From Price Club to Costco: The Warehouse Revolution
In 1976, inside a former airplane hangar in San Diego, Sol Price opened the first membership-based warehouse store—Price Club. His idea was simple: sell fewer items, in bulk, at low margins, directly to small businesses and restaurants. The principle was efficiency over variety.
Seven years later, in Seattle, Jim Sinegal and Jeff Brotman expanded this model to the public, founding Costco in 1983. By limiting stores to around 3,700 items, cutting out advertising, and charging a membership fee, they built a foundation of efficiency and trust.
Mergers and the Birth of Kirkland Signature
In 1993, Costco merged with Price Club to form PriceCostco, before returning to the Costco name in 1997. Around this time, the company launched its in-house private label: Kirkland Signature.
Named after the company’s former headquarters in Kirkland, Washington, the brand reflected Costco’s ethos: “cost + minimal margin.” Unlike competitors, Costco capped margins at about 14% (15% for Kirkland)—half the industry average. The savings went directly back to members.
The Treasure Hunt Experience
Costco’s shopping experience is designed as a treasure hunt. Members wander aisles where familiar brands sit beside Kirkland products, seasonal exclusives, or one-time-only “wow” items. The scarcity effect keeps customers coming back—not just for necessities, but for discovery.
The $1.50 Hot Dog Promise
Perhaps Costco’s most famous tradition is the $1.50 hot dog and soda combo, unchanged since the mid-1980s. When then-CEO Craig Jelinek once suggested raising the price, co-founder Sinegal replied:
“If you raise the price of the hot dog, I will kill you. Figure it out.”
Costco responded by changing suppliers, even building its own hot dog factory—ensuring the $1.50 promise remained intact. It became more than food; it became a symbol of trust.
Rotisserie Chicken and Vertical Integration
The same philosophy extends to Costco’s $4.99 rotisserie chicken. In 2019, the company built its own poultry plant—Lincoln Premium Poultry—to secure supply and keep prices stable. Critics raised questions about farming practices, but for Costco, the message was clear: members could always rely on price, quality, and consistency.
Surviving the Pandemic and Membership Growth
During the pandemic, Costco became a lifeline for essentials—paper towels, rice, frozen food—while expanding online and same-day delivery. Membership remained its backbone, and in September 2024, fees rose for the first time in seven years:
- Gold Star & Business: $60 → $65
- Executive: $120 → $130
To balance the hike, Costco raised Executive rewards caps, reinforcing its value-for-trust contract with members.
Leadership Shifts and Financial Discipline
On January 1, 2024, Ron Vachris—who began his career as a forklift driver at Price Club—became CEO. In March, longtime CFO Richard Galanti stepped down, succeeded by Gary Millerchip, former Kroger CFO. Even with leadership changes, Costco’s financial discipline—low margins, strong cash flow, and special dividends—remains its compass.
Gold Bars and the Extreme Treasure Hunt
In late 2023, Costco began selling 1-ounce gold bars, often selling out within hours. By early 2024, they had sold over $100 million in gold, later adding silver coins and platinum. Members came for chicken and detergent but left with precious metals—an extreme version of Costco’s treasure hunt design.
Today: A $249 Billion Retail Giant
By fiscal year 2024, Costco reported $249.6 billion in net sales and surpassed 900 warehouses worldwide in 2025. Despite no advertising, stores stay packed. Why? Because Costco’s formula—limited selection, fast turnover, low margins sustained by membership fees—has permanently changed how millions shop.
Conclusion: A Promise Kept
From hot dogs to gold bars, Costco is more than a store. It is a promise—that price, value, and trust are constant.
As one shopper put it: “This is a place to find things.” Another corrected: “No—it’s a place to confirm promises.”
And that is Costco’s greatest drama: every day, the same shelves, the same prices, the same trust. A $1.50 promise that built a retail empire.
Costco Wholesale, Public domain, via Wikimedia Commons