Costco's Iconic Hot Dog

Around lunch time there are customers who come into Costco just for the hot dog. The hot dog and soda combination costs $1.50, the same price when it was first introduced in 1984. While the direct cost of the material ingredients could possibly be less than $1.50, Costco undoubtedly experiences a loss once one includes Food Court labor, utilities, and the capital cost of the equipment and space.

Instead of a cost-based approach, the Chronicle estimates what the price would be if it had merely kept up with inflation:

What’s still a $1.50 hot dog and soda would be setting you back well over twice as much: $3.96.

..The $1.50 hot dog deal is more about marketing than money-making, said Martha Gimbel, the executive director of the Yale Budget Lab.

“There’s so much that is changing right now in our world. Everything feels very uncertain. It sounds kind of silly, but you can rely on the fact that Costco has a hot dog for $1.50,” she said...

It’s still a soda and a hot dog, but the dog is now made by Kirkland Signature instead of Hebrew National. They were first sold at carts, then in an area dubbed “Cafe 150” (named for the price), though it’s now just known as “the Costco food court.”

At one point, the food court sodas at Costco came in cans from vending machines, but Costco switched to fountain soda to save money....And this summer, the retailer shifted from Pepsi back to Coke in yet another cost-saving move.

Even at $3.96 I would still buy the combo, but the $1.50 hot dog and $4.99 rotisserie chicken have become iconic. They're also a lifeline to those on a shoestring budget, so kudos to Costco for holding fast.