While many retailers are buckling under the weight of inflation and sky-high interest rates, Costco is thriving.
Its earnings missed analysts’ expectations but the membership-based warehouse club retailer beat revenue expectations for its fiscal second quarter and reported a 7.4% year-over-year increase in membership-fee revenue.
At a time when consumers are curbing their spending in response to higher costs and economic fears, Costco is able to maintain a loyal customer base by prioritizing value and innovating.
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Costco will not sell a product if it feels it can’t offer it at a competitive price. And Costco specifically limits its inventory to about 4,000 items, so it can focus on quality and price.
Related: Costco makes a big change members will love
At the same time Costco is constantly looking at its inventory and finding ways to shake things up. The company also seeks to continuously improve the experience for customers so they’re motivated to renew their memberships.
Costco’s food court will soon again feature a fan favorite.
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Costco’s food court is a big draw for members
One thing that keeps Costco fans coming back to the store is its food court. The famous $1.50 hot dog and soda combo is perhaps the food court’s most famous and economical offering, with a price that hasn’t changed since 1984.
Costco tends to keep its core food court menu stable, knowing how well its mainstay items tend to sell. While purists may be quick to point out flaws in Costco’s pizza, the very palatable $1.99 price point for a giant slice or $9.95 for a whole pie is enough to sway even the pickiest of consumers.
Related: Costco fans are mixed on this new food court addition
Costco fans also tend to love the chicken bake. Though not the cheapest item on the menu, it’s comfort food at its finest.
But just as Costco is constantly assessing its inventory, it also likes to tinker with its food court lineup — both to keep things interesting and make sure it’s offering desirable products to members.
Earlier this year, Costco rolled out a new strawberry banana smoothie to replace the fruit smoothie on its menu. So far, fan reactions have been mixed.
But if Costco sees that its new smoothie isn’t selling, it will no doubt come up with an alternative in relatively short order.
A popular Costco food court item is set to return
Fans of Costco’s food court may remember the hot turkey and provolone sandwich. It featured oven-browned turkey, a generous serving of cheese, red onions, tomatoes, and basil-garlic mayo on a toasted roll.
At a price of $3.99, the sandwich offered a lot of bang for consumers’ bucks. Costco’s current menu, on the other hand, features a chicken and bacon sandwich for $6.99, which is almost double the cost of the turkey and provolone sandwich. The two offerings are comparable in size.
Related: Costco is selling a $2,000 bourbon for $260
Fans clearly weren’t loving Costco’s latest sandwich offering. So on the company’s most recent earnings call, Chief Financial Officer Gary Millerchip revealed a big change.
Millerchip said the “fan favorite turkey provolone sandwich is making a return in Q3.” In fact, some Costco shoppers have already reported sightings of the turkey and provolone combination at their local stores.
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But while Costco fans may be thrilled to see their beloved sandwich return, they may not be thrilled with its new price point.
Like many retailers, Costco has been forced to play around with prices in response to inflation. Members should expect to pay the same price for the revived turkey and provolone sandwich as the bacon and chicken sandwich – $6.99.
In addition to the new sandwich, Costco said it would be switching to Coca-Cola products from Pepsi in its food courts over the summer.
But fans can rest assured that it won’t affect the price of the famous hot dog combo. Costco executives have confirmed in recent months that the $1.50 price point is safe.
Maurie Backman owns shares of Costco.
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