"The big-box warehouse famously charges only $1.50 for a hot dog and soda combo, which hasn't increased since 1985. When former CEO W. Craig Jelinek joined the company, he was shocked it was still that cheap and he told Costco founder Jim Sinegal the store needed to raise the price. Sinegal told him, "If you raise the effing hot dog, I will kill you. Figure it out.""
"There are two big reasons; one practical, one philosophical. The first is that Costco's food court items are a classic example of "loss leaders." This is the practice of deliberately charging below cost on certain items to draw customers into the store and retain their loyalty. Keeping food court prices low sends a message to Costco shoppers that the store is putting their experience first."
"The other big reason behind Costco's affordable food court is part of founder Sinegal's philosophy - you build trust with customers by doing the right thing. Short term cash outs and cost cutting measures may be tempting, but people value a company that treats them right, even when it's difficult. This has extended to how Costco treats its employees, and the company is consistently rated as one of the best large employers to work for."
Costco charges $1.50 for a hot dog and soda combo, a price unchanged since 1985, which demonstrates a long-term commitment to low food court prices. The price functions as a loss leader, deliberately priced below cost to attract customers, encourage longer store visits, and build loyalty while the company offsets losses by slightly higher margins on other items. Founder Jim Sinegal emphasized trust-building through doing the right thing, resisting short-term cash grabs. That philosophy extends to employee treatment and contributes to Costco's reputation as a top large employer, reinforcing customer trust and brand loyalty.
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