Sam's Club's Hot Dog Combo Is Now Even Cheaper Than Costco's

It's hard to believe that's even possible.

Costco has long prided itself on offering competitive prices on a host of products, from electronics to cleaning supplies to household essentials. And it's also worked hard to maintain its affordable food court prices, all the while changing up its menu from time to time.

In fact, there's one food court specialty that's become Costco's claim to fame -- the $1.50 hot dog and soda combo. The cost of that combo has not risen in decades, and Costco has actually pledged to keep that $1.50 price point in place for as long as possible.

But while $1.50 for a hot dog and large soda is clearly a bargain, it's no longer the most affordable meal deal in town. That's because Sam's Club just slashed the price of its own hot dog and soda combo to $1.38. And now, it gets to one-up Costco on the affordability front -- at least in this regard.

A strategic move for warehouse clubs

Clearly, both Costco and Sam's Club would be more than justified in raising the price of their respective hot dog meals. Inflation has impacted both retailers, and it wouldn't be unreasonable to raise the cost of a combo to, say $2. Even at that price point, it's still a cheap meal.

But there's a reason Costco and Sam's Club are willing to cut their profits on their lunch combos. It's fan favorites like these that help bring customers in the door. And also, Costco and Sam's Club charge membership fees that help offset their operating costs. So they don't necessarily need to generate more revenue from a food court staple like the hot dog combo when they have other ways to make money.

Will Costco lower the cost of its combo?

Now that Sam's Club has challenged Costco on the low price front, some customers may wonder if Costco will reduce the cost of its combo so it can retain the distinction of having the most affordable lunch in town. But just as Costco is unlikely to raise the cost of its combo, it's also unlikely to slash it. At this point, the $1.50 price point is widely known. And since it's certainly reasonable, there's really no reason to make any changes.

Now this isn't to say that Costco won't make changes to its membership fees in the near future. Though it has no immediate plans to do so, the last time those fees went up was the middle of 2017. So it's fair to say that Costco is due for a membership fee hike.

But even if customers are forced to spend more on a Costco membership, that incremental jump is likely to more than pay for itself in the form of ongoing savings on warehouse club purchases. Consumers who shop at Costco regularly often wind up with lower credit card tabs than those who stick to regular grocery stores and big-box stores. And the fact that they can still snag a cheap lunch is all the more reason to keep a membership active.