For millions of Costco members, a trip to the warehouse doesn’t necessarily end when the shopping is done. It often ends at the food court.
The food court has become an important part of Costco’s value proposition, pairing the retailer’s bulk merchandise with famously low-priced meals and treats.
The $1.50 hot dog-and-soda combo is perhaps the best-known example, but pizza, ice cream, and other food court offerings have become part of the Costco experience.
That’s important, because Costco’s business model depends heavily on membership loyalty. Rather than relying primarily on high merchandise markups, the retailer uses membership fees as a significant source of profit while keeping prices competitive.
A low-cost food court reinforces that value message and gives shoppers another reason to feel that their membership delivers tangible benefits.
Now, Costco is making a change to the food court that longtime members are likely to notice.
Costco is bringing back a fan favorite
During Costco’s latest earnings call, CFO Gary Millerchip confirmed that the famous churro is returning to the company’s U.S. food courts.
“For a limited time, the food court churro will be returning to all our U.S. locations starting this month,” Millerchip said.
The announcement comes after speculation about the churro’s return generated significant attention online. Millerchip specifically referenced that chatter when confirming that the rumors were true.
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The move is relatively small compared with Costco’s broader business. The retailer generated $93.87 billion in fourth-quarter net sales, while comparable sales rose 9.4%.
But Costco’s food court has never needed to be a transformative business on its own. Instead, menu changes can help create excitement around the warehouse experience.
Not long ago, Costco introduced its Vanilla Cookie Crunch Sundae, another dessert designed to give members something new to try and talk about.
The churro follows that same playbook, but with an added element of nostalgia.
Costco is bringing the churro back to its food court for a limited time.Shutterstock
Food court menu updates fit Costco’s larger strategy
Costco has plenty of reasons to keep its food court exciting. The retailer wants members visiting its warehouses frequently, because every additional visit creates another opportunity to make a sale.
That makes food court changes strategically useful.
The return of the churro can generate social-media attention, encourage members to make a specific trip to the store, and reinforce Costco’s reputation for delivering inexpensive treats alongside its larger value proposition.
The timing also fits Costco’s broader emphasis on giving members value.
The retailer has repeatedly highlighted the importance of offering compelling products at attractive prices, particularly as consumers remain selective about where they spend their money.
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Of course, the churro won’t materially change Costco’s financial results. But that isn’t really the point.
For Costco, the food court is another way to turn a warehouse visit into an experience members associate with value. Bringing back a familiar favorite for a limited time gives shoppers a reason to stop in.
It also sends the message that Costco is invested in keeping the shopping experience interesting. That, combined with consistent value, could lead to solid membership renewal numbers at a time when more consumers are cutting back.
Maurie Backman owns shares of Costco.
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