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Life is expensive and only getting more so with each passing day. It's like you're always stuck in second gear. Your job's a joke, you're broke, etcetera. Recently, my favorite way to turn a day around, spend some time with my loving spouse, and not deplete my wallet is to drive to the nearest Costco. No matter what state you're in (geographically, financially, or emotionally), the Costco food court can be a shining beacon of anti-inflationary eating, as you walk in and grab a glorious quarter-pound tube of meat smushed into a moist white bread envelope for just one dollar and fifty cents. That's not all, though, as the Costco Hot Dog also comes with a refillable container for Coca-Cola products.
I know Costco isn't the fanciest dining option in town, nor the healthiest, and the atmosphere is lacking, but for this little cash outlay it's rare that I can even beat this on a price-per-unit-of-enjoyment by cooking at home. I just checked Walmart, and a pack of Ball Park bun-size beef franks is $6.11 per pound, meaning a pound of Costco hot dogs is not only cheaper, but comes with four sodas, four buns, and free condiments. Just about the only meal you can make at home for less is the all-time cheap meal, a pack of Maruchan ramen, which runs the same $1.50 for three servings (no drink, no condiments).
In a world where simple restaurant sandwiches are seemingly $15 now, and lunch for two can run close to fifty bucks, this is a cheap and easy way to get out of the house and enjoy some food. Three bucks for two people to eat is unbeatable. Toss in a slice of pizza (a meal in itself) to split, and you're still under $5.50. And thankfully, Costco has less expensive gasoline than the competition, so you can use your hot dog fill-up as an excuse to get some top-quality petroleum distillate.
How can this be profitable for the Costco corporation
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Depending on how far you live from a Costco, you may spend more on fuel than you will on your meal. But if you live close, it's worth the trip. Costco gas runs an average of 10 to 30 cents less per gallon than nearby stations. Because of the sheer volume of fuel the warehouse store sells, and its 145 million member base, it can afford to sell fuel at a lower margin.
It's immediately obvious to everyone who knows anything about retail sales that the Costco hot dog is a loss leader product. The company intentionally loses money on every hot dog it sells in an effort to both get people in the door and as an image booster to help show that Costco is a place where bargains can be had. I guess it's working pretty well because Costco's retail sales revenue last year was about 26 billion shy of Amazon's, making it the third-largest retailer in the world. Surely not all of that was hot dogs, and only about 10% of it was gasoline.
Costco membership numbers tend to hold strong during times of economic uncertainty, as buyers pivot to buying in bulk and using the perks of membership in an effort to save on their grocery expenses. Costco has actually managed to increase its membership every year, including in the midst of the COVID-19 global pandemic and its resulting economic recession.
How is a hot dog a good date night?
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It's important in these trying times to remember that it's not about how much money you can spend together, but how much time. As the price of everything increases (including the oil that Costco also sells, it's nice to remember the little things that make life worth living, many of which can't be bought. I like to take my wife on a date night to the Costco, not only because the liquor, gasoline (sometimes diesel), and rotisserie chickens are cheaper there, but because we can walk the aisles holding hands, laugh at dumb new products we definitely don't need, crack jokes, and taste test all the little snacks they're handing out in the aisles. If we need to buy groceries anyway, why not make a night of it?
Sure, we could always spend a night in and binge-watch whatever sloppy TV show Netflix wants everyone to get on board with these days, order our groceries through a delivery app, and wait for an underpaid gig worker to drop all our stuff off at the door. That's what a good consumer does, isn't it? I implore you, even if you think you're too busy, it's worth it to venture out into public and interact with other human beings on a regular basis. It's good for you, it's good for your community, and it's a great opportunity to save some scratch in the process.
I am not invested in the success of Costco, and if they raised their prices tomorrow, I'd probably never shop there again. But I like that I can get a bunch of stuff in bulk, save a few bucks, and get a nice delicious dinner out of the deal at the same time. And, for the record, a hot dog is a sandwich.