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The Costco food court combo of a hot dog and a refillable drink for $1.50 has been a hallmark of bulk shoppers since 1985. Despite the value of the dollar changing dramatically since the 80s and the current economic climate, the wholesaler is promising again that the famously cheap snack will not change, possibly ever.
During a fourth-quarter review presentation, Costco CFO Richard Galanti assured that the inexpensive meal isn’t a threat to the company’s bottom line. In reference to the potential money the wholesale giant could be making if they raised the price, Galanti said, “We really don't look at it that way.” Due to how well the company is doing in certain areas, like gas and travel sales, they’re able to “be more aggressive” in raising prices in other areas. “Or, as you mentioned, hold the price on the hot dog and the soda a little longer—forever,” reasserted Galanti.
Costco representatives have historically been quick to quell any rumors floating around about the ballpark snack getting a price hike. In May 2022, during a third-quarter earnings call, Costco Senior Vice President Robert Nelson assured investors that despite internet rumors, the price was remaining at $1.50. CEO Craig Jelinek told shareholders in January 2020, “We have no plans to take that hot dog above a buck fifty. End of story.”
Famously, in April 2018, Jelinek brought up the hot dogs to Costco co-founder Jim Sinegal: “I said, ‘Jim, we can't sell this hot dog for a buck fifty. We are losing our rear ends.'” Jelinek says Sinegal replied, “'If you raise the effing hot dog, I will kill you. Figure it out.'” The solution that Costco came up with was opening manufacturing plants in Los Angeles and Chicago just for hot dogs. Because they have complete control over the meal, “We keep it at $1.50 and make enough money to get a fair return,” says Jelinek.
It seems as though the bargain meal has been a financially viable system for Costco. During the 2019 fiscal year, the big-box store company sold over 151 million combos, about $226.5 million in sales. While the company might not make a huge return on their beef frank investment, the emblematic meal means more for Costco than just being a snack. Jelinek explains, “It's the mindset that when you think of Costco, you think of the $1.50 hot dog.” As Elizabeth Licata deduces, the price is so cheap, “so people will show up just for the lunch.” She says that someone who comes in for the inexpensive meal “will likely look around and wind up buying something else. It’s probably pretty effective.”
Costco members can rest easy at night knowing the renowned and beloved food court meal will “forever” remain $1.50.
Costco’s combo of a hot dog and a refillable drink for $1.50 has been a hallmark for bulk shoppers since 1985.
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In a fourth-quarter financial review presentation, Costco CFO Richard Galanti said that because the company is doing well in areas like gas sales, they are able to raise prices elsewhere instead of the combo meal.
Galanti also says that the $1.50 price tag will remain that way “forever.”
Throughout the years, the big-box store company has been consistent about their commitment to the beef frank cost, despite inflation rates and the current economic climate.
In 2020, CEO Craig Jelinek stated, “We have no plans to take that hot dog above a buck fifty. End of story.”
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The solution the company came up with was to create their own hot dog manufacturing plants in LA and Chicago.
In 2019, the wholesaler sold 151 million combo meals, around $226.5 million in sales.
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While Costco doesn’t seem to get a huge return on their hot dog investment, customers can rest easy knowing the beloved meal will “forever” remain $1.50.
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h/t: [People]
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