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Costco

Explore episode Mar 4, 2026
History
How Price Club's First Store Almost Failed — Then Went Viral

Costco · Mar 4, 2026 History

Sol Price designed Price Club for business customers only — but the first San Diego store struggled to recruit enough businesses. A deal with the San Diego City Credit Union let consumer members in at slightly higher prices. Consumers exploded the business through word of mouth, and Price Club accidentally discovered that consumers would happily shop in a wholesale warehouse with no services or selection — as long as the prices were genuinely the lowest anywhere.

5m 20s

Where this was said

The $1.50 Hot Dog and the Consumer Revelation

At 50:00 · chapter starts 48:50

As the credit union deal sends consumer foot traffic surging through the first Price Club, local hot dog vendors start calling to set up carts at the store exit. Sol eventually calls Hebrew National, who agrees to supply both hot dogs and the cart — and the $1.50 hot dog and soda combination is born, unchanged in price 47 years later. Ben notes that this may be Costco's only true loss leader today, and that Costco now makes its own hot dogs and sells 130 million annually. More significant than the hot dog itself is what the consumer influx proves: that ordinary shoppers will forgo comfortable retail experiences, selection, and branding entirely if the prices are low enough. This runs counter to everything conventional retail wisdom said about consumer requirements. Price Club, designed as a B2B wholesaler, accidentally discovers that the model works even better with consumers.

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