In the last year, the inflation derived from the COVID-19 pandemic and the war in Ukraine have impacted once-strong countries, such as the United States or the United Kingdom. In our great nation, inflation has exceeded 8%, one of the highest in recent decades.
That’s why Costco’s CFO, Richard Galanti, was kinda forced to comment on rumors that the chain’s hot dog would rise up the price, despite it has remained immovable since 1985.
Will we pay more in Costco?
For more than 36 years, it has costed just $1.5 and, beside the hot dog, you get a soft drink. Isn’t it one of the greatest deals in the whole world?! Luckily, there are currently no plans to raise the price.
Galanti cleared this doubt in the company’s fourth-quarter earnings call in September, where an analyst asked him if the price of the sausage sandwich (made with ingredients are mostly provided by the Kirkland brand), was going to be adjusted.
The CFO explained that other much more profitable businesses, such as fuels or travels, help Costco maintain the hot dog at the same price for decades.
“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.
In 2009, a reporter from The Seattle Times asked Costco co-founder, Jim Sinegal: “If (the hot dog combo) price ever goes up, what will it mean?”. In response, Sinegal said he would have to be dead before that happened and stated: “We’re known for that hot dog. That’s something you don’t mess with”.
The odyssey to hold the prices
Costco and other retailers have had to raise consumer prices over the past year, passing on the higher costs to consumers.
Galanti estimated that the increase in the generalized costs of products for consumers is close to that 8.3% of the year-on-year inflation that the United States has experienced.
However, he said that the price of membership is likely to increase at some point in the near future. Costco typically raises its rates every five or six years, and it’s time to make an adjustment.
Despite the unflattering inflationary environment, Costco exceeded analysts’ expectations in the fourth quarter, with revenues over $72 billions, and that helps the chain keep prices like the rotisserie chicken’s or the hot dog’s.
So, don’t worry: You can keep enjoying a hot dog after doing the shopping at your local store.
