Costco fans fume as new store rules come into effect

Costco's crackdown on a major loophole at its outdoor food courts started this week.

New rules require staff to ask to see a Costco membership card for purchases at its 18 outdoor food courts across America. 

Until now, staff had turned a blind eye to nonmembers stopping by for its iconic $1.50 hot dog and soda combo at the outdoor food courts.

Staff normally check cards as customers enter stores - meaning nonmembers cannot normally eat at indoor food courts. But servers at food courts outside in car parks almost never checked. That has changed with the new rule.

Members have welcomed the move - saying it will cut some lines - but Costco fans who were not members and had been using the loophole have complained.

Costco staff have been told to check if customers are members when they use the food court

Costco is warning that it will crackdown on a loophole that allowed people to use its food courts even if they were not a member

 Gary Millerchip is the new CFO of Costco. He took over in March. It is not clear if he is behind the tighter rules on nonmembers at food courts

A Costco member wrote on X: 'Lines have dropped dramatically when they reinstated the membership only for food cou

Another member wrote on X: 'If you don't got a Costco membership. You no longer can get food from their food court. Started today. 

They got the reply: 'Good. No more long lines for pizza.'

The original poster added: 'I’m not mad at it for that reason. Hopefully the lines ain’t mad long anymore.'

Another member said on X: 'Great. Maybe I can get a seat in the food court now.' 

But in reply a nonmember complained: 'This is incredibly dumb and I hope it backfires. I’m sorry but a seat in the food court of Costco is not a big enough deal to cut access to affordable food for folks who need it. 

'It will hurt those who need it more than it will help members who don’t.'

A Reddit user posted a sign from outside an outlet in Orlando, which read: 'Effective April 8, 2024, an active Costco membership card will be required to purchase items from our food court.' 

Costco's $1.50 hot dog and soda is a huge hit with members and has been the same price for decades

There has always been a rule that people need a membership to enter warehouses. This means nonmembers have typically been restricted from indoor food courts.

But at Costco warehouses with outside food courts or a kiosk, people without memberships have been able to avoid checks. 

As a result, many non members have become used to being able to buy the $1.50 combo or other favorites.

It is the latest attempt to crack down on customers sharing membership cards.

Staff at a warehouse in Washington - near its HQ - in January started scanning shoppers' cards before they enter.

That pulls up a photo of the cardholder on a screen, which the worker at the entrance can compare with the person standing in front of them.

Normally shoppers simply flash their card at that employee, who may or may not choose to scrutinize the small photo printed on it.

The new system is thought to be a trial ahead of a potential broader rollout.

Costco charges either $60 or $120 annually for either basic or executive membership but is widely expected to raise fees soon. Official policy is that anyone with a card can bring two guests with them on each visit.

Membership fees are a key source of revenue. In a recent earnings report, it emerged they came in at $1.11 billion for the three months for the year ending February 18, up from $1.03 billion a year ago. 

Costco's finance chief is stepping down after 40 years - and he gave an interview last week on a topic that members are obsessed with.

Pictured is the setup at the entrance of the Costco warehouse in Issaquah, Washington, that enables a store employee to view the photo associated with a membership card

Costco membership fees usually account for more than half of the company's profits

In a 2022 earnings call Galanti told analysts that the $1.50 price was 'sacrosanct' and would remain at that level 'forever.'

But this week, he gave a less definite answer when he was interviewed by Bloomberg.

This week, he was asked: 'What will happen to the $1.50 hot dog and soda combo when you are gone?'

His reply was: 'It's probably safe for a while.'

That is not as clear as the outlook he gave in 2022 - when he called the deal 'sacrosanct'.

Costco fans will now be looking for a clearer answer from Gary Millerchip, the former Kroger exec who is taking over as CFO.

He is next likely to speak at Costco's quarterly earnings expected in June.