Costco makes decision about $1.50 hot dog-and-soda combo as inflation soars

A top Costco Wholesale executive confirmed the big-box retailer has no plans to change the price of its $1.50 hot dog-and-soda combo at its stores despite months of decades-high inflation.

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

An 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 just struck me,” Galanti joked when the combo was mentioned. He added that higher-margin businesses such as gas and travel sales help Costco maintain its value deals.

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

Costco and other retailers have hiked prices over the last year, passing along the higher costs of commodities and goods to consumers. Inflation has slightly declined in recent months but was still hovering at a hotter-than-expected 8.3% in August.

Galanti estimated that price inflation at Costco was about 8% during the fourth quarter, with increases “a little higher on the food and sundries side.”

Costco doesn’t have any immediate plans to hike its membership fees, according to the executive. Annual membership dues at the retailer currently start at $60.

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

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

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

But shares still fell more than 4% in trading Friday after executives noted a decline in gross margins.

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

In July, Costco CEO Craig Jelinek delivered a one-word answer when asked on CNBC whether prices changes were being considered for the deal.

“No,” he said.