Costco refuses to raise the price of its $1.50 hot dog combo despite painful inflation. 4 experts explain the strategy, and why Charlie Munger loves it.

Even though US inflation is at a 40-year high, it has no plans to raise the price of its hot dogs and soda.

The big-box retailer's dedication to cutting costs without sacrificing quality, then passing on those savings to customers in the form of lower prices has won the admiration of investors.

"If you're associated with such a business many times in your life, you're very lucky," Munger said in 2011.

We wanted to know why the price of its signature meal deal hasn't been raised and how Munger loves the company.

This is the first thing. John Longo is a finance professor.

Longo said that the hot dog and soda deal gets customers in the door and likely fuels sales.

He wondered how many people buy the hot dog combo and leave. Some, but not most, shoppers.

The hot dog combo can be found at rock-bottom prices thanks to the fact that most of the profits from membership fees are reinvested in the business.

He said that the strategy generated free publicity, fostered goodwill towards the brand, and drove members to sign up. He said that it increases customer loyalty because it increases the cost of service.

Longo said that they are telling their customers that they are not taking advantage of them while they are down because of high inflation.

There are two "Charlie Munger: The Complete Investor" is a book written by the author.

The hot dog and soda combo is one product that reinforces the reputation of the company and is praised by Munger.

With inflation squeezing their budgets, consumers appreciate companies that have a small markup on their products.

He said that Costco does the comparison shopping for high quality products for its customers.

There are three. Cheviot Value Management is owned by the president of the company.

Pollock said that the hot dog is a product of the customer-centered culture at the warehouse club. The company doesn't need to make money on every item they sell. What number of other retailers are known for that?

Cheap hot dogs make existing members happy and attract new members, which is a win-WIN for the company. Some of its biggest fans are attracted to the retailer's philosophy of giving its customers a good time.

"Charlie Munger is a big fan of the Costco culture in which it provides its customers with the lowest possible prices for the goods it sells," he said.

There are four. The president of a company that is a shareholder of a store.

The retailer's members trust it to offer quality products and sell everything in its warehouses at lower prices than other retailers.

He said that the combo of a hot dog and soda was a testament to that. They are not apart. Trust and loyalty are driven by the $1.50 price.

The price of its hot dog combo has gone down over the years. After striking a better deal with the latter soda maker, it built two manufacturing facilities to bring production in-house and swapped cans of soda for fountain cups that were cheaper even with free refill allowed.

The fund manager said that inflation has made the hot dog combo unprofitable on a stand alone basis, but he didn't think it was a loss leader.

Despite losing money on each of the 130 million combo sales, the $1.50 combo is good for trust and loyalty.

He said that he expects the price of the combo to remain at its current level, but that it will be done at a reduced cost.

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