Business

Costco hot dogs are immune to price hikes despite inflation, CEO says

Good news for inflation-weary Americans: There will be no price increase on Costco hot dogs.

In an interview with CNBC’s “Squawk on the Street” on Monday, CEO Craig Jelinek answered in one word when asked if he would raise the price of a branded product at the food court: “No.”

Costco continues to post strong sales even as other retailers say consumers are frugal and spending more on services than on products. It also avoided another recent problem for many retailers: excess inventory that builds up in warehouses and stores that must now be packaged or marked down.

However, amid nearly four decades of high inflation, Costco raised the prices of some food items. This prompted speculation that the super-low price of a hot dog might also be on the block. The combination of hot dog and soda has sold for $1.50 for decades. It caused Article Mental Floss from 2018 for re-treatment.

In the article, Jelinek recalled reaching out to Costco co-founder and later CEO Jim Sinegal. He told him that the company was losing money because of the iconic food product.

“One day I came to (Sinegal) and said, ‘Jim, we can’t sell this hot dog for fifty dollars,'” Jelinek said, according to the article. “We are losing our rear.” And he said, “If you raise (the price of) a fucking hot dog, I will kill you. Understand.” That’s all I really needed.”

Another aspect of Costco’s business has also come under scrutiny: when membership fees might increase. The vast majority of Costco’s profits come from annual fees, not product sales. Historically, membership fees have increased every 5.5 years, and the last time they were increased was in June 2017, which, according to Cory Tarlow, an analyst at Jefferies, will lead to an increase soon.

On Monday, Jelinek told CNBC that the membership fee is “not in discussion at the moment.”

“I made it very clear,” he said. “I don’t think now is the right time. Our subscriptions are still high.”


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