Does Costco Cost More? Costco Vs. Cash & Carry
Saving money on food is a huge part of saving for financial independence. For the average family in the United States, food counts for seven thousand dollars of annual spending. It’s the largest single spending category outside of housing and transportation.
Love it or hate it, buying in bulk saves money. Costco has been a champion on this front since the 1980’s, and a big force in lowering our grocery spending over the years. I’ve been a huge fan of Costco, and once even had the opportunity to meet and speak with Jim Sinegal (Costco’s founder).
Lately though, Costco has been sucking eggs — the groceries aren’t as affordable as they used to be. While the famous Costco rotisserie chickens might still be $5, many of my favorite “regular” products have been removed in favor of “luxury” options. Costco (to my eyes) now appears to be a retailer of “luxury” goods.
Thankfully, there is finally some competition in the bulk food arena — Cash & Carry. For those of you not familiar with Cash & Carry, it’s a regional wholesale food retailer with 61 locations in Western states: California, Washington, Oregon, Idaho, Nevada, Utah, and the first store in Montana opens in a few weeks. The chain is growing like gangbusters, with new locations opening all the time.
Cash & Carry styles themselves as a retailer where “restaurants buy better”, but any Joe-off-the-street can walk in and buy a 5 gallon bucket of mayonnaise if they like. (Maybe you want to take a bath in mayonnaise?)
Since a Cash & Carry recently opened in my area, it’s high-time I did a formal battle between the two!
Let the Battle Royale begin!
Price
OK, so technically a battle royale is a fight between many competitors. In this case, I’ve already narrowed the field down to just two competitors…. but a Battle Royale just sounds so much cooler. So just go with it, OK?
To begin this battle, we’re going to start with the most important factor on every shopper’s mind: Price.
While both retailers offer thousands of items, I’m going to limit my comparison to just the items that currently matter to me.
Why do these items matter to me? They were on my shopping list this month! Feel free to run your own price comparison if I’ve neglected something you purchase with regularity.
While both retailers do offer many of the same items in bulk, there are often slight differences in packaging and size. Larger volumes typically have larger discounts, so I’ll be attempting to match packaging sizes where possible, and comparing the unit pricing to determine the winning retailer (price per pound, price per gallon, price per barrel of mayonnaise, etc).
Without further ado here are the numbers:
This was pretty much a landslide in Cash & Carry’s favor. Yellow wins. In most of the categories I priced, C&C was the clear leader with an average unit price advantage of 38%. That huge! The only categories they didn’t win were avocados, butter, and pork tenderloin.
Overall, C&C was the winner with a 31% advantage in the total shopping cart. Smaller sizes and cheaper unit prices made the difference here.
Advantage: Cash & Carry
Selection
When it comes to a large selection, it would appear that Costco takes the advantage by going wide instead of deep. They have far larger stores, and carry an impressive number of non-food items… yet according to reports, the stores only sell 4,000 different SKUs at any one time. (In comparison, the average Walmart sells 70,000 SKUs.)
You can buy your groceries, tires, diapers, and t-shirts all in one location, but only in one color. 😉 If you enjoy the “treasure hunt” that Costo provides, they’re clearly the winner when it comes to a wide selection.
A typical Cash & Carry store stocks about 8,000 products, some of which are very unique items that I’ve never seen at Costco — various kinds of rice noodles, dried beans and lentils, mirin, tonkatsu sauce, mini tortillas, a huge variety of spicy peppers, and many more. Basically anything you might need to make a variety of ethnic dishes is available at C&C.
It’s tough to call a winner here, so I won’t. Instead, I’ll call it a tie. Both stores have advantages and disadvantages in their product selections.
Advantage: Tie
Membership Fees
Most warehouse stores typically have membership fees, and we would be negligent if we didn’t include these fees in our battle.
A standard Costco membership is currently $60 for a year. If you shop there once a week, this works out to be $1.15 on top of your weekly bill. Every other week, and that’s $2.30 per visit.
Cash & Carry does things a little different. They have no membership fees. Clearly, $0 is better than $60, so I’ll declare Cash & Carry the winner.
Advantage: Cash & Carry
Online Price Checkability
If you’re anything like me, you end-up buying groceries from a few different stores — There is no one-stop shopping for everything a family needs.
Before we head out the door, we try to check prices online first. Some stores will have sales, and prices will vary from week to week. It’s to the consumer’s advantage to not get into shopping habits — check prices before you ever step foot in a store.
Unfortunately, some retailers aren’t very forthcoming with pricing information online. Costco doesn’t put grocery prices on their regular website (notice I said “regular”… more on this later). Instead, they want you in their stores shopping at the “treasure hunt” while you stock up on cage-free eggs and organic bacon.
Here’s a trick I learned years ago — While Costco’s regular website doesn’t offer online grocery prices, their business delivery site does. Just pop in your zip code, and start searching. They carry many of the same items as the retail store, and prices are the same.
It’s not a perfect solution though — the business delivery site contains many items not available at regular Costco stores — be careful when pricing Costco items online using this method. If you can’t match the brand and product size, it’s probably a product only available for business delivery.
Cash & Carry has a completely different set of online tactics — They allow customers access to product prices without jumping through extra hoops. All products found online are available in the stores, including those with sale prices.
Advantage: Cash & Carry
Organic Food
While Cash & Carry does carry many organic items, the clear winner here is Costco. With 20% organic SKU growth in 2016, Costco has been moving into organic groceries in a huge way the last few years. They now stock organic options in most grocery categories.
Not everyone wants to buy 100% organic, but for families looking to eat organic, Costco has many good options.
Advantage: Costco
Crowds
Have you ever walked into a Costco on a Saturday and been overwhelmed by the crowds? I know I have. It’s a complete zoo!
Shopping at Costco on the weekend feels like a war, and the free food samples don’t help the situation. With people crowding around the sample tables it can be impossible to move quickly through the store.
They do have lots of employee though, so the wait at the checkout line is never terrible — fifteen minutes at most. My average shopping trip at Costco takes about 1 hour on the weekends, and 30-45 minutes during the week.
Meanwhile, Cash & Carry is a relatively peaceful shopping experience. The lines are much shorter, and the aisles are not crowded. They don’t have samples, but who really needs to try all that processed food anyway? (We try to skip processed foods)
Compared to Costco, C&C is a much faster trip. What’s the longest line I’ve ever seen at my local Cash & Carry? Three customers in front of me. My average shopping trip takes about 30 minutes. I’m in-and-out relatively quickly.
Advantage: Cash & Carry
And The Winner Is…
The ultimate winner here is the consumer — with more price competition grocery spending can be lowered. Savings for financial independence can increase! It’s a clear win for the consumer.
That said, Cash & Carry won the battle today by winning 4 out of 6 categories. Yes, they don’t sell shampoo, clothes, and kayaks like Costco… but they aren’t trying to either!
Could Costco win the price war again tomorrow? Sure, Costco could decide to cut prices and become more competitive. Will they? I doubt it. Cash & Carry is a tiny speck compared to Costco. People will continue to shop at Costco for luxury goods, and pay those annual membership fees for a very long time.
I know my family will continue to shop at Costco for things like shampoo, toothpaste, toilet paper, and diapers. That said, we’re beginning to wonder if paying the annual membership fee is still worth it.
It’s clear to me that Costco has lost some of it’s magic. It’s no longer a frugal shopper’s dream. A small upstart like Cash & Carry can come into town and provide a better shopping experience, and better prices. It shouldn’t be that easy to ‘beat’ a giant like Costco, but they clearly do.
Costco’s “moat” probably isn’t as strong as it used to be. Even “regular” grocers are competitive with Costco’s prices these days! Competitors like Cash & Carry are now taking market share from Costco. If I was a Costco investor (like my blogging buddy Tawcan), I’d be very worried about that.
With Amazon’s recent purchase of Whole Foods, I believe Costco is going to come under some significant pricing pressure over the next few years. For consumers, this is going to be a fantastic time to buy groceries.
In the meantime, look for a Cash & Carry in your town to enjoy the savings!
Wow I have never heard of Cash&Carry before. I live in DC, and I definitely have never seen one in the area. It’s amazing that CC has lower prices than Costco. I agree that some items at Costco are still very expensive. Can’t wait until CC comes to the East coast!
P.s. I like your mayo joke haha
You only thought I was joking! 😉
Right now in NC we only have Costco and Sam’s Club. We actually found that we can save more by shopping at Aldi and Amazon vs Costco and there is no membership or giant things of ketchup in the pantry. For example I just bought milk for $2.26 per gallon and a dozen eggs for the insane price of $0.47.
Sadly, there’s no Aldi out west (yet), but $0.47 for a dozen eggs *is* insane!
We don’t have cash and carry here either so I’m relegated to Costco for now.
I agree with you that their prices haven’t been the best recently but with five kids in a family they do save us some money. Thankfully we have a phenomenal grocery chain here (H-E-B) that can go toe to toe with Costco in a lot of areas.
I had to look up H-E-B. It looks like they’re limited to Texas. It’s surprising how all these little regional grocery players can compete *very well* with the global giant Costco.
Clearly, Costco has lost some of their mojo.
There is a retailer in Germany called Metro, and their stores are called Metro Cash & Carry 😉
I am letting my Costco membership expire, because there is just too much traffic there ( parking lot is frequently packed, and it takes a while to check out). I am not talking about weekends either. My time is always scarce, and I place a higher value on going in and out of shops quickly. Sitting in lines is not something I enjoy.
I think that on average, Costco does not offer that big of a discount for things I buy. Some things are actually more expensive. Others, like organic fruits are cheaper. Since I have to buy in bulk, I may overspend and could also get spoilage. So in effect, I may end up losing money by going to Costco. Since there is limited selections, there are a lot of other items I end up buying elsewhere, so I end up with trips to several other stores to catch up ( e.g. my cat only eats a type of wet food that is sold everywhere else but at Costco)
That being said, COST is a company that I have never invested in, because I always thought they were “overvalued”. I would think that rising membership numbers are good for the business and its investors.
They certainly did offer good discounts in the past, but lately I’m seeing the same thing you are. It’s a mix — some things are cheaper, but many are more expensive.
They’ve done very well for investors in the past (something like a 5,000% return), but the strategy seems to be changing.
We’re in the Midwest so we don’t have a Cash & Carry by us, but I’m definitely going to keep my eye out. It sounds like a good place to shop!
We were a member of BJs for a few years and then stopped for a while before joining Costco. We only stayed with Costco for a year – we really weren’t impressed.
Regardless, I’m sticking with Aldi. They might not do bulk or have name brands, but the food is very good and I’m sure we come out further ahead even over buying in bulk like we used to. As an added bonus, they’ve removed items with artificial colors and have lots of organic and non-GMO foods.
— Jim
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The east coast/midwest has Aldi. We have Cash & Carry out west. I would love to see Aldi here, and I’ve heard they are planning a major expansion. Crossing my fingers — competition is a very good thing.
Hmm interesting we don’t have C&C here in Canada. Is C&C listed?
Here in Vancouver Costco does offer a huge discount over other grocery stores so lot of people shop there.
It’s a subsidiary of SFS. Next time you cross the border into Washington, check one out!
I’ve heard Costco is in Houston but I’ve never seen one. First time I’ve heard of C&C. I’ll watch for them both. I find good deals at Aldi’s. A little further drive but worth it except for meat which is no-brainer from Joe V’s.
Also I am human or cephalopod.
The closest C&C in my area is 16 miles away from me. If it was closer I’d give it a shot, but 32 miles driving for groceries makes our Costco and local Indian stores the winners
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I don’t blame you, that is a long ways away.
Thinking of canceling my Costco membership in the new year. Never been to a cash and carry facility. Will have to check it out.
I am interested to see what Amazon does in this field in the next few years. Will they get prices down and provide lots of competition to the big players?
Oh wow! I’ve never even heard of Cash & Carry–thanks for featuring them. We canceled our Costco membership because we just weren’t recovering enough funds to justify the membership fee. But hey, if you can make up for the fee in savings, I could see how Costco is a good investment. I think it just depends on what you buy and how many people you’re feeding.
Costco used to be good for large families, but I’m not so sure anymore. Their prices don’t reflect good bargains anymore, and my analysis seems to reflect this.
The one thing I note in looking at your comparison spreadsheet is that BOTH stores are rather pricey versus the normal stores I visit around Raleigh. I don’t shop at Costco (those lines, yo!! and I don’t want to buy 5 gallons of ANYTHING unless it’s liquid awesomeness), so I can’t really say whether our costco is any cheaper than your costco, but those prices sound about right. I visited costco many years ago and quickly realized my combo of Aldi plus the occasional sale items at regular grocery stores gets me stuff way cheaper and not in bulk sizes. And I’m in and out in 20-30 minutes max in most places (except Walmart which inexplicably takes an hour no matter what we’re getting).
Once I get back to Raleigh I need to visit Costco and do a formal cost comparison. Maybe I’ll be surprised!
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We do live in a high cost of living area, so I wouldn’t be surprised if your Costco was considerably cheaper!
Typically we do pick up sale items from regular grocery stores, or our local asian grocer (see my post about Nametake for example). But, sometimes it’s just cheaper to buy certain items in bulk. I always try to price check first, and limit myself to a 1 gallon maximum! 😉
Did not know about Cash & Carry! I don’t pay as much attention to grocery stores now that we get our food from all over the world while travelling. Will definitely check them out when we’re in the States though.
With no fees, CC definitely wins over Costco. And for organic produce, we usually go to Trader Joe’s when we’re in the States.
What do you think of Safeway versus CC?
Safeway tends to be pretty expensive in my area. They do have loss leaders like most grocery stores, but I find that everything that *isn’t* on sale is just kinda overpriced. If we’re going to a regular (non-bulk) grocery store, we usually hit-up either our nearby Fred Meyer, Trader Joe’s, or our local asian store.
Mr. Tako,
We have been seriously considering dropping our Costco membership, especially since I found out the membership fee has gone up. You are right they do have much more in what seems to be luxury items instead of bargains.
We have been shopping at Cash and Carry for many years but still never gave up our Costco Membership…mostly because we live about 3 miles away from.
Lately, we have found Grocery Outlet and a smaller family run store in my town to have less expensive fruit/veggies/cheese/spices/chocolate than Costco. We used to buy TP/Razers/shampoo/female products/protein powder at Costco but found we can get those items on Amazon Subscribe and Save for a much better price. So the only thing we buy at Costco is coffee…I don’t think it is worth it just for Coffee.
After being in Spain and France last September and shopping at Aldi’s I have been emailing them about once a month petitioning them for a store here in the Seattle Metroplex. Hopefully they will build one before my teenagers are out of the house…lol
I’ve heard Aldi is planning a huge expansion … here’s to hoping we get a nearby store!
The good thing for Costco is their brand name, people will blindly go in and shop like crazy without looking at the prices. As you clearly point out, this is the wrong approach. You have to stay vigilant and keep an eye out for the pricing. Complacency is expensive!
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Thanks for teaching me something new. There is a C&C 2 miles away. I have no idea this store existed. We’ll take a field trip this weekend. We usually shop at Winco. The price is very good compare to Safeway. I really hate the shopping experience at Costco. Way too many people there. I like the Kirkland brand, though. It’s nice that we can get Kirkland from Amazon now.
I wasn’t aware Costco was selling stuff on Amazon now. Is there some kind of markup?
Ditto with Retire by 40. We also have been WinCo shoppers but it looks like that may change. I just googled if they will accept visa…and yes they do! Who would have thought with a name like cash and carry? That will be good for travel hacking support shopping! Thx Tako!
Chris,
They changed to CC at the same time they opened membership up to non business owners about 10 years ago…great for us.
We don’t have a Costco close to where we live in NH, but we do have a BJ’s. I go back and forth on whether the membership is worth it. We just renewed–my husband got a special $35 for 18 months deal through work– so I’m sure I’ll be shopping there a lot more. I find that staples like eggs, butter, etc., make so much more sense to buy at my local grocery store. Wish we had an Aldi’s!!
Learn something new everyday! Thanks for sharing the nugget of knowledge that is Cash & Carry. Being in California, I hadn’t seen one yet so I had to look up where the closest one was. Alas, they are 30-45 minutes away, no wonder. I will definitely check one out when I am in the area.
At least our local cash & carry has a walkin freezer room that is wonderful on a hot summer day. Miss the hotdog/drink for $1.50 but if I want I can always walk into costco and buy it.
Oh yeah, ours has that sub zero freezer room too. It’s super cold!
Interesting breakdown of prices! I’m a huuuge fan of Costco and one thing that I feel they don’t get enough credit for is the selection. Not the variety but the fact their buyers go through the effort of finding things that members would like and then negotiating to create value. Sure makes my purchases easier, any 😉
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I am intrigued by this Cash & Carry. Hopefully they make it out to the East Coast. I don’t want a million varieties. Just some quality prices and ease of getting out of the store. My local groceries are all terrible and have horrible produce/customer service. I’ve started walking double the distance in the other direction for a more expensive coop grocery that gets me in and out quickly while having tomatoes that have flavor.