The typical American shopper seems to get little respite these days. From fuel to eggs to plane fares, the expense of everyday items keeps rising.
Yet a handful of things remain immune to soaring inflation.
Costco Wholesale’s hot-dog-and-soda deal is a standout. It’s still priced at $1.50.
The cost of Costco’s iconic food-court combo has astonishingly stayed unchanged since 1985.
For perspective, that combo — which gives you a jumbo hot dog and a 20-ounce fountain drink (with free refills!) for $1.50 — should be priced around $4.11 today when adjusted for inflation, per MarketWatch.
Costco’s hot dog offering stands out in an era when fast-food chains are nudging up value menu costs and Dollar Tree no longer prices everything at a dollar.
Shoppers may celebrate Costco’s bargain hot dog, but maintaining such a low price is far from simple.
Why Costco Won’t Raise Its Hot Dog Price
How can Costco keep the hot dog combo so inexpensive?
According to Costco’s former CEO W. Craig Jelinek, retaining the $1.50 price tag bordered on a matter of principle — and, as the company’s lore goes, a blunt promise from leadership.
Well, somewhat dramatically put.
Jelinek recounted the episode at an April 2018 chamber of commerce gathering in Issaquah, Washington:
“I went to (Jim Sinegal, co-founder and former CEO of Costco) and said, ‘Jim, we can’t sell this hot dog for a buck fifty. We’re losing our shirts. And he said, ‘If you raise the effing hot dog, I will kill you. Figure it out.’ That was all I needed to hear.”
That conversation happened more than four years ago, and keeping the cost steady has been challenging. The price of beef, the primary component of Costco hot dogs, rose 14.3% year over year in April 2022, according to the U.S. Bureau of Labor Statistics.
So what’s the practical reason the combo remains affordable? Costco stopped offering Hebrew National frankfurters in its food courts in 2009, per Time and Reader’s Digest. Instead, Costco manufactures Kirkland Signature hot dogs in its own facilities in Los Angeles and Chicago, making the company its own supplier.
That strategy appears to be working.
In fiscal 2019, Costco sold 151 million hot dog combos, generating roughly $226.5 million in revenue, according to the Puget Sound Business Journal.
The Viral Hot Dog Price Hoax
Costco devotees panicked on May 18 when a bogus account tweeted that the wholesaler had finally bumped its famed hot-dog-and-soda combo to $2.50 “because of inflation.”
The fake announcement sparked widespread online outrage. Costco’s shares even tumbled almost 12.5% that same day.
Costco swiftly debunked the rumor on Twitter, and company leaders reiterated the truth during the wholesaler’s earnings conference on May 26.
“I want to address some incorrect information floating around on social media … claiming that we have increased the price of our $1.50 hot-dog-and-soda combinations sold in our food courts,” said Robert Nelson, Costco’s senior vice president for investor relations and treasury.
“The price today is $1.50, and we have no plans to increase the price at this time.”
Relieved shoppers celebrated. Reddit users even mocked up T‑shirt concepts featuring the notorious “I will kill you” line.
For the moment, budget-conscious Costco customers can relax: The hot dog combo price isn’t slated to change.
Other Goods That Have Resisted Inflation
Seeing Costco’s inflation-defying hot dog made us curious: What else still costs less despite rampant inflation?
The answer: not much.
Below are categories that fell in price from April 2021 to April 2022, per the Consumer Price Index.
- Smartphones (down 16.1%)
- Telephone hardware and calculators (down 11.4%)
- Televisions (down 5.8%)
- Computer software and accessories (down 4.2%)
- Video and audio products (down 4.1%)
- Audio equipment (down 2.6%)
- Cosmetics and perfumes (down 0.5%)
- Watches (down 0.3%)
Notice anything? Not a single grocery item appears on that list. Overall inflation reported in May reached 8.3%, while food-specific inflation climbed even higher to 9.4% year over year.
Some of the steepest food price jumps included bacon (up 17.7%), chicken (up 16.4%), eggs (up 22.6%) and margarine (up an eye-popping 23.5%).
At a time when many of us are stretching grocery budgets and cooking at home more, that $1.50 Costco hot dog feels like a small triumph, doesn’t it?
Alex Morgan is a Certified Educator in Personal Finance and a senior writer for Savinly.
