Connect with us

Business

Why Is Costco’s Hot Dog Still $1.50 When Everything Has Become So Expensive?

Published

8 months ago

on

costco

Inflation has affected almost everything over the last two years, including Trader Joe’s 19-cent banana. However, Costco’s hot dog-and-soda combo price remains unchanged.

Costco’s hot dog deal, available in its food courts, remains at $1.50, the same price as in 1985, before the Great Recession, the housing crisis, the pandemic, and the most recent about of decades-high inflation.

costco

Why Is Costco’s Hot Dog Still $1.50 When Everything Has Become So Expensive?

According to the Bureau of Labor Statistics, consumer prices have increased about 20% since the pandemic began. Many crucial industries, such as housing and groceries, have seen even higher price increases.

If Costco’s hot dog sale had kept up with inflation, it would be three times as expensive now, nearly $4.50. But Costco’s $1.50 combo is a deliberate decision, also known as a loss-leader: The firm is willing to lose money selling the hot dogs at that price — inflation be damned — as long as it helps Costco attract and retain consumers.

“It’s branding,” explained Scott Mushkin, a retail analyst at R5 Capital. The $1.50 offer fosters client loyalty, he noted. “It reminds customers of who Costco is.”

Costco loses money on more than 100 million hot dogs yearly, but it counters these losses by raising prices on other products. Costco has raised the prices of pizzas and other goods in its food courts.

However, Costco has a unique business plan allows it to keep costs low: it makes almost all of its money from memberships, selling things on its warehouse floor for practically cost – and occasionally less.

In a recent interview, Richard Galanti, Costco’s longstanding financial chief who retired this month, stated that the $1.50 pricing was “probably safe for a while.”

costco

Why Is Costco’s Hot Dog Still $1.50 When Everything Has Become So Expensive?

declining inflation and declining prices
Most businesses need the benefit of a membership model like Costco. They can’t afford to sell the majority of their items for a small profit — or to lose money on products that sell 100 million units each year.

Inflation has fallen significantly since its peak of 9.1% in June 2022. To reduce inflation, the Federal Reserve implemented 11 severe rate hikes designed to crush demand and discourage spending.

According to the Bureau of Labor Statistics, total consumer prices increased by 3.2% in February.

While we may want reduced prices, decreasing prices are a red flag indicating that the economy is in bad shape. We’re not there yet, so don’t worry.

Companies have reported unusually high profitability in recent months owing to strong consumer spending. Even when companies like Costco must hike prices (even on hot dogs in some circumstances), Americans continue to spend.

Consumer spending is the most powerful engine driving the US economy. When individuals spend less money, firms prefer to lay off employees, which can lead to even lower spending and more layoffs. This cycle has the potential to drive the economy into a recession, but again, this is not occurring yet.

“A lack of demand causes price declines. “That means we’d be in a recession,” said Gus Faucher, chief economist at PNC.

“If you raise the effing hot dog, I will kill you.”
Costco’s hot dogs fought inflation from the outset.

Costco’s hot dog offering originated in the company’s early days. Costco added a Hebrew National kiosk to its second warehouse store in Portland, Oregon, shortly after it opened in 1983.

To keep hot dogs’ pricing consistent, Costco found ways to cut other costs in the food court, such as switching from 12-ounce soda cans to cheaper 20-ounce fountain drinks.

costco

Why Is Costco’s Hot Dog Still $1.50 When Everything Has Become So Expensive?

Costco sold kosher hot dogs in its food courts until 2009 when meat supplies began to run low. Recognizing the value of low-cost hot dogs, the business moved production in-house and launched its Kirkland Signature brand. Costco’s factories generate around 388 million non-kosher hot dogs annually for both food courts and retail sales.

Jim Sinegal, Costco’s co-founder, famously threatened former CEO Craig Jelinek, “If you raise the effing hot dog, I will kill you.” “Figure it out.”

“I know it sounds crazy making a big deal about a hot dog, but we spend a lot of time on it,” Sinegal told the Seattle Times in 2009. “We’re recognized for our hot dogs. That is something you do not mess with.

Last year, Costco sold over 130 million hot dog-soda combos worldwide, totaling around $195 million.

SOURCE – (CNN)

Related Topics:
Continue Reading

Business

Forced Sale Google Chrome Could Fetch $20 Billion

Published

6 hours ago

on

2024-11-21

By

Sale Google Chrome

Antitrust officials in the US could force the sale of Google’s Chrome browser for up to $20 billion, demonstrating the tremendous worth of the world’s most popular web browser.

Bloomberg Intelligence attributes Chrome’s projected worth to its more than 3 billion monthly active users. The US Department of Justice is preparing to request a federal judge order the browser’s separation from Google’s parent company, Alphabet.

Chrome’s worth comes from its overwhelming 61% market share and its crucial role in Google’s advertising ecosystem. User data enables businesses to better target adverts, and the browser also acts as an important distribution mechanism for Google’s AI technologies.

Industry analysts think it may be difficult to find a suitable buyer. While tech behemoths like Amazon could finance the purchase, they would likely face regulatory scrutiny.

AI businesses, such as OpenAI, may emerge as more viable contenders. They could potentially leverage Chrome to broaden their reach and develop an advertising business.

“It’s not directly monetizable,” one analyst told Bloomberg. “It functions as a gateway to other things. It’s unclear how you would assess that in terms of pure revenue generation.”

Google opposes prospective sales, claiming that they will hamper innovation. The firm does not break out Chrome’s revenue individually in its financial filings, even though the browser’s user data plays an important part in the company’s principal revenue stream, advertising.

The DOJ’s suggestion follows Judge Amit Mehta’s August decision that Google had illegally monopolized the search industry. The judge will consider the recommended remedies at a two-week hearing in April 2024, with a final judgment due in August 2025.

Related News:

Appeals Court Delays Order For Google To Open Its App Store In Antitrust Case

Appeals Court Delays Order For Google To Open Its App Store In Antitrust Case

Continue Reading

Business

Bitcoin Has Set a New Record And Is Approaching $100,000.

Published

15 hours ago

on

2024-11-21

By

Bitcoin

(VOR News) – Bitcoin broke beyond the $98,000 mark for the first time on Thursday as investors awaited Donald Trump’s second term as president. All of this happened during the day. As such, cryptocurrency has reached a significant turning point.

According to Coin Metrics, the top cryptocurrency was trading at $97,541.61 during the most recent trading session. Merchants provided this information. This suggests a price gain of more than three percent during the previous trading session.

When the period began, Bitcoin peaked at $98,367.00.

During the premarket trading session, MicroStrategy, a platform that facilitates cryptocurrency foreign exchange trading and serves as a bitcoin proxy, saw a 13% gain. Coinbase, on the other hand, had a 2% rise during that period. Furthermore, all of these increases occurred simultaneously.

The market value of Mara Holdings increased by 9%, which helped raise the valuation of mining companies overall. This was among the factors that led to the total rise.

Because of the widespread belief that President Trump will usher in a new era of prosperity for cryptocurrencies, one marked by more favorable laws and the possible creation of a national strategic bitcoin reserve, the price of Bitcoin has been rising steadily this month.

The most recent change brought about by the increase was the consequence of higher financing rates and more open interest in the futures market during Asian trading hours. The rise was the catalyst for this change. This action was prompted by the ensuing rush.

Throughout its lifespan, this legislation was the catalyst for this change for a variety of reasons. At the same time, spot market premiums decreased, according to CryptoQuant statistics. All of this happened at the same time.

Furthermore, a number of short liquidations have been sparked by the recent spikes in Bitcoin’s price, which has caused the price to rise overnight. As a result, the price has gone up much more. As a result, the total number of short liquidations has increased.

According to CoinGlass, these liquidations have effectively produced more than $88 million in capital during the last 24 hours.

Rob Ginsberg, an analyst at Wolfe Research, noted in a study released on Wednesday that “historically, following previous movements of this magnitude, Bitcoin has either entered a consolidation phase or disregarded the overbought condition as investors accumulate.” This phrase relates to the fact that this particular move has happened before.

Ginsberg stated this in reference to the evolution of Bitcoin over time.

Ginsberg’s answer makes reference to Bitcoin’s propensity to go through a period of consolidation. The comment also made reference to this.

He said, “Considering we are emerging from an extended consolidation phase and the price has reached a new high, it suggests that the pursuit is underway.”

The crucial psychological milestone of $100,000 is expected to be reached in the upcoming weeks, and this breakthrough could happen as early as Thursday. It seems likely that this level will be reached. There is a chance that this new development will take place.

This task will be carried out against the backdrop of this historical era. In addition, if Trump were to win a second term, federal budget deficits would increase, inflation would likely increase, and the dollar’s position in international affairs would change.

The administration that Trump would run during his presidency would be responsible for these consequences. All of these characteristics would positively impact the value of Bitcoin as a currency if they were taken into account in the order that they are presented.

The price of bitcoin had risen by more than 130% by the beginning of 2024.

SOUREC: CNBC

SEE ALSO:

PayPal’s Technical Challenges Are Affecting Thousands Of Customers Globally.

NVIDIA’s Earnings: The Leader In AI Chips Demonstrates Relentless Growth.

 

Continue Reading

Business

Target Struggles in the Third Quarter: Offers Tempered Holiday Outlook and Price Cuts

Published

1 day ago

on

2024-11-20

By

Target

(VOR News) – Target experienced a modest rise in sales during the third quarter; nevertheless, profitability declined due to reduced customer spending attributed to inflation and adverse effects from the ongoing costs associated with the October dockworker strike.

Despite ongoing consumer expenditure in the United States, but with more prudence, the Minneapolis retailer did not meet Wall Street’s forecasts for the quarter and similarly disappointed industry analysts with its projections for the final quarter of the year.

Target’s reduction in prices for Christmas products, including a Thanksgiving promotion that lowered the cost of the holiday feast relative to last year’s total, raises concerns about disappointing quarterly results.

Target’s latest quarter sharply contrasts with competitor Walmart, which reported another quarter of exceptional revenues on Tuesday and provided positive forecasts for the forthcoming holiday season. Amazon disclosed last month that its quarterly profits had risen. Amazon surpassed projections with an 11% rise in quarterly revenue.

Target fell over 21% on Wednesday morning.

Chairman and CEO Brian Cornell stated, “We encountered distinct challenges and financial constraints that impacted our overall performance.”

FactSet reports that Target’s net income for the quarter ended November 2 was $854 million, or $1.85 per share, markedly below the anticipated $2.30 and a decline from $971 million, or $2.10 per share, in the same quarter of the previous year.

Despite an increase in sales to $25.67 billion from $25.4 billion the previous year, they fell short of Wall Street’s projections.

Target announced that for the fiscal fourth quarter, it anticipates earnings per share to fall between $1.85 to $2.45. This amount is below the $2.65 per share forecast by analysts surveyed by FactSet.

The retailer announced that in the third quarter, its comparable sales, derived from stores and digital platforms operational for a minimum of one year, increased by 0.3%.

This is inferior to the second quarter’s 2% growth. Several months of decreases, comprising a 3.7% reduction in the first quarter and a 4.4% reduction in the company’s final quarter of 2023, were counterbalanced by the rise in the April–June period.

Cosmetics sales rose by almost 6%, whilst food, beverages, and necessities such as shampoo experienced gains in the low single digits relative to the previous year.

The positive attributes were negligible. Target’s quarterly customer traffic rose by 2.4%. Target officials report that this represents an increase of 10 million sales transactions compared to the previous year. Digital comparable sales rose by 10.8% due to a 20% enhancement in same-day delivery facilitated by the Target Circle loyalty program and double-digit growth in its drive-up service.

Target encountered several challenges.

Target’s food and beverage sales constitute under 25% of overall sales, indicating a greater dependence on luxury items such as apparel and accessories.

Target management acknowledged that the company, similar to other retailers, had to redirect specific items due to the strike of 45,000 dockworkers, the first occurrence since 1977.

The accumulation of commodities in warehouses escalated operational expenses and diminished corporate earnings.

The commitment by President-elect Donald Trump to impose elevated import tariffs is resulting in difficulties for Target and other enterprises. Trump advocates for a 60% tariff on Chinese imports and a 20% levy on all other products. Cornell stated that, despite monitoring trends meticulously, the corporation has prioritized diversifying its supplier network.

“Currently, there exists considerable uncertainty regarding future developments, and we will exercise our flexibility to adapt as necessary,” he stated on the call.

Buyers remain apprehensive due to ongoing uncertainty, as prices, albeit decreasing, remain elevated compared to a few years prior.

“They are exhibiting significant patience, pursuing promotions and outstanding value on essential pantry items,” Cornell stated during a conference call with reporters. “Over the year, they have consistently focused on discretionary categories and are practicing prudent shopping behaviors.”

Target officials indicated a decline in television purchases, although they expressed interest in incorporating candles, frames, and flowers into their home décor.

Target has been reducing prices to boost sales. Last spring, it reduced costs for numerous essentials, including milk and diapers. Almost fifty percent of the numerous goods offered this Christmas are priced below $20. Target is offering a Thanksgiving dinner bundle for four people at $20, which is $5 less than its 2023 Thanksgiving meal package.

SOURCE: USN

SEE ALSO:

Comcast Is Expected To Announce Its Cable Network Separation On Wednesday.

Canada’s Budgetary Watchdog Warns Over Trudeau’s Spending

Continue Reading

Trending