Costco's $1.50 hot dog and soda combo, unchanged since the mid-1980s, sells over 100 million units yearly. The company built its own production facilities to absorb costs and keep the price frozen, using the deal as a loss-leader that brings shoppers in to buy higher-margin items.
You've heard of Costco's chicken bake and double chunk chocolate cookie, but Costco's real winner is their glizzy. I found some wild glizzies. Oh, which means, uh, a hot dog, I guess. Anyway, here's why. Let's go back to the mid-1980s, and Costco is doing okay but not doing great. They're looking for something their customers will never forget, so they launch an iconic combo: a quarter-pound hot dog and a soda for just $1.50. And now, 30 years later, take a look at their menu. It's exactly the same price. So why won't Costco raise the price of this hot dog? Turns out the hot dog combo isn't just about selling food. It's a genius business strategy called a loss leader. Costco knows if they can offer one unbeatable deal, people will flock to the store. Except once they're in, they fill up their carts with other, more expensive items. They've also kept the hot dogs insanely cheap to produce. And how did they do it? By controlling everything. When outside suppliers started getting more expensive, Costco didn't panic. They just built their own hot dog factories because they absolutely refused to raise that price. Today, they sell over 100 million hot dog combos each and every year and are a fabulously profitable business.
