Fans of Costco’s hot dog combo can rest assured that the price won’t increase anytime soon, as CEO Craig Jelinek told CNBC on Monday.
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.”
Earlier this week, dozens of Seattle Times readers shared their thoughts on the significance, or lack thereof, of the combo. “It’s a staple of my visits to Costco,” wrote one reader.
Some people said they’d stop buying the hot dogs if the price increased. Others chimed in that it was a “heck of a deal” even at $2 or $3. One reader said it’s so good, he tells his friends to schedule their first dates at a Costco food court.
Several commenters lamented the loss of the Polish sausage — a Costco offering canceled back in 2018 to make room for healthier options on the menu. Some said they’d happily pay more to bring it back. The Polish dog with sauerkraut and onions was Monty McCormick’s go-to order.
John Bartlett, general manager at the Costco in Seattle’s Sodo neighborhood, confirmed that starting during the COVID-19 pandemic, his store eliminated the onions and sauerkraut to “streamline” the condiment offerings. Bartlett couldn’t say for sure if it was a companywide change, and he didn’t know if cost played a role in eliminating the popular toppings.
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!”