As any parent who has braved Costco with their kids can tell you, the $1.50 hot dog and soda combo available at the store’s food court is a lifesaver. Need to wait 20 minutes in line to get discounted gas? Don’t worry, we can have a hot dog and 20-oz. fizzy sugar water while we wait. Have a picky kid that is begging for a hot dog but will only eat four bites before ‘accidentally’ dropping it on the floor? Who cares, it’s a buck-fifty. Schlepping around five kids before band practice who all claim they are thirstier than they’ve ever been before? The combo’s free refills are here to save the day.
Costco knows that families are really feeling the crunch of inflation, and the retailer plans to keep its signature hot dog soda combo available for $1.50, the price it’s had since the combo was first introduced in the ‘80s. Costco’s chief financial officer, Richard Galanti, emphasized that the warehouse retailer isn’t going to bump up the price to make up for lost margins in other areas.
“We really don’t look at it that way. I think the thing I mentioned earlier about there [being] some businesses that are doing well with margin, like [the] gas business, [in] a smaller way — in the travel business, those things help us be more aggressive in other areas, or, as you mentioned, hold the price on the hot dog and the soda a little longer — forever. But at the end of the day, no, I don’t think we necessarily look to find places where we can harvest margin,” Galanti explained.
The hot dog combo price has been a point of contention for Costco in the past. Jim Sinegal, one of Costco’s co-founders, allegedly threaten to kill Craig Jelinek, who replaced Sinegal as CEO in 2012, should he raise the price of the combo.
“I came to [Jim Sinegal] once and I said, ‘Jim, we can’t sell this hot dog for a buck fifty. We are losing our rear ends.,’” Jelinek recalled in 2018. “And he said, ‘If you raise the effing hot dog, I will kill you. Figure it out.’ That’s all I really needed.”
Costco does so much hot dog business that they have manufacturing plants in both Los Angeles and Chicago for Kirkland signature hot dogs. “By having the discipline to say, ‘You are not going to be able to raise your price. You have to figure it out,’ we took it over and started manufacturing our hot dogs. We keep it at $1.50 and make enough money to get a fair return,” Jelinek explained.
Unfortunately, you do have to be a Costco member to access the food court, a change that was made at the beginning of 2020. Still, the fact that Costco is making sure its hot dog soda combo stays $1.50, like how Arizona Tea will always be 99 cents, is oddly comforting as prices for every other necessity skyrocket due to inflation.