During his inaugural Costco earnings call, Gary Millerchip, the newly appointed CFO and executive vice president, delivered a candid message to investors and analysts.
During the company’s Q3 earnings call, Millerchip addressed recent media speculation and reassured everyone that the price of the $1.50 hot dog would remain unchanged.
Costco’s hot-dog-and-soda combo has been priced at $1.50 since it was introduced in the mid-1980s. However, recent remarks by Richard Galanti, Costco’s former CFO, have left some customers unsure about the future of this beloved item.
During Costco’s quarterly earnings calls, Galanti had often talked about the price of the combo deal, just like Millerchip. In 2022, he even mentioned that the $1.50 price would stay the same “forever.” However, earlier this year, Galanti seemed to suggest that Millerchip might consider raising the price. In an interview with Bloomberg, he mentioned that the $1.50 combo deal might only be “probably safe for a while” after he leaves.
According to former Costco CEO Craig Jelinek, the story behind Costco’s beloved hot dog and its consistent price can be attributed to James Sinegal, co-founder of Costco.
In a 2018 interview with 425 Business, Jelinek recounted a conversation he had with Sinegal, where he expressed concern about selling the hot dog for $1.50. Jelinek mentioned that they were losing money on it and suggested raising the price. Sinegal’s response was firm and straightforward, as he told Jelinek that if he dared to increase the price, there would be serious consequences. This left Jelinek with the task of finding a solution to the issue.
According to Jelinek, the company decided to produce its own hot dogs in order to reduce costs, instead of purchasing them from external sources.
In a previous earnings call, Galanti had mentioned that the revenue generated from other sectors of Costco’s businesses contributes to maintaining lower costs at the food court. This suggests that the popular $1.50 hot-dog deal may continue to be offered for the foreseeable future. Costco’s latest earnings report revealed a remarkable 9.1% increase in sales compared to the third quarter of 2023, surpassing expectations.
“We are experiencing success in various categories,” stated Costco CEO Ron Vachris on Thursday.
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