Hi, welcome to Costco, where an all-beef hot dog and a soda is always — under threat of death — $1.50.
No, for real. Before Craig Jelinek became Costco’s CEO in 2012, he suggested to then-CEO and co-founder Jim Sinegal that the retailer raise the price of its hot dog combo as they were losing money on it, per Mental Floss.
According to Jelinek, Sinegal said, “If you raise [the price of] the effing hot dog, I will kill you.”
Costco now sells ~130m dogs annually. Had Costco kept pace with inflation, the combo would cost ~$4.13; notably, hot dog prices were up 16% YoY in June.
Costco has made some cost-cutting changes
- In 2009, amid rising supply costs, it switched from Hebrew National dogs to making its own.
- When Coca-Cola was about to hike prices in 2013, Costco switched to Pepsi.
… inflation and supply chain issues have forced many retailers to rethink their strategies.
For Costco, that’s included raising the price of its chicken bake by a buck and a 20-ounce soda by 10 cents, per Fortune.
But when CNBC’s “Squawk on the Street” asked Jelinek if the hot dog combo was next, he simply answered, “No.”
Why? For Costco, most of its profit comes from its annual membership fee, which may increase. The eternally affordable hot dog combo builds goodwill among those members — and that’s more valuable than a slightly more expensive meal.
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