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

Costco will keep $1.50 hot dog and soda combo 'forever' despite inflation: exec
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A top Costco Wholesale executive confirmed that the wholesaler has no plans to change the price of its $1.50 hot dog and soda combo in its stores Months of decades of high inflation.

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

One analyst asked if Costco was adjusting prices in other parts of its business to maintain selling margins on its hot dog and soda deal and other value offerings.

“Lightning Just Struck Me” Gallant joked when the combo was mentioned. He added that higher-margin deals like gas and travel sales are helping Costco maintain its value deals.

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

Costco and other retailers have hiked prices over the past year, passing the higher cost of raw materials and merchandise on to consumers. Inflation has eased slightly in recent months but was still a better-than-expected 8.3% in August.

Costco
Costco’s $1.50 combo deal is here to stay.
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Costco
Costco has increased prices on some items due to inflation.
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Galanti estimated price inflation at Costco was about 8% in the fourth quarter, with increases “slightly higher on the grocery and small-goods side.”

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

Costco
Costco has no immediate plans to increase membership dues.
SOPA Images/LightRocket via Gett

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

“Our view is that we are confident that we can do that 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 posted quarterly sales of $72.09 billion and earnings per share.

Costco
Costco beat earnings expectations for the fourth quarter.
SOPA Images/LightRocket via Gett

But shares were still down more than 4% in Friday trading after executives noted a decline in gross margin.

Costco executives have notoriously avoided raising prices at their food courts, particularly for the hot dog and soda combo, regardless of shifts in the economy.

In July, Costco CEO Craig Jelinek provided a one-word answer when asked on CNBC whether price changes have been considered for the deal.

“No,” he said.

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