An exchange between Costco founder Jim Sinegal and Costco CEO Craig Jelinek over the cost of their hot dog and soda combination — a staple of the brand that has not changed since 1985 — frequently goes viral on social media. As the story goes, Jelinek wanted to raise the price of the hot dog combo, and Sinegal did not take it well:
The exchange, based on the testimony of Jelinek — the CEO who wanted to raise the price — is factual. He discussed it in an April 12, 2018, speech to a local chamber of commerce. His remarks, which were part of a broader message about problem solving, were summarized in several places including the website 425 Business:
“I came to (Jim Sinegal) once and I said, ‘Jim, we can’t sell this hot dog for a buck fifty. We are losing our rear ends.’ And he said, ‘If you raise the effing hot dog, I will kill you. Figure it out.’ That’s all I really needed. By the way, if you raised (the price) to $1.75, it would not be that big of a deal. People would still buy (it). But it’s the mindset that when you think of Costco, you think of the $1.50 hot dog (and soda).
“What we figured out we could do is build our own hot dog-manufacturing plant (in Los Angeles) and make our own Kirkland Signature hot dogs. Now we are doing so much hot dog business that we’ve opened up another plant in Chicago.
“By having the discipline to say, ‘You are not going to be able to raise your price. You have to figure it out,’ we took it over and started manufacturing our hot dogs. We keep it at $1.50 and make enough money to get a fair return.”
Because the story comes from Jelinek himself, the claim is true.