How Costco Keeps Its Hot Dog Combo Price Consistent

In this climate of economic inflation, Costco raised the cost of food court favorites including soda and the classic chicken bake (via Reddit). This was met with reasonable disappointment online from its members and caused many to question whether its traditional $1.50 hot dog combo price would also be adjusted. Thankfully, the company has made it clear that the price would remain the same no matter what (via 425 Business), but if other prices are going up you may wonder how the wholesale depot keeps the hot dog combo price so low.

In a recent Instagram post by @thehustledaily, digital creator Nicole Phillip explains how Costco managed to keep the cost of its hot dog combo low and not to adjust the price consumers are accustomed to. From changing who makes the hot dogs to swapping out the offered soda, they found a formula that allows them to keep the $1.50 price tag for now.

The Costco food court offerings are a vital part of its brand. From the twisted churros to the pepperoni pizza, the snacks have become an added benefit to the shopping experience of its members (via BuzzFeed). One of the most iconic options is the combo that comes with a quarter-pound all-beef hot dog or polish sausage nestled in a snug hot dog bun and a 20 oz fountain soda of your choice, per CostcoHotDog.com.

In a recent Instagram reel posted by @thehustledaily, Nicole Phillips explains how the company has cut costs to keep the combo price at $1.59 since 1985. The first change occurred in 2009 when the company stopped sourcing its hot dogs from Hebrew National and began making its own version. Then, when the price of Coca-Cola started to rise, it switched to selling Pepsi products instead. Had these changes not been made, the cost of the combo would be around $4 today.

While they've managed to keep costs low, Costco loses money on the combo sales (via NPR). Food economist David Ortega explains that Costco still garners value from offering it because customers who come in for it are likely to buy other products in the store, a strategy known as a loss leader. Thankfully, the store can still delight customers with this great offer.