The Brand Behind Costco's $1.50 Food Court Hot Dogs

Few commodities can dodge inevitable price rises but every once in a while there are some surprising contenders. For one, bananas seem largely untouched by inflation. And, for a completely different reason, so does Costco's hot dog combo. The iconic $1.50 soda and hot dog deal has remained the same price since its introduction in the mid-1980s and has now become more than just a food combo. It is synonymous with the food court's more-for-less strategy and is a public relations goldmine for the warehouse chain. However, considering the wild amount of hot dogs Costco sells, the retail giant has had to take some big steps to keep its hot dog prices low.

It all started with a Hebrew National hot dog cart outside one of the first Costco outlets and the company continued to source franks from the hot dog maker until supplies fell short. This led Costco to take the dramatic step of bringing production in-house — a move that's not very common amongst retail giants. While several Kirkland products are sourced from other manufacturers, Costco's Kirkland hot dogs are produced in the retail giant's own factories. Not only has this helped maintain the $1.50 price, but it has also allowed Costco to actually increase the size of the hot dogs it serves. And while Kirkland hot dogs may still not be a money maker, the company has taken other measures to offset the cost of keeping the price iconically low.

Hebrew National was Costco's original hot dog supplier when the retail giant introduced the hot dog combo in 1985. However, rising costs and pressure from Costco's founder Jim Sinegal to keep the hot dog price unchanged forced then-CEO Craig Jeline to bring hot dog production in-house. The first Kirkland hot dog factory was subsequently set up outside Los Angeles, with another one later in the Chicago area. Costco's annual production and sales of hot dogs, unsurprisingly, are in the millions. Interestingly, unlike the Hebrew National ones, which were kosher, the Kirkland Signature hot dogs are not kosher.

The behemoth undertaking of setting up production plants shows just how serious Costco is about keeping that combo price fixed. The drinks have changed from cans to a cheaper fountain alternative, but even so the retail giant doesn't expect to make much profit from hot dog sales. In fact, it offers free toppings (which can upgrade your Costco food court purchase) that are specifically focused on the hot dog combo.

All of these efforts are a bid to hold customer loyalty that seems to be working. To get the low-priced hot dogs (and other food court and store offerings), 90% of Costco shoppers continue to renew their memberships to the warehouse retail chain, paying anywhere from $60 to $120 annually. Ultimately, Costco continues to enjoy its consumer-centric image while the rest of us can enjoy experimenting with combinations like the viral Costco hot dog hack.