Remember the days when going to the store would be an experience? I’m not talking about an experience dodging a deadly virus, either.
Rather, there once was a time when stores cared about shoppers’ experiences as they browsed the aisles. You see some artifacts of that time today. One of the longest standing is Costco’s hot dog and soda combo.
The combo got its start in 1984. The idea was to leave customers with one last transaction that would make them feel well taken care of. The hot dog and soda combo accomplished just that.
The price of the combo hasn’t changed since its inception.
It’s been $1.50 and might just stay that way in perpetuity. It isn’t an easy task to keep the price so low, however. It should have gone up long ago with factors such as inflation and distributor price changes. Still, Costco has worked really hard to keep that price as it’s always been.
How hard? When Costco cofounder and CEO Jim Sinegal passed the reigns on to W. Craig Jelinek in 2012, he threatened to kill him if he changed that price.
Costco fans know that shopping at the big box retailer is an experience. A major part of that experience is the Costco food court. Part of that experience is the iconic hot dog and soda combo, available for $1.50 at Costco locations around the world.
The $1.50 combo first came to be in 1984, when the retailer added a hot dog cart outside its original location in downtown Seattle.
“It’s a great meal. For a buck fifty — the prices vary depending on the currency obviously. The customers love it,” Jim Sinegal, Costco cofounder, told The Seattle Times in 2009.
“They think it’s a great item. I eat it myself. They’re very healthy; they’re very good for you.”
In that same interview, Jim plainly told the publication under what circumstance they might consider raising the price.
“That I’m dead,” he replied.
“It’s amazing how creative we have been to figure out ways to keep the price down. It was a Sinai hot dog, and now it’s a Kirkland Signature hot dog. It’s actually 4.4 ounces, so it’s slightly bigger than a quarter pound now.”
“It’s a drink and a free refill on the drink for a buck fifty. We used to sell the soda in a can, and we put in soda machines, which took the price down. We improved the cost of the condiments, we’ve purchased better on buns and things like that,” he continued.
“It’s the same quality hot dog, all beef, the best ingredients that you can imagine. I know it sounds crazy making a big deal about a hot dog, but we spend a lot of time on it.”
Jim also shared why the deal meant so much to him.
“Because everybody talks about it. People look at that hot dog and say a buck fifty, this is unbelievable. It’s the same thing you’d spend $7 or $8 at the ballpark for and not get the same quality dog. It’s one of the things that we’re known for,” he explained.
“When you get customers who are that delighted with something, it’s worth your time and energy to make it work. I was standing in line behind some people in San Francisco one time, a young man and a woman just getting a hot dog, and he says, ‘No, you need your cup to get the drink,’ and she said, ‘We didn’t pay for the cup,’ and he said, ‘No, you get the drink, too. Don’t you get it? That’s the great thing about this place!'”
“We have people who have parties at our hot-dog stands. Guys in Florida get together and have T-shirts that have the Costco hot dog on them. We have people who after their wedding party came over and got a hot dog at one of our warehouses.”
“We’re known for that hot dog. That’s something you don’t mess with.”
Apparently, someone did try to mess with that just a few years later. Jim handed the reigns over to Costco president W. Craig Jelinek in 2012.
The new boss lamented the losses that came from the combo. Jim shut him down immediately.
“If you raise [the price of] the [expletive] hot dog, I will kill you,” he said, according to Mental Floss.
“Figure it out.”
The new boss would later learn that the true value of the hot dog combo was not about the price tag. It’s about the message it sends customer that the company kept this staple at this price point over 35 very economically tumultuous years. It’s part of the Costco experience, and that’s priceless.
According to a 2018 Popsugar article, Costco is making next to nothing off the hot dog combo. At the time, it made just $0.08 from each purchase.
“[It’s] just so your last experience before leaving is one of a pleasant cashier treating you well and giving you a good deal,” an employee noted.
It makes sense for Costco to prioritize the combo, because quite honestly, it works for the company. It’s not only brand identity and experience, it’s the fact that Costco sells over 100 million hot dogs a year, more than every MLB stadium combined. To some, it may just be a hot dog, but to Costco, it’s everything.