Frankfurter aficionados may now rejoice, Costco’s iconic hot dog combo will NOT be going up in price due to inflation. The beloved combo item will be staying at a firm $1.50.
While this value meal might seemingly be immune to price hikes…
This news is partially thanks to the unprecedented backlash by devotees of the wholesaler and the c-suite itself.
Here’s what happened.
Squashing Costco Hot Dog Rumors
This controversy began when the former Chief Financial Officer of Costco, Richard Galanti, said that the Costco hot dog is “probably safe for a while”…
Seems the former CFO wasn’t great at inspiring confidence.
Since this comment, fans and business outlets have been speculating about the future of the adored food court items.
The Costco hot dog combo became a fan favorite due to its unwavering price and value. Since 1984, when the combo was introduced, the price stayed at $1.50 without adjusting for inflation…
TODAY, THE COSTCO HOT DOG SHOULD BE WORTH $4.40
Thankfully, the current CFO of the wholesaler, Gary Millerchip, took to settling the public’s worries once and for all. In their recent earnings call, Millerchip confirmed that the price of the hot dog combo would NOT be increasing.
PR and Frankfurter experts alike herald this as a fantastic move on behalf of the company. Not only does it keep the price down, making shoppers happy…
But it also humanizes the company.
And in a time when seemingly every grocery store and retailer is fighting over nickels and dimes, this is a good look to have.
But what about the finances behind the combo? The company might be stern about the pricing but in actuality…
This deal loses the company money. So why is Costco so adamant about preserving its hot dog pricing?
Why Losing Money… Can Be Good For Business
At the price that Costco is selling the hot dog combo, the company is operating at a loss. In fact, the company loses big time if it sells more than 100 million of its signature combo…
IN 2023, COSTCO SOLD 130 MILLION HOT DOG COMBOS… WORTH $195 MILLION.
If the value meal is creating losses, what reason does the chain have to fight to the end to keep it around?
It’s simple: To the company, the hot dog does more than create losses. It actually provides value.
The Costco hot dog being sold at a loss is part of a larger sales tactic. The combo in this scenario is an example of “loss-leader pricing”.
Loss-leader pricing is when a company sells an item below market value, which attracts new customers. Ideally, those customers, while purchasing the cheaper product…
Will also buy other more profitable goods.
COSTCO IS LOSING MONEY WITH THE COMBO… BUT ANY OF THEIR LOSSES ARE OFFSET BY PRICES ON OTHER GOODS.
Not to mention, thanks to Costco’s membership model, they can afford to charge people dirt-cheap prices for their food-court treats. Most of the company’s revenue comes from the membership model…
With the cheapest membership being $60 annually…
So in reality, the infamous Costco hot dog is actually a huge value add for the brand’s members.
The Hot Dog’s Cult Following
Costco knows how important the hot dog combo is to the ecosystem the company has strived so hard to create.
Not only are fans of the combo loud about their support and excitement over getting the meal at the end of their grocery trip…
But the cofounder of Costco arguably takes this issue more seriously than anyone else. In 2018, the former CEO of the company, Craig Jelinek, confessed that Jim Sinegal told him…
“IF YOU RAISE THE EFFING HOT DOG, I WILL KILL YOU. FIGURE IT OUT.”
Needless to say, this is a huge deal for everyone at the company.
In the end, the pricing of Costco hot dogs is here to stay. Not even the powers of the company’s CEO or the whims of inflation can change that.
Be Great,
GCTV Staff
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