One Thing Inflation Hasn’t Ruined: This $1.50 Hot Dog Deal at Costco
The average American consumer just can’t seem to catch a break. From gasoline to eggs to airplane tickets, the cost of everyday goods keeps going up.
Yet a few things remain untouched by historically high inflation.
Costco Wholesale’s hot-dog-and-soda combo is a prime example. It’s still just $1.50.
The price of Costco’s famous food court offering has remarkably stayed the same since 1985.
For context, the combo — which gets you a jumbo dog and 20-ounce fountain drink (plus free refills!) for $1.50 — should cost consumers $4.11 by now when adjusted for inflation, according to MarketWatch.
Costco’s hot dog combo stands out in a world where fast food chains are edging up their value menu prices and Dollar Tree no longer sells everything for $1.
Consumers may rejoice at Costco’s low-cost hot dog deal, but keeping prices low is no easy feat.
Costco’s Beef with Raising Hot Dog Prices
Why is Costco’s hot dog combo still so cheap?
According to Costco CEO W. Craig Jelinek, keeping the price at $1.50 was a matter of life and death.
Well, sort of.
Jelinek explained the situation to attendees at an April 2018 chamber of commerce meeting in Issaquah, Washington:
“I came to (Jim Sinegal, co-founder and former CEO of Costco) once and I said, ‘Jim, we can’t sell this hot dog for a buck fifty. We are losing our rear ends. And he said, ‘If you raise the effing hot dog, I will kill you. Figure it out.’ That’s all I really needed.”
That was over four years ago, and keeping the price consistent hasn’t been easy. The cost of beef, the main ingredient in Costco hot dogs, increased 14.3% year-over-year in April 2022, according to data from the U.S. Bureau of Labor Statistics.
OK, so here’s the real reason Costco’s hot dog combo is so affordable: The company stopped selling Hebrew National franks at its food courts in 2009, according to Time and Reader’s Digest. Costco now produces Kirkland Signature hot dogs at factories in Los Angeles and Chicago so it can act as its own supplier.
Costco’s commitment to low prices seems to be paying off, too.
The company sold 151 million hot dog combos in fiscal year 2019, bringing in roughly $226.5 million in revenue, according to the Puget Sound Business Journal.
Costco’s Red-Hot Hot Dog Controversy
Costco fans went into a tailspin May 18 when a fake account falsely tweeted that the company was finally raising its classic hot-dog-and-soda combo to $2.50 “due to inflation.”
It spurred a fury of internet backlash. Costco’s stock even sank nearly 12.5% the same day.
Costco quickly dispelled the rumor on Twitter, but company executives also set the record straight on May 26 during the wholesaler’s most recent earnings report conference.
“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.”
Costco fans rejoiced. Folks on Reddit even created T-shirt designs with the infamous “I will kill you” quote.
For now, thrifty Costco shoppers can rest easy: The company’s hot dog combo price isn’t changing anytime soon.
Other Inflation-Proof Items
Costco’s seemingly inflation-proof weiner combo got us wondering: What other items still offer a low price, despite high inflation?
It turns out — not much.
Here are some items that have decreased in price from April 2021 to April 2022, according to 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%)
As you can see, not a single food item made the list. Overall inflation reported in May hit 8.3% but the year-over-year increase for food items specifically rose even higher, to 9.4%.
Some of the biggest food price hikes include bacon (up 17.7%), chicken (up 16.4%), eggs (up 22.6%) and margarine (up a whopping 23.5%).
At a time when we’re all trying to save a buck on groceries and cook more at home (sniffle), that $1.50 Costco hot dog hits a little different, huh?
Rachel Christian is a Certified Educator in Personal Finance and a senior writer for The Penny Hoarder.