Local NewsCostco’s $1.50 hot dog deal defies inflation

Costco’s $1.50 hot dog deal defies inflation

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Fans of Costco’s hot dog combo can rest assured that the price won’t increase anytime soon, as CEO Craig Jelinek told CNBC last week.

As food costs skyrocket and inflation hits record highs, even for wholesalers, Costco will hold steady on its iconic dog-and-drink deal.

The combo has cost $1.50 since it first arrived in food courts in 1985, even though the Bureau of Labor Statistics’ inflation calculator says it’s worth more than $4 today.

Jelinek once suggested raising the price, but in a now-legendary exchange, co-founder Jim Sinegal shut him down quickly, allegedly responding with, “If you raise (the price of) the effing hot dog, I will kill you.” Instead of increasing prices, Costco switched from Hebrew National franks to making its own Kirkland Signature brand hot dogs at a plant in Los Angeles, Mental Floss reported.

But while the deal’s price tag has aged well, some loyalists question whether they’re still getting as good a deal as they once did. (There are many loyalists. In fiscal year 2019, the wholesaler sold 151 million combos, according to the Puget Sound Business Journal.)

Pat and Monty McCormick have been Costco members for 35 years. They’re frequent buyers of the hot dog-and-a-soda combo and have fond memories of bringing their children and grandchildren to the food court. But ever since the stores removed the sauerkraut and onions from the condiments bar, they don’t find themselves buying franks as often.

“Sometimes I don’t think stores realize how much the changes they make affect customers,” Pat McCormick said. “The store might think it’s just a little thing, but to the customer it can make a big difference.”

The longer customers pay fixed prices for iconic products, like $1.50 for the hot dog combo or 5 cents for a bottle of Coca-Cola, the harder it is to change those prices without backlash, said Jeff Shulman, marketing professor at the University of Washington’s Foster School of Business.

Since Costco shoppers know precisely how much a hot dog combo is worth, any increase in price would be highly noticeable and, in theory, give people the impression that Costco is becoming a more expensive place to shop.

However, a period of mass inflation provides the perfect opportunity to raise prices since the business could blame higher supply costs, Shulman said. That Costco chose to keep its price steady will only make it more difficult to adjust in the future.

“I can’t imagine if things continue as they are that it’ll still continue to be the best economic decision,” Shulman said. “Enjoy it while it lasts!”

The $1.50 Costco quarter-pound hot dog deal is touted with a picture that dwarfs the others Thursday at the Sodo warehouse in Seattle. (Ken Lambert/The Seattle Times/TNS)The $1.50 Costco quarter-pound hot dog deal is touted with a picture that dwarfs the others Thursday at the Sodo warehouse in Seattle. (Ken Lambert/The Seattle Times/TNS)

Maya Miller / The Seattle Times

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