Featured Image Credit: PATRICK T. FALLON / Contributor/Getty Images
Topics: US Food
Rachael Davis
Costco’s not as big a name in the UK as it is in the States, but if you’ve been to one of the few we’ve got on these shores you’ll know they’re oddly wondrous places.
With no end of wholesale deals and an incredibly extensive range, it’s a bit like the Ikea of food.
Its hot dogs are available here as well as in the US, where they’re something of a legendary meal deal. For $1.50 (£1.13) you can get a Kirkland quarter-pounder hot dog and a 590ml soda, and it’s been that way since 1985 – inflation be damned.
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If its price had risen in line with inflation, it would now be marked at $4.40 (£3.31), but Costco has made a point of keeping the spirit of 1985 alive.
According to Costco President and CEO Craig Jelinek, founder Jim Sinegal was particularly committed to this pricing strategy.
“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’,” he said at a presentation in 2018, as reported by 425 Business.
"And he said, ‘If you raise the effing hot dog, I will kill you. Figure it out.’
"That’s all I really needed. By the way, if you raised [the price] to $1.75, it would not be that big of a deal. People would still buy [it].
“But it’s the mindset that when you think of Costco, you think of the $1.50 hot dog."
To keep prices down, the company built and maintains its own hot dog factory so they can avoid contractor markups.
Jelinek explained: “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.”
In 2009, founder Sinegal was asked by the Seattle Times what it would mean if Costco’s hot dogs ever rose about $1.50.
Sinegal replied: "That I'm dead."