Costco Continues to Draw Big Crowds with Hot Dog Combo

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The sure things in life are death, taxes, and the Costco $1.50 hot dog and soda combo. For more than 30 years, Costco has been drawing customers in with the promise of the $1.50 hot dog value meal. Costco loyalists come back year after year to the food court to take advantage of this rock-bottom priced meal. It is not just the price that is a classic. The red picnic tables and large menu boards harken back to days of nostalgia. The classic hot dog combo meal is largely responsible for the cult-like following of the venerable Costco food court. Even though Costco makes no profit on the combo meal, the $1.50 price tag is unlikely to change, as Costco executives recognize the big draw that the value-driven food court has on customer memberships. The warehouse club receives either $60 or $120 annually per family membership, depending on the level and benefits offered. The tightly controlled business model of the Costco food court is no accident. With more than 750 food courts in operation, over $1 billion in sales is generated for Costco in this auxiliary business unit alone. In addition to quick snacks such as churros or soft serve ice cream, customers can also pick up a $4.99 rotisserie chicken or a $9.99 18-inch pizza to take home on their way out of the store. In an effort to please the more health-conscious clientele, many of the Costco food courts have begun offering items such as acai fruit bowls, vegan salads, and organic burgers. Because Costco is committed to keeping the hot dog combo price steady, it will cut costs in other areas to make up the difference. Recently, Costco made the switch to lower-priced hot dog buns and condiments in an effort to be able to offer the combo for the only price it has ever had.

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