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The Costco Hot Dog
Capitalism at its finest
Like every good American millennial, I love Costco. They take returns no questions asked. And it’s cheap. And they even sell alcohol. Other than the chaos in the parking lot, it really is the complete package. One of the best things about Costco, in some ways even better than the all-you-can-eat-buffet (because you don’t have to stand around like a vulture waiting for the elderly lady to use a pair of scissors of all things to cut a ravioli in half like just give me the entire ravioli and oh my god now it’s burning the roof of my mouth I need to find a free sample of coconut water right now), is the hot dog.
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When one buys a Costco hot dog, not only do they get to avoid feeling like a zombie waiting to jump on a lone Totino’s Pizza Roll, they only have to shell out $1.50. And this is the beauty of raw capitalism. Costco hot dogs have been $1.50 since 1985. While inflation is rampaging through home prices and airline tickets, the humble Costco hot dog has stayed the same price for 38 years. And it comes with a free drink. To give context, if the Costco hot dog would have increased with inflation it would cost $4.28 today. Still not expensive, but $1.50 almost feels like free.
Costco is committed to keeping the price of the hot dog at $1.50. They understand that even if it loses them money, people go to Costco for that $1.50 hot dog. They also aren’t stupid - you might go for just the hot dog, but then when you notice that gallon of mayonnaise for sale and buy that as well, they’ve made a net profit on your visit.
Additionally, the $1.50 hot dog has become an article of faith among some Costco executives. According to the current Costco CEO Craig Jelinek, he once pitched increasing the price of the hot dog to the founder of Costco, Jim Sinegal. Mr. Sinegal responded with one of the greatest lines in American business history:
If you raise the fucking hot dog, I will kill you.
That is commitment to your customer base.
So with their lives on the line, Costco executives had to figure out a plan. They were spending tons of money buying hot dogs and had to sell them for more than they were worth. So what to do? They built their own hot dog factory! That was so successful, that then they built a second one. Today Costco owns multiple hot dog factories, the price is still $1.50, and all is right with the universe.
Hurrah for capitalism.