Sam’s Club has taken its rivalry with Costco to the next level.
The big box retailer has lowered the price of a hot dog and drink in its food court from $1.50 to $1.38, undercutting Costco’s long-standing price in an attempt to attract new customers.
“New lower price. Same great hot dog & drink combo,” Sam’s Club said in an advertisement on its website. “Frankly, it can’t be beat.”
Also, unlike Costco, where a membership is required to order at its food court, the Sam’s Club deal is also available to non-members as well.
Hot dogs might seem an unlikely hill on which to mount an assault, but they’re a strategic one. Food courts keep people in stores longer—and that increases the odds they’ll make an additional purchase.
The hot dog deal is a loss leader for both companies, but it’s a draw. Costco’s CEO has vowed to never increase the price of the combo, saying it would remain at $1.50 “forever” on an earnings call in September.
The popular menu item has remained at only $1.50 since the 1980s. Hot dog prices, though, have been on the rise lately, increasing 15.2% annually in October.
That’s not to say the idea of increasing prices hasn’t been floated at Costco. CEO Craig Jelinek discussed concerns about the losses from the meal deal with founder and former CEO Jim Sinegal, at one point.
Sinegal, he told 425 Business, replied “If you raise the effing hot dog, I will kill you. Figure it out.”
To date, Sam’s Club has not lowered the price of its rotisserie chicken, one of the other low-cost draws for shoppers to both stores.
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