Some good news for inflation-weary Americans: There will be no price hike on Costco’s hot dogs.
In an interview Monday on CNBC’s “Squawk on the Street,” CEO Craig Jelinek had a one-word answer when asked whether he would raise the signature food court item’s price: “No.”
Costco has continued to put up strong sales, even as other retailers have spoken about consumers becoming more budget-conscious and spending more on services instead of goods. It’s also avoided another recent problem for many retailers: excess inventory that’s racked up in warehouses and stores, which must now be packed away or marked down.
Yet amid nearly four-decade high inflation, Costco has raised the prices of some food court staples. Earlier this month, its chicken bake jumped from $2.99 to $3.99 and its 20-ounce soda rose by 10 cents to 69 cents. That prompted speculation that its hot dog’s super low price could be due for a hike, too. The hot dog and soda combo has sold for $1.50 for decades, and was the subject of a Mental Floss article from 2018 that recently began circulating again.
In the article, Jelinek recalled approaching Costco co-founder and former CEO Jim Sinegal. He told him the company was losing money over the iconic food item.
“I came to (Sinegal) once and I said, ‘Jim, we can’t sell this hot dog for a buck fifty,” Jelinek said, according to the article. “We are losing our rear ends.’ And he said, ‘If you raise (the price of the) effing hot dog, I will kill you. Figure it out.’ That’s all I really needed.”
Another aspect of Costco’s business has also been under scrutiny: When its membership fee might increase. Costco membership costs $60 a year or $120 a year for an executive membership, a higher-tier option that includes additional discounts and perks.
The vast majority of Costco’s profit comes from the annual fees rather than from selling items. It has historically raised it every 5½ years and the last increase was in June 2017, putting it on track for a rise soon, according to Corey Tarlowe, an analyst at Jefferies. Its membership fee typically increases by $10.
On Monday, Jelinek told CNBC that a membership fee hike is “not on the table right at the moment.”
“I made it very clear,” he said. “I don’t think it’s the right time. Our sign-ups continue to be strong.”