Some good news for inflation-weary Americans: There will be no price hike on Costco’s hot dogs.
In an interview Monday on CNBC’s “Squawk on the Street,” CEO Craig Jelinek had a one-word answer. When asked whether he would raise the signature food court item’s price: “No.” Costco CEO’s one-word answer to whether he would raise the price of hot dogs: “No.”
Costco has continued to make strong sales, even as other retailers have spoken about consumers becoming more budget-conscious and spending more on services instead of goods. It has also avoided another recent problem for many retailers: excess inventory that has piled up in warehouses and stores, which must now be packed away or marked down.
The article recounts a time when Jelinek approached Costco co-founder and former CEO Jim Sinegal. He told him the company was losing money over the iconic food item.
Costco has raised prices of some food court staples. Earlier this month, its chicken bake jumped from $2.99 to $3.99, and its 20-ounce soda rose by 10 cents to 69 cents. That prompted speculation that its hot dog’s super-low price could also be due for a hike. The hot dog and soda combo has sold for $1.50 for decades and was the subject of a Mental Floss article from 2018 that recently began circulating again. Yet amid nearly four-decade-high inflation, the price remains unchanged.
“I came to Sinegal once and said, ‘Jim, we can’t sell this hot dog for a buck fifty,” Jelinek said, according to the Mental Floss article, which cites 425Business. “We are losing our rear ends.’ And he said, ‘If you raise the price of an effing hot dog, I will kill you. Figure it out.’ That’s all I really needed.”
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Costco’s Founder Once Told the Company’s Current CEO
Costco has charged $1.50 for its hot dog and soda combo since 1985, and a quote from Costco founder Jim Sinegal explains why that is. When Costco’s now-CEO Craig Jelinek approached Sinegal about raising the price of the combo, Sinegal told him, “I’d kill you” if Jelinek raised the price.
In a January shareholders’ meeting, Jelinek said Costco had “no plans to take hot dogs above a buck fifty.” Costco co-founder Jim Sinegal has always been fiercely customer-first, an approach the wholesale giant has fostered for decades. Of course, shareholders aren’t complaining, considering how the stock has fared since it IPO’d at a split-adjusted $1.67 per share.
At last check, it was trading around $334.
- A small testament to that customer-focused mindset is the beloved hot dog and soda combination, which has been offered for a mere $1.50 ever since it debuted in 1985.
- That, however, might have changed if Craig Jelinek, who replaced Sinegal as CEO in 2012, had his way. According to an article from 2018, Jelinek threw out the idea of raising the price of the iconic combo and drew a rather strongly worded response from Sinegal. “If you raise [the price of the] effing hot dog, I will kill you. Figure it out,” is what Jelinek recalled Sinegal saying.
- Two years later, that quote really struck a chord on social media. This tweet, from an account with fewer than 1,000 followers, blew up to the tune of more than 400,000 likes overnight.
- We’ll get an idea of how Costco, which got a big coronavirus boost earlier that year, performed in the quarter that ended in August when the company posts its financial results later that week. The numbers are expected to show increases in both profit and revenue.
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Costco Has Charged
Costco has charged $1.50 for its iconic hot dog and soda combo since 1985. When Costco’s current CEO Craig Jelinek once approached Sinegal, then CEO, about raising the price of the hot dog, Sinegal told him, “If you raise the price of the effing hot dog, I’ll kill you. Figure it out.” An old quote from Costco founder Jim Sinegal about why that is has resurfaced on Twitter after a user posted screenshots from a 2018 Mental Floss article.
Therefore, in 2009, Jelinek did figure it out. Costco stopped using its longtime hot dog supplier, Hebrew National, and built a Kirkland Signature hot dog factory in Los Angeles, later building another one in Chicago. The new factories reduced production costs for hot dogs, allowing Costco to continue selling the menu item for $1.50.
This is an example of how businesses can control expenses to maintain attractive prices. Other practical topics, such as how to make soil in Little Alchemy, demonstrate how step-by-step processes can help explain a subject, although the topic itself is unrelated to Costco’s pricing strategy.
Jelinek told local Seattle Eastside publication 425Business in 2018 that he expected people would still buy the hot dog if the price rose to $1.75.
Costco’s $1.50 Hot Dog and Soda Combo
Not many companies pledge never to raise the price of an item, which is part of why the famous Costco $1.50 hot dog and soda combo gets so much attention, especially when inflation is running rampant.
The affordable meal has garnered attention over the years. The 2018 Mental Floss article quoted Costco co-founder Jim Sinegal telling CEO Craig Jelinek, “If you raise the price of the effing hot dog, I will kill you.”
Thankfully for shoppers and Jelinek’s loved ones, Costco still has not changed the price. In 2022, when asked on CNBC’s “Squawk on the Street” whether Costco would increase the cost of the combo, Jelinek simply said, “No.”
Similarly, Costco has kept the price of its grill chickens at $4.99 since 2009. Like the hot dog combo, the chicken is known as a “loss leader,” or a product companies are willing to sell at a loss because its low price lures in customers who will likely buy other items as well.
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Conclusion
Another aspect of Costco’s business that has also been searched for is when its membership fee might increase. Costco membership costs $60 or $120 per year for executive membership, a higher-tier option that includes additional discounts and perks.
The numbers are expected to show increases in both profit and revenue. The new factory reduced production costs for hot dogs, allowing Costco to continue selling the menu item for $1.50.
Jelinek told local Seattle Eastside publication 425Business in 2018 that he expected people would still buy a hot dog if the price rose to $1.75.
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