When Costco (COST) fans celebrated the retailer's decision to keep the price of its hot-dog-and-soda combo at $1.50 "forever" last fall, very few focused on another side of the announcement -- namely that the chain would have to compensate somewhere.
In its fourth-quarter earnings call, Chief Financial Officer Richard Galanti said that Costco would need to "be more aggressive in other areas" to both make up for food inflation and be loyal to customers who have come to love the decades-old price consistency of the combo.
The latter was especially important as, Walmart (WMT) offshoot Sam's Club upped the ante by lowering the cost of its own hot-dog-and-soda combo by 12 cents to $1.38.
The Cost Of Costco's New Roast Beef Sandwich Is Causing Outrage
But one can't escape the rising price of food indefinitely and, last week, Costco shoppers in Lynnwood, Wash., saw a new menu item with a price significantly out of line from a food court known for $1.99 pizza slices and a $3.99 chicken bake: a $9.99 Roast Beef Sandwich.
Read More: Sam's Club Cut to Popular Costco Food Deal Fuels Viral Debate
The sandwich, which the chain describes as having "sliced roast beef, onion relish, mayo/mustard blend, lettuce, roasted cherry tomatoes [and] red onions on an artisanal roll," was first posted on Reddit by a Lynnwood shopper.
The post on the Costco subreddit quickly started gaining traction, generating over 2,100 likes and 560 comments. Many criticized the price as a "slippery slope" that veered far from what shoppers usually expect from the Costco food court.
"10 dollars!? Is it the same size as the pizza?" wrote one user in reference to the $9.99 pizza.
"Only slightly more expensive than two whole rotisserie chickens…" wrote another. The $4.99 chicken is another cult Costco favorite that has withstood the cost of inflation.
"Is the beef wagyu?" wrote yet another. "It should be for $10."
Some Popular Items Aside, Food Inflation Is Very Real
Throughout the last year, food inflation has hit both retailers and shoppers. Between January 2022 and 2023, the cost of groceries rose by 11.3% while eating out is now 8.2% more expensive.
While significantly less dramatic than the 32% jump in egg prices, the cost of beef is also up 5.3% between 2021 and 2022.
On Costco's end, the chain reacted to rising food costs by raising its chicken bake from $2.99 to $3.99 and the price of the standalone soda from $0.59 to $0.69 last summer.
In Costco's latest earnings call, the CFO said that raising the price of its $60-a-year membership was also a "question of when not if."
"There's no analytical framework we use other than we feel very good about our member loyalty and our strength," Galanti told investors in December. "And if we wanted to do it yesterday, we could. If we want to do it six months from now, we can."
But any increase is unlikely to go over well with shoppers -- particularly for a chain like Costco, which has built a reputation around offering grocery deals and savings.
"$10 for a single-serve, individual item doesn't seem to fit in well with the rest of their lineup," wrote one more Reddit user. "I would expect this to be a poor seller and get scratched from the lineup quickly."
