Costco Maintains $1.50 Hot Dog Combo Despite Inflation, Plans Drink Switch

Costco has maintained its iconic $1.50 hot dog and soda combo price since 1985, using it as a strategic loss leader to drive customer traffic and reinforce brand loyalty despite nearly $300 million in annual losses. This pricing strategy reflects a broader trend among some brands, such as AriZona iced tea and Olive Garden's Never Ending Pasta Bowl, which hold prices steady to build customer loyalty amid rising food prices and inflation. Costco recently announced it will switch its food court soda from Pepsi back to Coca-Cola, a change aimed at preserving the $1.50 price point. While food prices have increased by 23.6% since 2020, these companies sacrifice short-term margins to signal value and encourage repeat business. Analysts remain optimistic about Costco's stock, predicting an average 11.47% upside over the next year, though some metrics suggest possible downside risks. Overall, Costco's pricing decisions exemplify how retailers balance profitability with customer retention in an inflationary environment.