CEO says Costco hot dog is safe from price hikes despite inflation

Some good news for inflation-weary Americans: There will be no price hike on Costco sausages.

In an interview Monday on CNBC’s “Squawk on the Street,” CEO Craig Jelinek had a one-word answer when asked if he’d raise the price of premium food court material: “No.”

Costco continued to have strong sales, even as other retailers talked about increasing consumers’ budget awareness and spending more on services rather than goods. It also avoided another recent problem for many retailers: the excess inventory being piled up in warehouses and stores, which now had to be packed away or identified.

However, amid rising inflation for nearly four decades, Costco has raised the prices of some basic food commodities. Earlier this month, chicken bread jumped from $2.99 ​​to $3.99, and a 20-ounce serving of soda rose 10 cents to 69 cents. This sparked speculation that the very low price of hot dogs may be due to the rally as well. Hot dog and soda combo has been selling for $1.50 for decades and has been the subject of a Mental Floss article from 2018 that has recently started to go viral again.

In the article, Jellinek mentioned getting close to Costco co-founder and then CEO Jim Sinegal. Tell him the company is losing money because of the great food.

“I came to (Senegal) once and said, ‘Jim, we can’t sell this hot dog for fifty pounds’,” Jelinek said, according to the article. “We’re losing our back ends.” And he said, “If you raise (the price of) the hot sausage, I will kill you. Find out.” That’s all I really need.”

Another aspect of Costco’s business has also been under scrutiny: when membership fees might increase. Costco membership costs $60 per year or $120 per year for an executive membership, which is a higher-tier option that includes additional discounts and perks.

The vast majority of Costco’s profits come from annual fees, not from selling items. It has historically raised membership fees every 5.5 years and the most recent increase was in June 2017, which puts it on track to increase soon, according to Corey Tarlow, an analyst at Jefferies. Membership fees usually increase by $10.

On Monday, Jelinek told CNBC that membership fees are “not on the table right now.”

“You made it very clear,” he said. “I don’t think this is the right time. Our signups are still going strong.”

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