Costco CFO addresses future of $1.50 hot dog-and-soda deal

Business

Customers wait in line to order below signage for the Costco Kirkland Signature $1.50 hot dog and soda combo, which has maintained the same price since 1985 despite consumer price increases and inflation, at the food court outside a Costco Wholesale Corp. store on June 14, 2022 in Hawthorne, California. (Photo by Patrick T. FALLON / AFP) (Photo by PATRICK T. FALLON/AFP via Getty Images)

(NEXSTAR) – Goods all over the shelves at Costco’s massive warehouses may have their prices forced up by inflation, but at least one food court deal isn’t going anywhere, company leadership confirmed.

During an earnings call Thursday, Costco CFO Richard Galanti fielded a question on the famous hot dog-and-soda combo deal, which still sells for $1.50 at Costco food courts around the country despite record inflation.

An analyst from Truist Securities asked Galanti about the “line in the sand” the company has drawn for the food court combo, as well as rotisserie chicken, which still retails for $4.99. Galanti said Costco isn’t explicitly raising prices in other sectors to make up for losses at the food court, but the profit margins they’re seeing in the gas and travel sectors make it easier to keep offering the discount.

“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,” he said, before quickly correcting himself: “Forever.”

Galanti said that while other businesses struggled during the peak COVID-19 pandemic, it brought more people into Costco, and they’re still seeing that benefit years later. “The enormity of the improvement in the bottom line … we’re better than we were two years ago.”

Costco says the price of the hot dog-and-soda pairing hasn’t changed since the combo deal was introduced in the mid-1980s.

Costco isn’t the only company that’s made such a commitment; AriZona recently told Nexstar it has no plans to raise the price of its signature 99-cent canned iced tea, despite mounting inflation.

Last month, prices of consumer goods were up 8.3% year-over-year, according to the Bureau of Labor Statistics.

Over the summer, the retailer did raise the price of two other food court items: 20-ounce sodas and chicken bakes. The sodas went from $0.59 to $0.69, and a chicken bake now costs $3.99 instead of $2.99.

Galanti admitted membership fees might go up in the future, but the company was focused on growing sales before making that change. A basic Costco membership costs $60 – and as of 2020, you need one to eat at the food court.

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