Costco’s chief financial officer, Richard Galanti, was asked during a presentation on its fourth-fiscal-quarter results what categories it’s harvesting extra margin on to offset the margin squeeze in other areas, including the noted hot-dog-and-soda combo.
“Lightning just struck me,” he quipped, according to a transcript on S&P Global Market Intelligence.
“We really don’t look at it that way. I think the thing I mentioned earlier about there [being] some businesses that are doing well with margin, like [the] gas business, [in] a smaller way — in the travel business, 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. But at the end of the day, no, I don’t think we necessarily look to find places where we can harvest margin.”
The hot-dog-and-soda combination, a prepared-food offering that is a hallmark for many of a visit to the warehouse retailer, has taken on a life of its own. When inflation started accelerating in May, an executive publicly proclaimed that it was holding the combination constant at the same price in effect since the 1980s.
Famously, Costco co-founder Jim Sinegal threatened to kill Craig Jelinek, the current CEO, when he considered raising the price.