"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.”"
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.