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.

Nearly $100,000 in Instant Ramen Was Stolen in Georgia Noodle Heist

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iStock

It's not easy to steal a small fortune when your target is instant ramen, but a team of thieves in Georgia managed to do just that a few weeks back. As The Atlanta Journal-Constitution reports, the criminals made off with a trailer containing nearly $100,000 worth of noodles, and the local police force is still working to track down the perpetrators.

The heist occurred outside a Chevron gas station in Fayetteville, Georgia some time between July 25 and August 1, 2018. The 53-foot trailer parked in the area contained a large shipment of ramen, which the truck's driver estimates was worth about $98,000. Depending on the brand, that means the convenience food bandits stole anywhere between 200,000 and 500,000 noodle packs.

Some outlets have connected the truck-jacking to a recent string of vehicle-related robberies, but the Fayette County Sheriff's Office told the AJC such reports are inaccurate. Any potential suspects in the case have yet to be revealed.

The outlaws join the list of thieves who have stolen food items in bulk. Some of the most ambitious food heists in the past have centered on 11,000 pounds of Nutella, $75,000 worth of soup, and 6000 cheesecakes.

[h/t The Atlanta Journal-Constitution]

Are Millennials Really Killing Mayo? An Investigation

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iStock

If the headlines are to be believed, then Millennials have killed chain restaurants, beer, bars of soap, cereal, diamonds, marriage, marmalade—and now mayonnaise.

Philadelphia Magazine ran a story earlier this week under the headline "How Millennials Killed Mayonnaise," and judging by the reactions, people have some pretty strong opinions about their preferred condiments, and whether or not said condiments are "literally dead," as a Millennial might say.

As evidence of the eggy mixture's untimely demise, the article's author, Sandy Hingston, cited BuzzFeed headlines outlining why mayonnaise is the "devil's condiment" and pointed to her personal experience of having to bring home potato salad and deviled eggs that went untouched at a family cookout.

Hingston went on to write that 20-somethings "would sooner get their news from an actual paper newspaper than ingest mayonnaise."

But does the data support this claim? Business Insider did some digging and discovered that mayonnaise sales are, in fact, down. In the U.S., sales fell 6.7 percent between 2012 and 2018, according to Euromonitor. To sell their products, Hellmann's and Kraft have been forced to lower mayonnaise prices, which fell 0.6 percent from the beginning of 2017 to 2018. And, Millennials tend to get blamed when sales numbers tank in particular industries because, as of 2018, they are the largest generation alive and also account for the most spending power.

According to Hingston, Millennials' distaste for mayo could be because it jiggles, it looks like a gross bodily fluid, and it seems like "a boring white food," as opposed to something more exotic, like aioli (mayonnaise with garlic). Also worth noting, though, is the rising popularity of healthy, vegan diets, as well as the availability of egg-free "mayonnaise" products.

So, while Millennials may have "deeply wounded mayonnaise," according to Business Insider, it probably won't disappear from store shelves anytime soon. Instead, companies are getting creative and releasing new mayonnaise products, like Heinz's new Mayochup (mayonnaise and ketchup) and Real Mayonnaise, made from cage-free eggs, lemon juice, oil, and vinegar. Many supermarkets also sell garlic, herb, hot and spicy, and lime variations.

As to whether Millennials will continue on their killing spree, Jason Dorsey, who researches Millennials at the Center for Generational Kinetics, tells the BBC, "The real issue is not that Millennials are not killing industries or businesses, but businesses aren't adapting." Jeff Fromm, the president of consulting firm FutureCast, agrees: "Millennials are the canary in the coal mine regarding trends. Innovation is going to be required."

[h/t Business Insider]

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