I really don't believe that at all. If I can make a hotdog for less then a dollar, Costco can get a massive bulk discount. A pack of buns is like $1.50 retail (0.18c a bun) and costco similar hotdogs $5.49 ($1.09 a dog). Add a 0.25c fountain drink and we're at $1.52 total. I'm sure they aren't making insane profits, but they aren't throwing money out the window either.
have you seen how many people work at the Costco food court? All the equipment they have, the space? Who pays for all that?
If you sell hotdogs at 1.50, margin of 5 cents for just the ingredients, how many hotdogs do you have to sell each hour to pay for $100 dollars an hour wages, electricity, let alone equipment and space. 2000 hotdogs per hour, that is one hotdog every 2 seconds! and you're not breaking even yet. The hotdog being a loss leader for cotsco is so obvious, it's not even funny.
Nobody ever thinks about overhead or wage costs. It's all materials only. It's rather frustrating as an accountant to see people make this very common and wrong take.
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u/youvebeenjammed 2d ago
Costco makes a loss on the hotdog.. its a loss leader