News: How Inflation-Proof Hot Dogs Made Costco a Beacon of Value

Wednesday, July 26, 2023

How Inflation-Proof Hot Dogs Made Costco a Beacon of Value

By Andy Swan

Each year, Costco (COST) sells more hot dogs than all the Major League Baseball (MLB) stadiums combined... four times more, in fact.

Maybe that's because it's been offering the same trusty deal since 1985: a jumbo hot dog and 20-ounce soda for just $1.50.

In today's dollars – factoring in inflation – that one-two combo should cost $4.28.

But the price has never changed.

The Costco Hot Dog is a testament to the membership club's commitment to value. Folks go crazy for it.

And it's just one of the reasons Costco stands in a league of its own... even as inflation, interest rates, and an end to COVID-era stimulus put the squeeze on consumer spending.

Most retailers are feeling the pinch – and Costco isn't immune to the spending slowdown. Its latest earnings report missed estimates, bringing in $53.65 billion in quarterly revenue compared to an expected $54.75 billion.

"This is the second quarter that we've seen that discussion of lower sales of big-ticket discretionary items," CFO Richard Galanti told investors.

But despite all that, its stock price is up 17% year-to-date.

Because for Costco – and its investors – it's not about merchandise sales.

THIS is the secret to Costco's success, even in challenging times...

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