February 27, 2023 | Eul Basa

Costco Founder Once Threatened CEO Over Proposed Price Hike Of Its $1.50 Hotdogs

In this capitalist society, it's hard to believe that companies actually have our best interests in mind. But contrary to popular belief, not all of them are really "out to get us."

Just take Costco for example—the big box retailer, which has served the public for decades, prides itself for putting its customers first; focusing on their needs above all else (including profits). Perhaps its greatest testament to that mindset is its staple hot dog and soda combo, which has remained priced at $1.50 ever since it was introduced back in 1985.

Jim Sinegal, the founder and former CEO of Costco, has stood by that price for years and will apparently fight 'til his dying breath to keep it that way. He made that clear in 2012 when he was replaced by Craig Jelinek, a former Costco warehouse manager. In one of his first proposals as the new head honcho, Jelinek proposed hiking the price of the combo by 25 cents or possibly more.

Considering that Costo never priced its hot dogs based on what the market will bear, the idea seemed absolutely preposterous to Sinegal. After 35 years of leadership, Sinegal had never once thought to raise the combo's price. Besides, if it works, why change it?

According to reports from 2018, Jelinek ultimately threw out that idea because he received some pretty intense words from Sinegal himself: "If you raise the [price of the] effing hot dog, I will kill you. Figure it out."

Mental Floss's Jake Rossen said it best when he described the significance of the $1.50:

"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."

Needless to say, when Sinegal told Jelinek to "figure it out," he said it from his gut.

Fortunately for Sinegal, Jelinek is not one to take criticisms like that lightly. After Sinegal threatened him, he said that was all he really needed to hear to come up with a better solution.

"By having the discipline to say, 'You are not going to be able to raise your price. You have to figure it out,' we took it over and started manufacturing our hot dogs," he said. "We keep it at $1.50 and make enough money to get a fair return."

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