HomeBusinessWhy Costco's $1.50 hot dog combo and Arizona's 99-cent iced tea still...

Why Costco’s $1.50 hot dog combo and Arizona’s 99-cent iced tea still cost the same

However, there are still a few things that cost the same as usual.

Arizona’s iconic 23-ounce can of iced tea still retails for 99 cents, the same price it has been since its debut 30 years ago.

The family-owned company sells about 1 billion of the 99-cent Big AZ Can, as it’s called internally, each year, the Los Angeles Times reported in April.

“I’m committing to this price of 99 cents – when things go against you, you tighten your belt,” Don Vultaggio, the 70-year-old company founder, told the newspaper. His reasoning: Raising prices and losing customers as a result just isn’t worth the short-term profit.

Arizona – which started in Brooklyn – cuts costs by spending less on marketing than other beverage brands and makes the bulk of its profits by selling fruit drinks, energy drinks, bottled teas, snacks , soda water and other products at higher prices.

Costco’s $1.50 hot dog and soda combo

Costco’s hot dog and soda deal in its food courts has cost $1.50 since its introduction in the mid-1980s.

The hot dog offering was born in the early days of the company. Costco added a Hebrew National stand to its second outlet store in Portland, Oregon shortly after it opened in 1983.

To keep the price of the hot dog stable, Costco found ways to reduce other costs at the food court, such as switching from 12-ounce soda cans to cheaper 20-ounce fountain drinks.

Customers line up to order the $1.50 Costco Kirkland Signature hot dog and soda combo under signage.
Costco (COST) sold kosher hot dogs in its food courts until 2009, but vendors began to run out of meat. The chain therefore integrated production and switched to its own Kirkland Signature brand hot dogs. Costco now produces about 285 million hot dogs at its California plant.
Costco co-founder Jim Sinegal once told the company’s current CEO, Craig Jelinek, “If you lift the effing hot dog, I’m going to kill you. Understand that.”
“I know it sounds crazy to make a fuss out of a hot dog, but we spend a lot of time on it,” Sinegal told the Seattle Times in 2009. “We’re known for this hot dog. It’s something you don’t mess up.”

Last year, Costco sold 122 million hot dog and soda combos worldwide.

Costco, Sam’s Club and BJ’s Roast Chicken

Despite a 16.4% year-over-year increase in chicken prices, wholesale clubs and other grocers kept rotisserie chicken prices down.
Roast chickens remain $4.99 at Costco, as they have been for over a decade, as well as at Big BJ club (B.J.). At Sam’s Club, they’ve been a penny less than that for over five years.

There is a strategy behind the decision of these stores to keep these prices stable.

Roast chicken is a popular item in supermarkets as it attracts customers to stores. Typically, customers shop and buy more than just chicken during their visit. This is why retailers want to stay competitive on rotisserie chicken prices and are willing to lose money selling them even if production costs rise.

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Plus, shoppers know exactly how much their rotisserie chicken costs and they’ll notice an increase. The price of a roast chicken helps define consumers’ overall perception of a store’s value.

Although BJ’s production costs for roast chickens have risen, the company has kept prices firm because it’s “such an important thing to our members,” CEO Bob Eddy said on an earnings call in may.

However, Costco’s efforts to keep its chickens at $4.99 are under intense scrutiny.

The retailer is facing a lawsuit from two shareholders claiming that Costco and its top executives allow the abuse of chickens in violation of animal welfare laws.

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