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![](\"https:\/\/fortune.com\/img-assets\/wp-content\/uploads\/2024\/05\/Costco-Hot-Dog-1.50-food-court-2024-03-14T140356Z_703008482_MT1USATODAY22769146_RTRMADP_3_THIS-HOT-DOG-AND-DRINK-COMBO-IS-SINGLE-HANDEDLY-THE-MOST.jpg?w=2048\")
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Some things never change\u2014traffic is always annoying; the rent is alway too high; a Philadelphia sports event will never be chill<\/a>. And Costco<\/a> will always offer its signature hot-dog-and-drink combo for $1.50, the same price<\/a> it\u2019s been for nearly four decades, regardless of who heads the retailer or what else it sells.\u00a0<\/p>\n The legendary wiener, along with Costco\u2019s nearly-as-famous $5 rotisserie chicken, are \u201cfoundational\u201d to the warehouse chain\u2019s success, Richard Galanti, who recently stepped down as chief financial officer, told Fortune\u2019s <\/em>Phil Wahba in a recent deep dive<\/a> into the warehouse club\u2019s stunning success.\u00a0<\/p>\n Previously, Galanti told the Wall Street Journal <\/em>the $1.50 price was \u201csacrosanct<\/a>,\u201d and declared<\/a> to investors that the dogs\u2019 price point would stay fixed \u201cforever.\u201d\u00a0<\/p>\n Galanti\u2019s successor as CFO, Gary Millerchip, this week reiterated that commitment. \u201cI also want to confirm the $1.50 hot dog price is safe,\u201d Millerchip told CNN reporter Nathaniel Meyersohn, according to an X<\/a> post.<\/p>\n In fact, Costco will overhaul its entire hot-dog supply chain before it will raise the price of the dog. When Costco introduced the $1.50 combo in 1985, it sourced its kosher beef dogs from Hebrew National. But by 2009, costs had gone up so much that the warehouse club brought production in-house. It built a plant outside Los Angeles<\/a> to produce Signature Kirkland hot dogs (not kosher), and later expanded production to add a second plant in the Chicago area.\u00a0<\/p>\n Same thing with the soda part of the combo: When Costco\u2019s contract with Coca-Cola<\/a> was up for renewal a decade ago, the retailer instead switched to Pepsi to save on prices<\/a>. To avoid San Francisco\u2019s tax on sugary drinks, Costco chose to serve only diet sodas or unsweetened tea<\/a> in its food courts.<\/p>\n That commitment to a rock-bottom price stretches all the way back to the warehouse club\u2019s founder, Jim Sinegal.\u00a0<\/p>\n As Sinegal\u2019s successor and onetime CEO Craig Jelinek explained back in 2018, he once suggested to Sinegal that the price of the money-losing dogs should be raised.<\/p>\n \u201cI came to [Sinegal] once and I said, \u2018Jim, we can\u2019t sell this hot dog for a buck fifty. We are losing our rear ends,\u2019\u201d Jelinek recalled<\/a> at a business event near Seattle.<\/p>\n Sinegal\u2019s response: \u201cIf you raise the effing hot dog, I will kill you. Figure it out,\u201d Jelinek continued.<\/p>\n \u201cThat\u2019s all I really needed,\u201d he said. Bringing production in-house, he added, eventually enabled the store to turn a profit on the popular menu item even at a $1.50 price tag. Today, Costco sells nearly 200 million hot dogs a year from its food courts, Fortune<\/em>\u2019s Wahba reports.\u00a0<\/p>\n But why is it so critical to keep the price frozen at $1.50\u2014what one online user dubbed<\/a> \u201cthe most stable commodity on earth\u201d? After all, Costco has raised plenty of other prices throughout its stores, and periodically adjusts its membership fee upward.<\/p>\n\nThe importance of low prices<\/strong><\/h2>\n