$1.50 was an outrageous amount for a hot dog in 1985. Are they really losing money on them? Not on ingredient costs. The price of the sausage and bun 'retail' is about $1.30. Presumably Costco pay less than that. (No idea what a bucket of sugar water costs, but can't be much.)
It’s $1.50 to get someone to your store where they will spend minimum $200. No brainer. Now get them to the back of your store for a 4.99 rotisserie chicken that is the best out there…. Another no brainer!!!! Retailing 101, but most businesses skip this class
I enjoyed your latest podcast. Is Costco selling these hotdogs at a loss? $1.50 for a hotdog seems profitable given how cheap hotdogs are. The other thing to consider that you didn't touch on is that Costco provides these perks to keep people renewing their $60 annual membership.
The $1.50 gets you a hotdog that's close to a foot long, the bun, any condiments they have, and a cup of soda plus a refill. It's definitely a loss leader.
And yet, Americans would rather vote against their self interests so as not to invest in their workforce so that it is healthier, stronger, and provides more opportunities to all. Freedom should also mean freedom from worry. Those at the top have never made the choice between rent and food.
American corporations believe in short term gains, boosting stock prices and maximizing profits at all costs so as to realize excessive executive bonuses.
There is little long term thinking. This is why China will eventually eclipse and dominate America. It may take 50 years, but they’re coming.
Hot Dog and Soda $1.50. Rotisserie Chicken $4.99. Pizza slice $1.99. Free product samples throughout the store. That anecdote doesn't explain why those prices stay the same.. The prices are maintained to attract shoppers to visit and spend more.
I remember working at frito lay, and presenting to the big guys from Dallas :PepsiCo food international. How can our sales reps be more efficient. My answer:
Have the stores order for more chips, and the sales reps can drop off the order with the store owner merchandising the product. Wrong answer
It's like dirty jokes are to Scott Galloway. Dirty Jokes... Galloways loss leader to keep 'em coming back for more. (and now I make that trademark Galloway noise... ehhh)
Its the IKEA model. Using food as a slight loss leader to drive foot traffic into store to create sales of more profitable items. Once customer is in store loyalty programs, credit cards, products and more can be potentially sold which builds brand loyalty and increases customer retention.
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Unlike so many maga corporations who see only blood to be wrung from stone.
I don't like shopping big box, but I make an exception for Costco.
There is little long term thinking. This is why China will eventually eclipse and dominate America. It may take 50 years, but they’re coming.
Have the stores order for more chips, and the sales reps can drop off the order with the store owner merchandising the product. Wrong answer
NOTHING IS CHEAP OR FREE AT COSTCO.
Consumerism 101: The sale price is %50 👆 than the price they make a handsome profit off of. Made up for by 👆 items not on sale.
Oh and "Club Cards" are a scam.