Costco adding membership requirement to food courts, reports say

Dive Brief:

Costco has posted signs outside numerous stores stating it will begin requiring a membership for shoppers to access its food court, according to numerous reports. The sign says the change will be effective March 16.
It’s unclear whether all Costco stores will have this requirement or just select stores. The retailer did not respond to Grocery Dive’s request for comment.
A Costco representative told San Diego’s 10News station that “management has no comment at this time.”

Dive Insight:

For years, hungry Costco members and non-members looking for cheap eats have flocked to the retailer’s beloved food court for its $1.99 slices of pizza and $1.50 hot dog and soda combo. Now, after building a successful following, the retailer appears to be leveraging its food court offerings to increase membership count.

Driving member sign-ups has been part of Costco's growth strategy in the past year, the company noted in its first quarter 2020 earnings call. The club retailer has made moves to improve its new member and membership renewal rates, from special credit card promotions to a tiered membership system that includes a $120 annual Executive membership offering cash back rewards and other perks.

In fiscal 2019, Costco added 1.3 million net new cardholders, bringing its total membership to 98.5 million. It also grew membership revenue by 7%, to $3.35 billion.

Costco's hot dogs, pizza slices, $4.99 rotisserie chickens and other selections have stayed the same price for years because they draw droves of shoppers to stores. The company has experimented with new selections and technology, offering healthier fare along with special checkout kiosks in select locations.

Will consumers who only go to Costco for its food court be willing to shell out $60 or more for a membership? By making it members only, Costco risks losing out on prepared food sales. Many Costco fans have even turned to Twitter to express their feelings on the change, with most members enthused because it will reduce lines. Some Costco members say they’ve always had to show their membership cards to eat at the food court.