There are a lot of different things Costco is known for – the low prices, the sheer variety of products, and perhaps the most flexible and generous return policy in all of retail.
But there’s something else that sets Costco apart from its competition.
Costco has a reputation of being a fun place to shop. In fact, the company’s executive team enjoys likening the Costco shopping experience to going on a treasure hunt.
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Costco also has a staunch commitment to value. If it can’t source an item at a price it’s happy with, it won’t carry that item.
Or, if possible, it will create its own Kirkland version – something the company has done many times over since the brand was established back in 1995.
The Kirkland brand is beneficial to Costco for a few reasons. It allows Costco to:
- Control prices and keep them low
- Maintain high standards for quality
- Offer products that can’t be found at any other retail store
In fact, as a general rule, Costco insists that its Kirkland line be priced at least 20% below competing national brands. It’s just another way of showing customers that the company takes low prices seriously.
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Costco’s famous hot dog deal should cost a lot more
Another thing that makes shopping at Costco so much fun is getting to enjoy the store’s food court. There, you’ll find a host of delicious eats at the low prices Costco prides itself on.
But there’s perhaps no better meal deal out there than Costco’s famous hot dog and soda combo.
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This year, that combo turns 40. But there’s something very unique about Costco’s hot deal – the company has held its initial $1.50 price steady since introducing it in 1985.
Of course, through the years, there’s been speculation about Costco increasing the cost of the hot dog meal. And any time a new management team takes the helm, that chatter tends to increase.
But Costco fans need not worry about having to pay more than $1.50 for a hot dog and giant soda.
During a 2024 earnings call, Costco CFO Gary Millerchip directly addressed the issue, stating, “To clear up some recent media speculation, I also want to confirm the $1.50 hot dog price is safe.”
Costco doesn’t profit on its hot dog combo for a good reason
It’s common for retailers to have what are known as loss leaders — deals that are designed to get customers in the door, even if they aren’t profitable.
Costco maintains that its famous hot dog combo isn’t a loss leader in that the company doesn’t lose money on the deal. However, it doesn’t really make money on it, either. And the reason is that Costco is charging 1985 prices in 2025.
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But it’s very worth it to Costco to keep the price of the hot dog meal where it is.
Costco’s business model relies heavily on revenue from membership fees. So the company is willing to forgo profits on its hot dog meal if it means retaining members and attracting new ones.
Plus, as is the case with every item it sells, Costco sources its hot dog meal components strategically to minimize its costs.
The meat used in Costco’s hot dogs – which is beef, by the way – comes from two in-house meat plants. The buns, meanwhile, are sourced from regional suppliers. And the soda flavors that go along with the hot dog are purchased by Costco in bulk, allowing the company to enjoy cost savings.
Of course, at this point, Costco members are so used to getting a great deal on the hot dog meal that there would no doubt be an uproar if Costco were to raise the price.
But you should know that if Costco were to adjust the cost of that meal to account for inflation, it would be priced at $4.50 today instead of $1.50.
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So the next time you make a pitstop at the Costco food court on the way out the door, you may want to take a minute to recognize just how terrific a deal you’re getting – and perhaps tip your hat to the company’s management team for committing to keeping that price unbelievably low.
Maurie Backman owns shares of Costco.
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