The cheapest thing in the warehouse is the reason people come

A warehouse club makes very little on its fuel, its hot dogs or its rotisserie chickens. It does not need to. Those items are why the trip happens, and the trip is where the rest of the basket gets filled.

Loss leaders done properly

Most retailers use promotions to buy traffic and hope the basket follows. A club turns a handful of permanently cheap items into a reason to visit, and the membership fee makes each visit feel like it is using something already paid for.

The discipline is in keeping those items cheap when costs rise. The moment they stop being a bargain, they stop pulling people in.

What I'm watching

• Traffic, which is the real output of the loss leaders
• Membership renewal, which tells you the visits feel worthwhile
• Fuel volumes, a useful read on trip frequency

Where I stand

Flat. The model is excellent and the valuation already treats it that way. I would rather watch the traffic than argue with the price.

What would change my mind

Traffic slowing while renewal holds. That would say the loss leaders are losing their pull, and the membership is running on habit rather than value.