Costco's Hot Dog Combo Price May Remain $1.50 'Forever,' CFO Says

Last week, Costco had its quarterly earning call. The company's chief financial officer Richard Galanti kicked things off by letting analysts know that net income for the quarter was $1.868 billion, $4.20 per diluted share, with net sales up 15.2 percent. But average consumers aren't analysts, and the number they care about wasn't mentioned until the end of the call: $1.50 — the price of Costco's famed hot dog and a soda deal. And that's when Galanti said something a bit unexpected: Costco wants to keep the price of the deal the same "forever."

Costco's insistence on keeping their hot dog food court deal at its current $1.50 pricing — where it has been since 1985 — is a thing of legend: Costco President and CEO W. Craig Jelinek said that co-founder Jim Sinegal once threatened to kill him if the price was increased. But this recent call may be the first time a higher-up at Costco publicly stated the plan is to keep the price there for all of eternity.

The offhand statement came toward the end of the call, during the Q&A section. Scot Ciccarelli from Truist Securities said that he knew "Costco tends to put a line in the sand on pricing with some items" — including the hot dog and soda deal — "despite today's inflationary pressures." And so, understandably, Ciccarelli wondered if Costco had other categories they are "using to maybe harvest some extra margin."

"We really don't look at it that way." Galanti responded, "I think the thing I mentioned earlier about there are some businesses that are doing well with margin… 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, forever."

Galanti then returned to answering the question at hand, but his quick adjustment from "a little longer" to "forever" is certainly eye-grabbing. "A little longer" would imply that the hot dog and soda price could change in the near future. "Forever" means it will never change. So which is it?

Admittedly, unlike the prepared remarks that start an earnings call, the Q&A at the end requires a CFO to be on his toes. Did Galanti let slip that a pricing change could be in the works and then tried to cover himself by quickly changing to "forever?" Or did he suddenly remember prior threats of murder and corrected himself?

To be honest, it's not entirely clear; but forever is a long time. Even if inflation subsides, some day, the world will end. And yet, even when that day comes, there's a good chance Costco's hot dog combo will still be $1.50.