Of all the things to love about shopping at Costco , chief among them is the fact that you can go to the Costco food court and get a hot dog and a soda for the low, low price of $1.50.
It’s an inflation-busting price that doesn’t seem like it should be possible in the 2020s. And yet, somehow, it is. There’s more good news: Costco says this price isn’t going to be changing anytime soon.
It’s one of those things that makes Costco unique.
Costco isn’t the only big box retailer to offer hot food and treats in the building, as Ikea does something similar. But no one else can boast of having a deal like Costco’s drink and dog combo.
The story of the cheap dogs goes back a long way.
Costco first started selling a hot dog and a drink for $1.50 all the way back in 1985. They’ve undergone a few tweaks over the years (notably switching from Hebrew National dogs to house-made Kirkland products), but overall, the concept remains unchanged.
Costco feels strongly about the combo.
Costco CEO W. Craig Jelinek said in 2018 that the chain was losing money on every hot dog combo, so he approached the company’s co-founder Jim Sinegal to ask about raising the price. Sinegal’s response was epic.
Why is it cheap? Death threats.
“[Sinegal] said, ‘If you raise the effing hot dog, I will kill you. Figure it out,” said Jelinek. Long story short, the current CEO wanted to raise prices, and the co-founder kept prices low with a death threat.
Yes, it really happened.
The price has to go up eventually, right?
The company’s chief financial officer, Richard Galanti, delivered a presentation on fourth-quarter earnings recently and offered up a tidbit on the status of the cheap hot dog deal — one that should delight everybody who loves the Costco food court.
Do they need to make up the gaps?
Remember, the hot dog deal is a loss leader, meaning that Costco doesn’t make any profit on it.
“We really don’t look at it that way,” said Galanti , who explained that other areas like gas stations helped fill in the gaps which allows Costco to “be aggressive” in other areas.
One of these areas? The famous hot dog combo. “Hold the price on the hot dog and the soda a little longer — forever,” said Galanti.
Forever?
It seems hard to believe, but it just echoes something that Jelinek told CNBC earlier this summer: in response to a question about whether the deal would be more expensive in the future, he responded simply with a one word answer, “No.”
How much should it cost?
It isn’t like a hot dog and a soda should ever cost much, but MarketWatch estimates the combo should sell for about $4.11 in 2022. But Costco is clearly committed to maintaining the original 1985 price.
Now I really want a Costco hot dog.
It’s nice to know that anytime I do want a soda and a hot dog, it’ll only ever cost me a buck-fifty.
Let us know what you think of this story — and share your Costco hacks — in the comments.
