CEO says Costco hot dogs safe from price hike despite inflation

Some good news for inflation-weary Americans: There will be no price hikes Costcosausage.

In an interview on Monday on CNBC’s”Squawk on the street“, CEO Craig Jelinek had a succinct answer when asked if he would raise the price of the food court’s signature item: “No. “

Costco has continued to drive strong sales, even as other retailers have spoken of consumers becoming more budget-conscious and spending more on services rather than goods. It also avoids another recent problem for many retailers: excess inventory Loaded up in warehouses and stores, they must now be packed away or marked.

However, amid nearly four decades of high inflation, Costco raised the prices of some food court staples. Earlier this month, their roast chicken went from $2.99 ​​to $3.99, and their 20-ounce soft drink went up 10 cents to 69 cents. That sparked speculation that the super-low prices of hot dogs could also be due to an increase. The hot dog and soda combo has been selling for $1.50 for decades and is the subject of a Articles about Mental Floss from 2018 which recently started circulating again.

The article recounts the time Jelinek approached Costco co-founder and former CEO Jim Sinegal. He told him the company was losing money because of the iconic food item.

“I went to (Sinegal) once and I said, ‘Jim, we can’t sell this hot dog for $50,” Jelinek said, according to the Mental Floss article, quote 425. “We are losing our backends.” And he said, “If you raise (the price of) hot dogs, I’ll kill you. Find out.” That’s all I really needed. “

Another aspect of Costco’s business is also coming under scrutiny: As its membership fees can go up. A Costco membership costs $60 a year or $120 a year for an executive membership, a higher tier option that includes discounts and additional perks.

Most of Costco’s profits come from annual fees, not from the sale of items. Historically, it has increased it every five and a half years, and the most recent increase was in June 2017, giving it an early boost, according to Corey Tarlowe, an analyst at Jefferies, according to Corey Tarlowe, an analyst at Jefferies. at Jefferies. Its membership fees usually increase by $10.

On Monday, Jelinek told CNBC that an increase in membership fees is “not on the table right now.”

“I made it very clear,” he said. “I don’t think it’s the right time. Our sign-ups continue to skyrocket.”

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