In Costco’s defense, they deliberately keep food court prices low as a perk for members. Making their money off the memberships is what allows for a lot of their pricing in several departments, including food courts. Disclaimer: I’m a Costco fan - I think they are one of the more ethical companies out there (although every time I post that I’m afraid someone is going to prove me wrong and break my heart).
"In 2018, Jelinek revealed he approached the company’s co-founder Jim Sinegal saying: “Jim, we can’t sell this hot dog for a buck fifty. We are losing our rear ends.”
Sinegal replied: “If you raise the effing hot dog, I will kill you. Figure it out.”"
In Costco’s defense, they deliberately keep food court prices low as a perk for members. Making their money off the memberships is what allows for a lot of their pricing in several departments, including food courts. Disclaimer: I’m a Costco fan - I think they are one of the more ethical companies out there (although every time I post that I’m afraid someone is going to prove me wrong and break my heart).
That and they have an executive who would literally rather open his wrists than break the $1.50 hotdog deal.
https://www.thestar.com/business/is-costcos-1-50-hot-dog-deal-in-jeopardy-now-that-the-top-exec-who/article_22c8099c-e6b1-11ee-b6b1-67b691336204.html
"In 2018, Jelinek revealed he approached the company’s co-founder Jim Sinegal saying: “Jim, we can’t sell this hot dog for a buck fifty. We are losing our rear ends.”
Sinegal replied: “If you raise the effing hot dog, I will kill you. Figure it out.”"
How do you lose money selling one hotdog for what a 10 pack of cheap hotdogs cost?
Mostly man power and the power it takes to prepare the hot dog.
It’s not losing money, it’s losing a percentage of profit.
Say 10 hot dogs cost 1 dollarydoo.
1 hot dog sells for 1 dollarydoo that’s a 10% food cost.
Enter bullshit inflation, hot dogs now cost 2 dollarydoos, so each one sold at 1 dollarydoo is now at 20% food cost.
that 10% comes out of profit margin unless your labor & fixed costs are 0.