In an interview Monday on CNBC’s “Squawk on the Street,” CEO Craig Jelinek had a one-word answer when asked if he would raise the price of the signature food: “No.” Costco has continued to post strong sales even as other retailers have talked about consumers becoming more budget-conscious and spending more on services instead of goods. It has also avoided another recent problem for many retailers: excess inventory accumulating in warehouses and stores, which must now be packed or marked. However, amid nearly four decades of high inflation, Costco has raised the prices of some food staples. Earlier this month, its roast chicken jumped from $2.99 to $3.99 and its 20-ounce soda rose 10 cents to 69 cents. This prompted speculation that the extremely low price of his hot dog could also be due to a hike. The hot dog and soda combo has been selling for $1.50 for decades and was the subject of a Mental Floss article from 2018 that recently started making a comeback. In the article, Jelinek recalled approaching Costco co-founder and then-CEO Jim Sinegal. He told him the company was losing money on the iconic food item. “I came to (Sinegal) one time and said, ‘Jim, we can’t sell this hot dog for fifty dollars,’” Jelinek said, according to the article. “We’re losing our rear ends.” And he said, “If you raise (the price of) hot dogs, I’ll kill you. That’s all I really needed.” Another aspect of Costco’s business has also come under scrutiny: When membership fees can be increased. A Costco membership costs $60 a year or $120 a year for an executive membership, 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 its last increase was in June 2017, putting it on track for an increase soon, according to Jefferies analyst Corey Tarlowe. The membership fee usually increases by $10. On Monday, Jelinek told CNBC that a membership fee is “not on the table right now.” “I made that very clear,” he said. “I don’t think it’s the right time. Our enrollment continues to be strong.”
