"Some things never change-traffic is always annoying; the rent is alway too high; a Philadelphia sports event will never be chill. And Costco will always offer its signature hot-dog-and-drink combo for $1.50, the same price it's been for nearly four decades, regardless of who heads the retailer or what else it sells. The legendary wiener, along with Costco's nearly-as-famous $5 rotisserie chicken, are "foundational" to the warehouse chain's success, Richard Galanti, who stepped down last year as chief financial officer, told Fortune's Phil Wahba."
"In fact, Costco will overhaul its entire hot-dog supply chain before it will raise the price of the dog. When Costco introduced the $1.50 combo in 1985, it sourced its kosher beef dogs from Hebrew National. But by 2009, costs had gone up so much that the warehouse club brought production in-house. It built a plant outside Los Angeles to produce Signature Kirkland hot dogs (not kosher), and later expanded production to add a second plant in the Chicago area."
Costco has sold a $1.50 hot-dog-and-drink combo since 1985 and preserves that price as a permanent, value-driving offering. The $1.50 hot dog and the $5 rotisserie chicken serve as core, customer-facing price anchors that support the warehouse club's business model. Costco has repeatedly altered suppliers and production—moving from Hebrew National to in-house Kirkland production with plants near Los Angeles and Chicago—to avoid raising prices. Beverage contracts have been shifted to control costs, and local menu adaptations have been used to avoid taxes, such as offering diet sodas or unsweetened tea where sugary-drink levies apply. Leadership consistently protects the price point.
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