Mental Floss article that recently started circulating again.
In the article, Jelinek recalls approaching Costco co-founder and then-CEO Jim Sinegal. He told him the company was losing money on the iconic food product.
“One time I came to (Sinegal) and said, ‘Jim, we can’t sell this hot dog for a dollar and fifty,'” Jelinek said, according to the article. “We’re losing our behinds.” And he said, “If you raise (the price of) steamed hot dogs, I’m going to kill you. Figure it out.” That’s all I really needed.”
Another aspect of Costco’s business has also come under scrutiny: when membership fees might increase. A Costco membership costs $60 per year or $120 per year for Executive Membership, a higher-level option that includes additional discounts and benefits.
Most of Costco’s profit comes from annual fees, not from selling items. Historically, it has raised membership fees every 5.5 years, and its last increase was in June 2017, putting it on track for a recent increase, according to Corey Tarlow, an analyst at Jefferies. His membership fee usually increases by $10.
On Monday, Jelinek told CNBC that membership fees are “not on the table right now.”
“I made it very clear,” he said. “I don’t think it’s the right time. Our registrations continue to be strong.”
Add Comment