Business

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

Published

1 month ago

2024-03-27

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.

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.”

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.

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)

Innovation

NASA Astronauts Arrive For Boeing’s First Human Spaceflight

Published

12 hours ago

2024-04-26

Kiara Grace

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The location is Cape Canaveral, Florida. On Thursday, the two NASA astronauts designated for Boeing’s inaugural manned space mission arrived at the launch site approximately one week before their planned departure.

Butch Wilmore and Suni Williams have been selected as test pilots for Boeing’s Starliner capsule, marking its inaugural crewed mission following significant delays. On Thursday, they traveled by air from Houston to Kennedy Space Center.

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NASA Astronauts Arrive For Boeing’s First Human Spaceflight

Scheduled for launch on May 6 using an Atlas rocket, the Starliner spacecraft will go to the International Space Station for a week-long test mission. Boeing is endeavoring to close the gap with SpaceX, which has been conducting manned space missions for NASA since 2020.

Boeing’s two earlier Starliner test flights were unmanned. The initial launch in 2019 was unsuccessful in reaching the space station due to software malfunctions and other technical issues. Boeing replicated the demonstration in 2022. In more recent times, the capsule encountered problems with its parachutes and had to address the issue of flammable tape that needed to be eliminated.

Wilmore emphasized that this is a test flight intended to uncover any anomalies.

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NASA Astronauts Arrive For Boeing’s First Human Spaceflight

Do we anticipate flawless execution? “This is the inaugural manned voyage of the spacecraft,” he informed the press. “I am confident that we will discover information.” This is the reason why we engage in this activity.

NASA enlisted the services of SpaceX and Boeing ten years ago, allocating billions of dollars to facilitate the transportation of personnel to and from the space station. Despite the space station’s planned closure by 2030, the space agency remains enthusiastic about procuring capsules from two rival businesses to transport its astronauts.

“That is of utmost importance,” Wilmore remarked.

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NASA Astronauts Arrive For Boeing’s First Human Spaceflight

Wilmore and Williams are set to become the inaugural astronauts to embark aboard an Atlas rocket since NASA’s Project Mercury in the early 1960s.

SOURCE – (AP)

Business

The TikTok Law Kicks Off A New Showdown Between Beijing And Washington. What’s Coming Next?

Published

13 hours ago

2024-04-26

Kiara Grace

Understanding What Happens When You Buy TikTok Followers

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WASHINGTON – TikTok is preparing to engage in a legal battle against a U.S. legislation that would compel the social media platform to sever its connections with its China-based parent company. Chinese authorities likely support this action, as the intense rivalry between the United States and China jeopardizes the future of a highly popular online platform for young Americans to connect.

Beijing has indicated that TikTok should resist what it perceives as a “robbers” move by U.S. politicians who aim to seize all the valuable assets possessed by others. If a judicial challenge is unsuccessful, experts believe that Chinese authorities are unlikely to permit a sale, as this may be interpreted as yielding to Washington.

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The TikTok Law Kicks Off A New Showdown Between Beijing And Washington. What’s Coming Next?

Alex Capri, a senior lecturer at the National University of Singapore and research fellow at Hinrich Foundation, suggests that Beijing is concerned about the negative implications that the U.S. action against the popular short-form video platform could have, as it may establish an undesirable precedent. “If Beijing surrenders to the United States, what will be the ultimate outcome?”

Parent firm ByteDance issued its first formal comment on the new rule in a post on Toutiao, a Chinese news app owned by the company. The statement explicitly mentioned that ByteDance has no intention of selling TikTok. In response to media reports, the firm based in Beijing addressed the speculation around exploring potential possibilities for selling TikTok’s U.S. business.

The legislation that U.S. President Joe Biden signed this week may allow Washington to extend its reach to target other China-related apps, such as the well-known e-commerce platform Temu, according to Hu Xijin, a former editor-in-chief for the party-run newspaper Global Times. Furthermore, it could encourage U.S. allies to take similar actions.

According to Hu, a political commentator, TikTok, with its 170 million American users, should display more courage and determination by refusing to give up and fighting until the very end.

TikTok has pledged to contest the recently enacted U.S. legislation that mandates ByteDance to sell off its ownership interests within a one-year timeframe in order to prevent a ban. The corporation has described the regulation as a violation of the freedom of expression of its users, the majority of whom utilize the program for amusement purposes.

The company expressed confidence in its position, stating that it firmly thinks the facts and the law support its case, and they are confident in its ultimate victory.

The dispute around TikTok has escalated the tensions between the United States and China, as both countries have pledged to safeguard their economic and national security concerns. U.S. legislators are apprehensive about the Chinese ownership of the application, as it may potentially enable Beijing to exercise undesirable influence on the United States, particularly on the impressionable minds of young individuals.

Washington has achieved a series of triumphs in reducing the influence of Chinese corporations through bans, export controls, and forced divestitures. This has led to protests from Beijing, who believe that the U.S. is intentionally trying to suppress China’s economic growth through coercion.

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The TikTok Law Kicks Off A New Showdown Between Beijing And Washington. What’s Coming Next?

The United States has previously compelled Chinese corporations to sell off their assets. For instance, in 2020, Beijing Kunlun, a Chinese mobile video game company, agreed to divest itself of the gay dating app Grindr following a directive from the federal government. However, TikTok, which was developed by a Chinese corporation exclusively for the international market, serves as a prominent example of China’s technological prowess on a worldwide scale. Beijing is determined not to relinquish control over this influential platform.

Gabriel Wildau, managing director of Teneo, a consultancy and advisory firm based in New York, stated that national dignity is at risk and may be prioritized over the financial interests of ByteDance investors, especially global investors with a 60% stake in the company.

The corporation is anticipated to mount a legal battle that will heavily rely on First Amendment considerations and has the potential to be protracted for several years. Analysts assert that Beijing is relying on a favorable legal outcome.

The course of action to be taken if TikTok fails to succeed is currently under discussion with the Chinese authorities, according to Dominic Chiu, an analyst with Eurasia Group. Chiu stated that President Xi Jinping, who has the authority to approve or disallow the transaction, has likely yet to make the definitive choice.

Fortunately for Xi, Beijing does not face any immediate pressure to decide, according to Sun Yun, the director of the China program at the Stimson Center in Washington. “There is a possibility for numerous alterations,” she stated.

If lawmakers’ desire for a sale of TikTok is fulfilled, the procedure is expected to be complicated for the company. TikTok would need to separate its activities in the United States from all other aspects of its business.

Firstly, the cost of acquiring TikTok’s U.S. operations, although undisclosed, is anticipated to be substantial enough to significantly restrict the number of potential investors and companies capable of affording it. Several investors, including former Treasury Secretary Steve Mnuchin, have already positioned themselves as potential purchasers of a U.S. iteration of TikTok. According to market tracker Pitchbook, ByteDance, a privately held company, has a valuation of $220 billion.

There is now a lack of clarity on the fate of the TikTok algorithm, which is the secret formula responsible for delivering personalized short videos to users depending on their preferences. This algorithm has played a significant role in establishing TikTok as a dominant force in popular culture.

ByteDance would be prohibited from having control over the algorithm of a U.S. subsidiary of TikTok. According to many experts, Chinese authorities are likely to prohibit the sale of the technology that appears in people’s TikTok feeds, based on the amended export regulations of 2020. After the federal courts blocked former President Donald Trump’s attempt to outlaw TikTok through an executive order, this revision took place.

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The TikTok Law Kicks Off A New Showdown Between Beijing And Washington. What’s Coming Next?

According to certain individuals, including Mnuchin, it is necessary to reconstruct TikTok in the United States by employing novel technology. However, it is uncertain how this will manifest or how effectively it will replicate the kind of video suggestions that viewers have become accustomed to.

According to Robin Burke, a professor of information science at the University of Colorado Boulder, certain elements of the algorithm might potentially be duplicated by individuals within the company. However, he also observed that TikTok has certain areas where it outperforms its competition, making it difficult to replicate.

“TikTok possesses extensive experience and a wealth of data,” Burke stated. “I believe it is improbable for a U.S. company, without inheriting the technology from its parent company, to construct something of equal caliber.” Definitely not immediately.

SOURCE – (AP)

Electronics

FTC Sends $5.6 Million In Refunds To Ring Customers As Part Of Video Privacy Settlement

Published

1 day ago

2024-04-25

Kiara Grace

AP - VOR News Image

The backslash character – escapes special characters in programming languages and other contexts. The following information is from a news article published by the Associated Press: Due to a settlement with Amazon-owned Ring, the Federal Trade Commission is giving consumers over $5.6 million in reimbursements. Ring was accused of neglecting to safeguard private video data against unauthorized access.

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FTC Sends $5.6 Million In Refunds To Ring Customers As Part Of Video Privacy Settlement

The FTC complained in 2023, alleging that the doorbell camera and home security provider permitted its employees and contractors to gain access to consumers’ confidential videos. Ring purportedly utilized this film for algorithmic training without obtaining authorization, among other objectives.

Ring was additionally accused of neglecting to install crucial security measures, thereby allowing hackers to get control over customers’ accounts, cameras, and footage. The FTC observed that this resulted in severe breaches of users’ privacy.

The final settlement necessitated Ring to remove unlawfully acquired content, implement enhanced security measures, and pay a substantial penalty. The FTC is currently utilizing a significant portion of the funds to provide refunds to qualifying Ring customers.

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FTC Sends $5.6 Million In Refunds To Ring Customers As Part Of Video Privacy Settlement

As per a notice issued on Tuesday, the FTC will be delivering 117,044 PayPal payments to consumers who were affected and owned specific types of Ring devices, such as interior cameras, during the periods when unlawful access is claimed to have occurred.

Customers who meet the requirements must claim these payouts within 30 days, as stated by the FTC. The FTC also mentioned that consumers can reach out to Rust Consulting, the refund administrator for this case, or refer to the FTC’s FAQ page on refunds for further details regarding the procedure.

Ring has stated that unauthorized individuals used stolen email addresses and passwords from other companies to gain unlawful access to certain customers’ Ring accounts in 2019. This occurred because these customers used the same login credentials on multiple websites. Upon discovering this breach, Ring promptly notified the affected customers and took measures to safeguard their accounts.

Ring did not promptly respond to the FTC’s accusations regarding employees and contractors inappropriately viewing footage.

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FTC Sends $5.6 Million In Refunds To Ring Customers As Part Of Video Privacy Settlement

In a recent announcement, the California-based company confirmed that it will no longer accept requests from police agencies to access doorbell camera footage from its users. This decision effectively terminates a controversial function that had faced scrutiny from privacy advocates.

SOURCE – (AP)