Brian Salcetti, AIF®, CIMA®’s Post

🌭 How Costco’s $1.50 Hot Dog is a Lesson in Loyalty and Loss Leaders. If the cost of Costco's famous hot dog combo had gone up with inflation, we'd be paying around $4.50 for it now. Instead, it's still just $1.50. This isn't just a random decision; it's a clever move by Costco, called a loss-leader strategy. They're okay with not making a profit on the hot dogs because it helps bring more people into the store and keeps them coming back. Scott Mushkin, a retail expert from R5 Capital, says it's all about building a bond with shoppers. That $1.50 price tag isn't just about food; it's a reminder of what Costco stands for in the eyes of its customers. Despite selling over 100 million hot dogs a year at a loss, Costco manages to balance the books by bumping up the prices of other things, like pizzas and various items in their food court. What's unique about Costco is how it keeps prices down across the board: it earns most of its cash from membership fees, selling most things in the store for about what it costs to get them, or even less. I guess we don't need to worry about the hot dog price going up anytime soon. 😅 #Costco #LossLeaders #Loyalty #CostcoHotDog #Inflation #Marketing

If you shop at Costco, you know of the legendary hot dog combo. But did you know that it’s been $1.50 for 40 years? What’s the point? They aren’t making any money. In fact, as Costco CEO Craig Jelinek once put it, Costco is “losing [their] rear ends” with the hot dog. The answer, it’s good for their brand. By maintaining a low price and offering the same excellent deal over decades, Costco is demonstrating their dedication to providing outstanding value, which in turn enhances customer loyalty and reinforces its image as a value leader. The hot dog also serves as both a loss leader and a means to attract more customers to the store. Costco uses this strategy throughout their food court for these reasons, as well as to show their commitment to their members… the hot dog being the most iconic and recognized item among them. Have you had a Costco hot dog? What do you think about them? #businessstrategies #businesscoach #costco

Now for something serious. Update on the $1.50 Costco Hotdog. 🌭Gary Millerchip, new CFO of Costco, reassures that the $1.50 hot dog combo price is safe. 🌭The price of the hot-dog-and-soda combo has been $1.50 since the mid-1980s. 🌭Former CFO Richard Galanti had implied the price might change, causing consumer uncertainty. 🌭Costco co-founder James Sinegal insisted on maintaining the $1.50 price, leading the company to produce its own hot dogs to cut costs. 🌭Revenue from other Costco sectors helps keep food court prices low. 🌭Costco reported a 9.1% increase in Q3 sales over 2023, exceeding expectations. Source: https://lnkd.in/ghC9KHCM

Some things never change—traffic is always annoying; the rent is alway too high; a Philadelphia sports event will never be chill. And Costco Wholesale 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. 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. Here’s how Costco built an empire of $1.50 hot dogs. Watch the full video and follow Fortune on Youtube here: bit.ly/3Xs86FQ

From the perspective of Accounting and Business management, the sales of warehouse-type discount stores with unlimited returns, such as #COSTCO, are not confirmed until customer returns. Costco allows returns to customers when selling, so customers who think that even if this year's sales are 6 trillion won are not equivalent to the sales of the Korean corporation and the 200 billion won in dividends sent to the U.S. headquarters, the products they purchased last year in 2024, the next year. If they are returned, the store's sales shrink from 6 trillion won to 3 trillion won to 2 trillion won, and the reduced sales are confirmed in the accounting ledger. MBA Business Administration and business expert explain that the increase in returns in supermarkets and commercial transactions is not a problem with customers, but because there are problems with the seller and the supermarket's products or because of competitors https://lnkd.in/gwifp-xg #Walmart #Amazon #Kroger #Target #NEWYORK #manhattan #Seattle #Texas #California #LA #Gangnam #Seoul #Alabama #Detroit #Minnesota #Connecticut #NASDAQ #FORBES #Chicago #skincare #서울 #강남 #NYC #UK #Tokyo #Paris #Ohio #London

Costco sells a $330,000 diamond 20 feet away from the $1.50 hotdog. Why? Value anchoring. $330K is a lot to spend on a ring. And if you were going to drop that kind of coin, why would you do it at Costco? Because of the hotdogs. Costco is about value. That doesn't mean they're cheap. It means you're getting more than you pay for. Bigger packages, better quality, longer warranty. The $1.50 hot dog signals they're not trying to rip you off. So the ring must be worth it. It's a subtle strategy. And it's everywhere. The hotdog says everything. Without saying anything at all. #marketing #growth #brand

Costco made a $3B investment in price image. Price for hotdog combo should have climbed 335% over last 40 years but instead they have been stable for 40 years. Costco hot dogs are a vehicle for Costco to shape its price image. It gives you a peace of mind that you are at a place with low prices, regardless of the overpaid products 2 aisles down. They didn't just keep pricing low by taking a price cut and taking huge losses, instead: 1) They shrank drink sizes 2) They bought production in house 3) Kept choices at minimum In a world where every retailer is struggling with its pricing strategy and image, we have yet to hear complaints about pricing at Costco. It took 40 years of prudent investment in this strategy. It takes a lot of discipline to execute something like this. Costco is not the only one: 1) Trade joe did it with bananas 2) Ikea does it with their food court 3) McDonalds with dollar menu How much are you willing to invest in your price image ? If not then its worth considering. When done right its an investment that keep giving....... ---------------- I write about #pricing #discounts #revenuemanagement and #careers and share actionable pricing techniques everyday. Join 9000 other pricing professionals.

The most expensive meal you will ever eat.. Is going to Costco Wholesale to buy a hot dog!! 💲💲💲 I hate shopping at Costco Wholesale.. Too big of a store and poorly organized IMO... But... I love buying a hot dog and a drink for $1.50 🌭 🥤 But you can never go to Costco and walk out with just the hot dog... Somehow I'm always walking out with 6 months of food storage and a new kayak! That $1.50 hot dog leads to me spending $300+ every time! So for the eCommerce stores out there.. do you have a Costco hot dog item on your store? #HotDogLover #eCommerce #CORSO

I know I’m getting old, because switching grocery stores is hard. Groceries are expensive. As a family of four we spend over $1,000 in groceries each month. So naturally, we shopped at the cheapest local grocery store. But that all changed when we tried our local Hyvee… _______________ Hyvee knows they don’t have the lowest prices in town. And they don’t have the largest selection. But they do have…..THE CART. A simple “kiddie cart” is why we now spend more money on groceries each month. I can feel my son’s pride and excitement as he walks down the aisle putting food in his cart. His eyes light up and he feels ten feet tall. As a parent, I can’t resist the opportunity to empower him and let him flex his sense of responsibility. _______________ Hyvee makes grocery shopping an amazing experience for us, not just an expensive errand. The key isn’t always being the cheapest. The key is providing your customers with an unparalleled experience. _______________ #Hyvee #groceries #customerexperience

Thinking about implementing a bit of a different twist to my business model and seeing how it shakes out... At my bar, we have a very very small space for making food. In Vermont you are able to buy pre-made food wholesale as long as its done in a certified home kitchen. So my solution is to instead of trying to make food on-site, we can wholesale from different local vendors to suit our needs and then retail the food to our customers who come to the bar. We have been trying this out with La Casa Empanada in West Brattleboro and my gosh has it been successful off the bat. We are selling 300% more than anticipated and it is bringing in new customers. What do you think? Have you seen this model elsewhere? What works about it? What might be a problem with it?