George Li
George Li
Mar 17 · 2 min read

Hey Daniel,

Thanks for the detailed response. I always enjoy hearing contrary thoughts and facts. I wrote this article mostly with the aim of showcasing how we make terrible decisions when we’re hungry. The reason I singled out Costco and some other retailers was that they were a way to highlight the recent trend of turning stores into “destinations” by having food options that also coincidentally exploits our human nature.

I tried to be tongue-in-cheek/satirical with this article because my honest opinion is that I don’t think Costco or any other store purposely adds a food court with the intention of getting people to shop while hungry, it’s just a nice side-benefit. From my experience, business decisions are rarely based on academic psychology papers. So in short, your points are well-received and I generally agree with you.

Specifically for Costco, maybe I’ve had a different experience than you, but based off my experiences at Costco, people have no problem bringing their entire cart of items in tow while they chow down at the food court. But to Tom Sharkey’s point, different Costco’s have different layouts and depending on the space and location of the food court, people’s behavior probably changes stores by store. It would be interesting to do an informal poll of how many people shop before they eat or vice versa based on different Costco’s.

As to the $1.50 deal, it’s fair that comparing Costco hot dogs to NYC street vendors is not an apples to apples comparison. I still believe Costco likely makes a profit from the food court given the scale that Costco can buy hot dogs at, but I think if you factor in the opportunity cost of what Costco could do with the food court space (e.g. sell more stuff!) then it probably dilutes their total margin.

Based off your feedback, I edited my article to have less of an accusatory note. I love shopping at Costco and it seems like a stand-up company based off it’s reputation so I’m not trying to disparage Costco in any way. I’m actually super interested to hear about your experiences as a vendor for Costco as I imagine they would want to pass as much savings onto the customer as possible? That’s my polite way of saying they would be tough price negotiators.

Once again, really appreciate your thoughts!

George Li

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George Li

writer of the interesting — lover of froyo — more articles that spark conversations at http://latenightfroyo.com