- $1.50 is the cost of a hotdog & soda at Costco.
- 151 million were sold in 2021.
- $226,500,000 dollars worth
Putting that into perspective, Nathan’s hot dogs revenue last year was 76 million and Hebrew National sold 170 million.
Costco selling a hotdog at the same price as 1985 manages to sell more than two of the largest hotdog brands in the US..
Today, adjusted for inflation, Costco should be charging $4.02 per hotdog/soda.
Even more amazing, the Costco hotdogs have actually gotten 10% larger since the deal began in the 80s, where other brands have worked to reduce product size.
Costco has refused to change that, seeing products such as rotisserie chickens and hotdogs as a form of marketing.
Recently, there was a fake story leaked that Costco would change the deal from $1.50 to $2.50, which the company denied.
Which raising the price does make some sense.
If they priced it at $4.00, versus $1.50 and sales held, Costco would make over 600 million yearly off hotdogs.
Costco made 196 billion dollars in 2021, showing, just adjusting prices on hot dogs, could be alone about a .3-4% increase in revenue.
A price increase makes sense, until factoring in how much people spend at Costco per visit.
$135 is the average checkout size at Costco.
- Costco made 196 billion in revenue for 2021.
- Profit was 5 billion.
- Margin of 2.55%.
That’d suggest the profit on the average visit is $3.44.
Which doesn’t sound huge, but that margin is more than double the cost of the hotdog itself.
Which the hotdogs despite popular opinion don’t lose much if any money.
Due to the volume costco buys meat/bread at, with sodas also being almost no cost minus the cup itself.
It’s believed the food cost despite inflation and increased sizes is still under $1, making the margin on hotdogs higher than the average product sold there.
The only thing Costco visibly loses money on is rotisserie chickens, where the price costs the company 30-50 million yearly, which they make back by total checkout for other goods.
All said and done though, despite inflation and gas prices, I don’t see Costco changing the hotdog price for decades to come, even if they have to cap them to one per visit, per person.