Costco Wholesale (COST.O) is set to increase wages for most of its hourly U.S. store employees, raising top-tier worker pay beyond $30 per hour, according to a company memo shared with employees this week.

Pay Increase Details

• The wage increase will be implemented gradually over the next three years.
• In the first year, top-of-the-scale employees will see a $1 increase to $30.20 per hour.
• Over the following two years, wages will continue to rise by $1 per year.
• Entry-level employees will also receive a 50-cent increase, bringing their hourly pay to $20.

Union Pressure & Negotiations

The decision follows growing pressure from Costco Teamsters union members, who recently voted in favor of a nationwide strike.

• Earlier this month, 85% of union members voted to authorize the strike ahead of a Jan. 31 contract deadline.
• The Teamsters union represents more than 18,000 Costco workers across the U.S.

Company Statement

Costco remains confident that its wages and benefits will continue to outpace competitors in the retail industry.

“With these changes, we believe our hourly wages and benefits will continue to far outpace others in the retail industry,” CEO Ron Vachris stated in the memo.

This wage adjustment solidifies Costco’s reputation for offering some of the highest pay and benefits in the retail sector.

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For over a decade, Costco shoppers have been sipping Pepsi alongside their $1.50 hot dogs at the warehouse giant’s food courts. But now, Coca-Cola is set to make its return to Costco’s soda fountains this summer, replacing Pepsi, its longtime competitor.

Costco’s Decision to Switch Back to Coca-Cola

At Costco’s annual shareholders meeting on Thursday, CEO Ron Vachris confirmed that the company would be returning to Coca-Cola products in its food court fountains. He addressed speculation when a shareholder directly asked, “Are we truly switching back to Coke products?”

The switch will see Costco once again offering Coca-Cola sodas alongside its iconic $1.50 hot dog deal. The transition ends Pepsi’s reign in Costco’s food courts, a relationship that began in 2013. Costco has long solicited bids from various companies for its fountain drink business, and Pepsi had won the contract nearly 12 years ago.

Pepsi’s Exit and Coke’s Return

The shift back to Coca-Cola is significant since the soda giant had been a mainstay at Costco for decades before Pepsi took over. A Costco executive remarked in 2013 that the switch was a “big shift” for the company, as Coke was the only vendor at most of Costco’s locations for years.

At the time, the decision to switch was tied to Costco’s desire to “preserve the integrity” of the beloved $1.50 hot dog and soda combo, which has remained the same price since 1985. Despite selling millions of these combos annually—around 150 million last year alone—Costco loses money on each sale. However, the company compensates for these losses by raising prices on other products in its stores, ensuring the overall model remains profitable.

Why the Hot Dog Deal Matters

The hot dog combo is more than just a food item for Costco. It’s a key part of the company’s brand identity. Co-founder Jim Sinegal has famously stated, “We’re known for that hot dog. That’s something you don’t mess with.” The $1.50 deal has become a powerful marketing tool and symbol of Costco’s commitment to value.

In fact, when Costco has considered raising the price of the combo, co-founder Sinegal made his stance clear with the memorable quote: “If you raise the effing hot dog, I will kill you. Figure it out,” as recalled by former CEO Craig Jelinek.

Costco’s Commitment to the Iconic Deal

Despite rising inflation and increasing costs, Costco has reassured its customers that the $1.50 hot dog combo is “safe.” The company understands the importance of this low-cost offer and has prioritized keeping it unchanged for its loyal members.

As Costco shifts back to Coca-Cola, the $1.50 hot dog and soda combo will continue to be a fan favorite, staying true to Costco’s promise of value and consistency.

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