A Costco hot dog and soda costs $1.50.

It cost $1.50 in 1985, when a gallon of gas was about a dollar and nobody owned a cell phone. It still costs $1.50 today. If it had merely kept pace with inflation, you'd be paying over four bucks for it right now. Instead, the price has not budged in forty years, which makes it one of the most defiantly frozen numbers in American retail.

This is not an accident. It's a promise, defended with a level of menace you don't usually find in a food court.

A few years back, the company was genuinely losing money on the combo. Rising meat and soda costs had turned every hot dog into a tiny loss. So the CEO at the time, Craig Jelinek, did the sensible executive thing and floated the idea of nudging the price up to the co-founder, Jim Sinegal.

Sinegal's response, which Jelinek happily retold years later, was not based on projections, data, or finances.

"If you raise (the price of) the f****** hot dog, I will kill you. Figure it out."

So they figured it out.

Rather than touch the price, Costco went to war on the cost. They built their own hot dog plants, in Los Angeles and later near Chicago, and started making their own Kirkland Signature franks instead of buying someone else's. When soda got expensive, they switched suppliers. When California slapped a tax on sugary drinks, they swapped in diet sodas at the fountain, which weren't taxed, rather than let it change the price a single cent.

The hot dog has become something so close to sacred that the entire supply chain was rebuilt to protect it.

Here's the part that makes it more than a funny quote. Costco knows exactly what it's doing.

The hot dog is a loss leader, a deliberately unprofitable product that exists to pull you through the door. You come for the $1.50 lunch, and you leave with 10 pounds of chicken, a new TV, and a 4-person sauna you definitely did not need.

The cheap hot dog isn't charity. It's the most reliable salesman in the building. It tells you, every single visit, that this is a place that won't gouge you. And a customer who believes that buys with their guard down.

Last year, Costco sold more than 130 million hot dogs and still made $8.1 billion in profit.

Find out where your promotion readiness case is falling short. A 3-minute diagnostic that scores you across four categories that determine if you get promoted or passed over.

Got a second? Give some feedback on today’s article so we can keep making improvements to The Manifold.

PS—I can’t imagine being threatened over the price of a hot dog, but it seems to have been effective.