Costco's $1.50 hot dog price is secure.
In response to recent media speculation, Costco CFO Gary Millerchip clarified during a meeting with analysts that the $1.50 hot dog price remains secure. This comment was made during Millerchip's first earnings call with analysts since replacing Richard Galanti, who had served as Costco's finance chief for almost four decades and currently holds the record for the longest-running CFO of a significant American public company.
Some people assumed Costco's iconic $1.50 hot dog deal could be at risk, since other long-standing discounts like Trader Joe's 19-cent bananas and Planet Fitness's $10 membership were discontinued amid rising inflation. If the hot dog deal had been adjusted to account for inflation, it would now cost about $4.50, but Costco has a strategic reason for maintaining this bargain price. They are willing to incur a loss by selling hot dogs at this price, as long as it helps attract and retain customers.
Given the current inflationary environment, it wouldn't be the optimal time for Costco to hike hot dog prices. Violent retailers like Walmart and Target have been slashing prices on thousands of items to attract shoppers disappointed with rising costs.
The $1.50 hot dog is an effective marketing tool and symbolic of Costco's brand. As Costco co-founder Jim Sinegal stated in 2009 to the Seattle Times, "We spend a lot of time on it. We're known for that hot dog. That's something you don't mess with."
Sinegal further emphasized this sentiment by saying, "If you raise the effing hot dog, I will kill you. Figure it out," as recounted by a previous CEO, Craig Jelinek.
Costco mitigates the financial loss from selling hot dogs cheaply by raising the prices of chicken bakes and other food court items, as well as by reducing costs. Additionally, Costco recently added $2.49 double chocolate chunk cookies to its menu, a decision that has been met with positive reception.
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Costco's strategic business decision to keep the $1.50 hot dog price is a testament to their commitment to affordable food options for customers. Despite the inflation, Costco's food court continues to offer other affordably priced items, such as the raised price of chicken bakes.
In this challenging economic climate, Costco's iconic hot dog deal serves as a key aspect of their business strategy, attracting and retaining customers with its affordability, much like how certain food businesses in the city offer affordable meal options to draw in cost-conscious diners.
