Costco’s $1.50 hot dog price is ‘safe’

Costco’s new chief financial officer has a reassuring message for inflation-weary customers: don’t worry about the price of the $1.50 hot dog-soda combo.

“To clear up some recent media speculation, I also want to confirm the $1.50 hot dog price is safe,” Costco CFO Gary Millerchip said on an earnings call with analysts Thursday. It was Millerchip’s first earnings call with analysts since taking over for Richard Galanti, Costco’s colorful finance chief of nearly four decades and the longest-serving CFO of a major US public company.

With Costco’s leadership change — and other longtime deals like Trader Joe’s 19-cent bananas and Planet Fitness’ $10 membership ending amid rising inflation — some had speculated about the future of Costco’s $1.50 hot dog. The price has remained the same since 1985.

If Costco’s hot dog deal kept pace with inflation, it would be three times as expensive today — nearly $4.50. But Costco’s $1.50 combo is a strategic decision, known as a loss-leader: The company is willing to lose money selling the hot dogs at that price as long as it helps Costco draw in and retain customers.

It’d be an odd time to raise prices, anyway. Other companies, such as Walmart and Target, have been cutting prices on thousands of items to draw in shoppers who are increasingly fed up with rising costs.

The $1.50 hot dog is a powerful marketing tool for Costco and is synonymous with Costco’s brand.

“I know it sounds crazy making a big deal about a hot dog, but we spend a lot of time on it,” Costco co-founder Jim Sinegal told the Seattle Times in 2009. “We’re known for that hot dog. That’s something you don’t mess with.”

Sinegal also famously once said, “If you raise the effing hot dog, I will kill you. Figure it out,” according to former CEO Craig Jelinek.

Costco offsets hot dog losses by increasing prices of pizzas and other items at its food courts and cutting costs.

It also recently added chocolate chip cookies to its food court menu. The $2.49 double chocolate chunk cookie has been a “continued success,” Millerchip said Thursday.