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The Enduring Enigma of Costco's $1.50 Hot Dog and Soda Combo

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Re: The Enduring Enigma of Costco's $1.50 Hot Dog and Soda Combo

#91

Post by dreae »

dsr_ wrote: post #78
grendelt wrote: post #56

"Enigma" It's called a loss leader.

Well, if they were actually losing money on it, it would be a loss leader. But since the actual cost of the dog, bun, cup, soda, paper plate, napkins, condiments, labor and depreciation comes in under $1.50, it's not a loss. It's just money left on the table. Except -- it probably isn't. Costco isn't really a restaurant, it's a store which carries a limited number of high-value items packaged in bulk. The hot dogs (a…

It's absolutely a text book loss leader. A loss leader doesn't need to be sold below cost, only below its minimum profit margin.

Leaving money on the table is effectively losing money.

Re: The Enduring Enigma of Costco's $1.50 Hot Dog and Soda Combo

#92

Post by chillwaves »

dsjoerg wrote: post #41
ouid wrote: post #24

Earlier quoted context omitted.

The modern world. Milk no longer goes bad quickly.

Maybe neither you nor grandparent know about UHT treatment of milk, and how it's common outside America and uncommon inside.

Seems to be at every single grocery store I have ever shopped in for the past at least 5 years.

Not every milk is UHT but every grocery store offers it.

Re: The Enduring Enigma of Costco's $1.50 Hot Dog and Soda Combo

#93

Post by dragonwriter »

chiefalchemist wrote: post #76
dragonwriter wrote: post #70

Earlier quoted context omitted.

They could, and then a mandatory charge for sugar packets (like there is for grocery bags) would be legislated.

But if the objective is to reduce sugar consumption shouldn't there be a sugar packet tax now, as part of the soda tax? Butt for butt my local Starbucks isn't any different than BK, MD, etc.

> But if the objective is to reduce sugar consumption shouldn't there be a sugar packet tax now, as part of the soda tax?

I think the objective of soda taxes is to reduce childhood habituation to sugar, which is why they focus on a product heavily marketed to children.

> Butt for butt my local Starbucks isn't any different than BK, MD, etc.

Most of the sugar moving through Starbucks probably isn't sugar packets, anyway.

Re: The Enduring Enigma of Costco's $1.50 Hot Dog and Soda Combo

#94

Post by fencepost »

qubex wrote: post #83
fencepost wrote: post #55

While the article starts with a "we're losing money on these" anecdote, the article does not say that they're losing money in terms of selling the combo below cost. They are selling it for less than the market will bear, but that also applies to the rotisserie chickens ($5/3lb vs grocery stores at 2lb). If it makes you feel better, think of the lost $0.50-$2 as being silently charged to their marketing budget behind…

Yeah... the leading quote screamed “loss leader” at me, and the whole article that ensues tries to dispel that notion; in my mind it fails, because I’m left with the feeling that they’re doing their best to minimize the loss they make on unit economics but still provide a subsidy from their overall operations.

They actually sell the same hot dogs that they use in the food court back in the refrigerated area (or something very similar) but I'm not at a Costco and can't check the pricing. I doubt they're making much of a profit on the dog-and-a-drink combo, but I'm pretty sure they're not subsidizing it at least in terms of ingredients. I'd be surprised if cost of ingredients for it was more than $1-1.10 - $0.50-0.60 for the dog, $0.20 for the bun, $0.05-0.10 for condiments, $0.30-0.35 for the soft drink, bearing in mind that they're not paying the retail prices for those items.

Re: The Enduring Enigma of Costco's $1.50 Hot Dog and Soda Combo

#95

Post by SirYandi »

aviv wrote: post #9
onetimemanytime wrote: post #8

Earlier quoted context omitted.

>> Panda Express and Five Guys are also well-liked by the customers who get sick consuming their products. Free will. You may become e vegan, but I want to eat meat products and drink beer. I will bear any consequences, if any, just like that person that doesn't exercise.

I agree. Adults have free will. I cringe though every time I see an adult feed their kids such nasty disease forming foods. Borderline child abuse.

I have to agree with you that feeding children excessive (or even moderate) amounts of unhealthy food is essentially cruel and abusive. Either the adult doesn't know better, or is just taking the easy option.

It really upsets me to see overweight children. Giving them a whole swathe of mental and physical health issues before they've even gotten started with life.

Re: The Enduring Enigma of Costco's $1.50 Hot Dog and Soda Combo

#96

Post by SirYandi »

aviv wrote: post #50
philwelch wrote: post #34

Earlier quoted context omitted.

So you think Costco's master plan is to sell people hot dogs and soda at or below cost, just ordinary hot dogs , and as a result of eating one hot dog and drinking one soda when they do their monthly Costco trip, they will develop chronic illness and need to pick up prescription drugs there? Even if you're that much of a sociopath, there are much better business models.

Yes. The messaging from Costco is that it's OK to eat this way. It feeds the overall mentality of unhealthy members that this lifestyle goes inline with their over consumption of oversized foods at Costco generally. That there is nothing wrong with grabbing a hotdog, pizza, and soda on your way to pick up your blood pressure "medication" at the pharmacy once you're done stuffing yourself with the food causing your hi…

You're right in that companies don't really care about you, only your money. Though they don't have a negative agenda to you either. They don't care about you at all.

There is nothing sinister about it.

Re: The Enduring Enigma of Costco's $1.50 Hot Dog and Soda Combo

#97

Post by Avshalom »

achille wrote: post #73
fencepost wrote: post #55

While the article starts with a "we're losing money on these" anecdote, the article does not say that they're losing money in terms of selling the combo below cost. They are selling it for less than the market will bear, but that also applies to the rotisserie chickens ($5/3lb vs grocery stores at 2lb). If it makes you feel better, think of the lost $0.50-$2 as being silently charged to their marketing budget behind…

> but that also applies to the rotisserie chickens ($5/3lb vs grocery stores at 2lb). It's a common myth that rotisserie chickens are cheaper than frozen. If you do the math you'll find that rotisserie chickens are slightly more expensive. See: https://www.ams.usda.gov/mnreports/pywretailchicken.pdf > Rotisserie, Under 2lb, Norwest cost is $5.73/lb on average

I think they meant that costco sells a 3lb rotisserie at 5 dollars while most stores sell a 2lb at $5. Which mean Costco's Rotisserie is 50% or 67% (depending which way you want to calculate it) cheaper.

Re: The Enduring Enigma of Costco's $1.50 Hot Dog and Soda Combo

#98

Post by thaumasiotes »

dsr_ wrote: post #78
grendelt wrote: post #56

"Enigma" It's called a loss leader.

Well, if they were actually losing money on it, it would be a loss leader. But since the actual cost of the dog, bun, cup, soda, paper plate, napkins, condiments, labor and depreciation comes in under $1.50, it's not a loss. It's just money left on the table. Except -- it probably isn't. Costco isn't really a restaurant, it's a store which carries a limited number of high-value items packaged in bulk. The hot dogs (a…

> The hot dogs (and the other low-priced food up front) are a form of complementary good, which more than pays for itself by enticing people to come in on their lunch breaks and shop for fifteen to thirty more minutes than they would if they had to stop for fast food somewhere else.

This is a loss leader. That's the entire concept.

Taking your loss in the opportunity cost is still a loss.

Re: The Enduring Enigma of Costco's $1.50 Hot Dog and Soda Combo

#99

Post by Avshalom »

chiefalchemist wrote: post #76
dragonwriter wrote: post #70

Earlier quoted context omitted.

They could, and then a mandatory charge for sugar packets (like there is for grocery bags) would be legislated.

But if the objective is to reduce sugar consumption shouldn't there be a sugar packet tax now, as part of the soda tax? Butt for butt my local Starbucks isn't any different than BK, MD, etc.

This is actually a follow up to the next paragraph in that it doesn't address your specific point but it's also sort of more important: "poor people" go to BK and MD, and we can't be having with the idea that poor people are equally rational but existing in a world of different circumstances/choices. Nope, they need to be told whats best for them. On the left we tax junk food, on the right they demand SNAP/TANF/WIC only cover a very specific subset of food.

None of the soda taxes are particularly well thought out BUT Starbucks does not offer a 64oz anything unlike 7-11, so it's less obvious.

Re: The Enduring Enigma of Costco's $1.50 Hot Dog and Soda Combo

#100

Post by kurthr »

fencepost wrote: post #94
qubex wrote: post #83

Earlier quoted context omitted.

Yeah... the leading quote screamed “loss leader” at me, and the whole article that ensues tries to dispel that notion; in my mind it fails, because I’m left with the feeling that they’re doing their best to minimize the loss they make on unit economics but still provide a subsidy from their overall operations.

They actually sell the same hot dogs that they use in the food court back in the refrigerated area (or something very similar) but I'm not at a Costco and can't check the pricing. I doubt they're making much of a profit on the dog-and-a-drink combo, but I'm pretty sure they're not subsidizing it at least in terms of ingredients. I'd be surprised if cost of ingredients for it was more than $1-1.10 - $0.50-0.60 for the…

I seriously doubt that their cost of soda runs even $0.30. A 5 gallon bag of Coke syrup (in relatively small quantities) runs $75 and makes 30 gallons or ~500 small cups of soda. At another 10c, the ice and an expensive cup might cost as much as the soda itself, but $0.20 total is probably high for Costco.

https://www.quora.com/Are-the-drinks-and-beverages-normally-...

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