It has been updated with updated information.
The leading warehouse retailer Costco Wholesale Corp COST says that even as inflation continues to climb, the retailer will keep its price for the hot dog and soda combo at $1.50.
The price will not change during the company's fourth quarter earnings call on Thursday, according to the New York Post.
What Happened: Costco's position on keeping the price unaffected was initially stated during its earnings call in May when the company addressed rumors of a price increase for its hot dog and soda combo, and comments previously made about raising the price of its annual membership.
I want to address some incorrect information floating around social media and a few other media outlets claiming we have increased the price of our hot dog and soda combinations sold in our food courts. Bob Nelson, Costco Senior Vice President, said that the price was $1.50 and that we have no plans to increase the price at this time.
Nelson said the price started at $1.50 in the mid- 1980s and has remained that price since being introduced.
Nelson used the earnings call to address comments about an increase in the membership fee for its customers.
Given the current macro environment, the historically high inflation and the burden it is having on our members and all consumers, we think increasing our membership fee today is not the right time, Nelson said.
Costco ended the third quarter with 27.9 million paid memberships, up around 800,000 since the end of the second quarter.
Related Link: Costco CFO Says Membership Price Hikes Likely: What Investors Should Know?
Why is it important that Costco is raising the price of its hot dog and soda combo by $1 due to inflation, according to a rumor on social media. The combo is one of several benefits of having a membership.
As Benzinga reported recently, an increase in the price of the hot dog combo is unlikely to happen, as company founder Jim Sinegal is highly opposed to it.
I came to Jim Sinegal once and said, Jim, we can't sell this hot dog for a buck fifty. We are losing our rear ends. He said if you raise the effing hot dog, I will kill you. As reported by 425 business, Costco CEO W. Craig Jelinek said.
Costco has raised its membership fee every five to six years. The last fee increase came in June 2017.
Nelson said the company usually gets questions as the company gets close to the 2 year mark of the last raise, and wanted to share that a fee increase was not in the cards at this time.
We're not saying that, we're not going to do it. We just say that it is not right for us right now. Nelson made comments after CFO Richard Galanti said during the company's second quarter earnings call that a price increase was coming sometime in the future.
Galanti said that they looked at the last three increases over the last 15 years and on average they were done about every five, a little over every 5.5 years. It would be this June, five years from the anniversary of June of 2017. Galanti said at the time the company felt good about its member loyalty and strong renewal rate of 92%.
You guys will know when we tell you, and at some point it will happen, but stay tuned. The annual fee was changed from $55 to $60 for the gold star plan to $110 to $120 for the exclusive plan.
Membership revenue makes up less than 2% of total revenue, but it is a high margin item that can help boost profits and bottom line for the company.