Costco founder's ruthless 'death threat' is the reason company hotdogs have remained the same price for 40 years
The CEO of Costco has opened up about a moment which made sure that one well-known deal at the company would stay the same.
If you've been to Costco, you'll probably be familiar with the popular offer to get a hotdog and a soda for $1.50.
Costco first introduced the deal at food courts in its outlets back in 1985 and it remains a staple of the business.
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While it was a good deal when it was first introduced, part of what has made the combo so appealing is the fact that 40 years later the price is still the same.
The hot dog is a quarter pounder, or 110 grams, and a 20oz soda, or 590ml.
Not bad for $1.50!
The deal has even developed something of a cult following, with people even making t-shirts celebrating it.
If the deal had risen in line with inflation, then it would cost around $4.40 today, but Costco has gone to extreme lengths to keep the price stable.
In fact, Costco President and CEO Craig Jelinek recalled that the price was of phenomenal importance to founder Jim Sinegal.
At a presentation in 2018 reported by 425 Business, he said: “I came to [Jim Sinegal] 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 pretty clear!"
Jelinek added: "That’s all I really needed. By the way, if you raised [the price] to $1.75, it would not be that big of a deal. People would still buy [it]. But it’s the mindset that when you think of Costco, you think of the $1.50 hot dog."
Aware of the importance of strong branding and the association of the deal, Costco has taken incredible measures to keep the price of its hotdogs down.
This involved the US company actually building and running their own hot dog plant so they could get the wieners at cost rather than having to pay markup to a contractor.
Jelinek said: “By having the discipline to say, ‘You are not going to be able to raise your price. You have to figure it out,’ we took it over and started manufacturing our hot dogs. We keep it at $1.50 and make enough money to get a fair return.”
And this wasn't the only time that Sinegal invoked death in the price of the combo, except the other time it was his own death rather than someone else's.
In 2009, he was asked by the Seattle Times what it would mean if the price of the hot dog combo ever went up.
Sinegal replied simply: "That I'm dead."
Topics: Business, Crime, News, US News, Food and Drink
Kit Roberts