The Enduring Enigma of Costco's $1.50 Hot Dog and Soda Combo

iStock // Tim Boyle, Getty Images
iStock // Tim Boyle, Getty Images

When Costco president W. Craig Jelinek once complained to Costco co-founder and former CEO Jim Sinegal that their monolithic warehouse business was losing money on their famously cheap $1.50 hot dog and soda package, Sinegal listened, nodded, and then did his best to make his take on the situation perfectly clear.

"If you raise [the price of] the effing hot dog, I will kill you," Sinegal said. "Figure it out."

Taking his words to heart, Jelinek—who became Sinegal's successor in 2012—has never raised the price on Costco's hot dog. Incredibly, it has sold for the same $1.50 since the retail club first introduced the dogs to customers in 1984. The quarter-pound, all-beef tube and 20-ounce soda combo appears to be inflation-proof and immune to the whims of food distributors. How does Costco do it?

Simple. When it comes to hot dogs, Costco doesn't price according to what the market will bear. They price according to their own cost and according to the value the hot dogs can afford them.

According to Jelinek, people would pay $1.75, and maybe more, for the deal. But is that extra 25 cents going to be more valuable than the goodwill and foot traffic generated by a combo that's stuck to its price point for nearly 35 years? Probably not. Customers coming in to shop at Costco are amused, satisfied, and fueled by the hot dog meal. If they get it just before leaving the store, they're left with a lasting impression of being treated well. That's worth more than keeping up with inflation.

That means Costco needs to maintain the food court staple with an eye on a steady price. When supply costs threatened to increase in 2009, the company made a major decision: They stopped using Hebrew National, makers of the all-kosher dog that they had used since 1984, and decided to move hot dog production in-house. A Kirkland's Signature hot dog plant was constructed in Los Angeles. When they needed to ramp up production, they built a second plant in Chicago.

They've also had to keep costs on the soft drink side in line. When their deal with Coca-Cola was set to increase the price, Costco opted to sign with Pepsi in 2013, ensuring that their trademark $1.50 price sticker would be kept intact.

Today, Costco sells over 100 million hot dogs annually, which is more than every MLB stadium combined. And they continue to prove surprisingly adept at anything that could add even a single cent to the deal. When California recently enacted a soft drink tax that would have raised the consumer's cost, Costco locations in the state switched the combo to include Diet Pepsi. (Diet drinks are exempt from the law.) The company's "effing hot dog" will continue to remain a steal for the foreseeable future.

KFC's New Firelog Makes Your House Smell Like Fried Chicken

KFC
KFC

The classic yule log has received updates from Star Wars, Nick Offerman, and Lil Bub over the years. This holiday season, why not stoke your fireplace with a log from the folks at KFC? As KRON reports, the fast food chain has produced its own firelog that releases the scent of Kentucky fried chicken when ignited.

The KFC 11 Herbs and Spices log is the best way to fill your house with delectable fried chicken smells without ordering takeout. Made in collaboration with Enviro-Log, it contains 100 percent-recycled materials and burns for up to three hours. KFC warns buyers that burning the log "may result in a craving for fried chicken," and that it "may attract bears or neighbors who are hungry." Despite the mouthwatering aroma, the KFC firelog is not safe to eat.

KFC and Christmas may seem like an odd pairing, but it's an annual holiday tradition in other parts of the world. In Japan, KFC has been a Christmastime staple for decades, with customers placing orders for buckets of "Christmas chicken" months ahead of the holiday.

The KFC log went on sale for $19 on Thursday, December 14, and it's already sold out from the online store, but keep checking back to see if they've restocked them.

It likely won't be the last scented novelty product we see from the brand: KFC has previously released a candle, nail polish, and sunscreen all made to smell like its famous fried bird.

[h/t KRON]

Where to Score Free Treats For National Cupcake Day

iStock.com/RuthBlack
iStock.com/RuthBlack

December is a magical time of year, and not just because of all the winter holidays. A few days on the calendar this month cater to those of us with a sweet tooth, and we can’t say we’re complaining. National Cookie Day fell on December 4, followed by National Brownie Day on December 8, and we still have National Cupcake Day to look forward to tomorrow, December 15. Because if you’re already planning to indulge in Christmas cookies and cake, why not go all out?

The icing on the cake is that a few bakeries across the country will be handing out free cupcakes tomorrow. Sprinkles Cupcakes will be giving away a limited edition strawberry cupcake with rainbow sprinkles to the first 100 visitors at each of its bakeries, which are located in California, Nevada, Arizona, Texas, Illinois, Florida, New York, and Washington, D.C. The bakery will also be doing “impromptu cupcake drop-offs” around New York City tomorrow.

Baked by Melissa also promises customers a free cupcake of their choosing at any of its 14 outlets in the New York City region, according to Metro. The company will also post information about a cupcake giveaway to its Instagram page tomorrow, and you can participate by tagging a friend in the comments. Two winners will receive a “Superstar” pack of 50 cupcakes.

If you happen to live in Cleveland, LaBella Cupcakes is taking a unique approach to the holiday and launching a scavenger hunt at 10 a.m. tomorrow. It will take participants to 10 historic locations around the city, and the person who solves the clues the fastest will take home a dozen free cupcakes. Check out the company's Instagram and Facebook pages for more details. 

There’s also a chance one of your local, non-chain bakeries will be hosting a promotion, so it’s worth visiting their website or social media pages to see if there are some freebies you can take advantage of. 

SECTIONS

arrow
LIVE SMARTER