Food Theory: Costco DOESN’T Save You Money! (2023)


*SUBSCRIBE to Style Theory!*
Be one of the first to subscribe to our NEW channel! ►

Inflation is getting out of hand! With rising gas prices, egg shortages, and interest rates, most of us are looking to save a buck where we can. And a great way to do that is buy buying BULK! Or is it actually the way to go? We’re breaking down the biggest myth when it comes to Costco and the best hacks for saving money at your local retailer.
*🔽 Don’t Miss Out!*
Get Your TheoryWear! ►
Dive into the Reddit! ►

Need Royalty Free Music for your Content? Try Epidemic Sound.
Get Your 30 Day Free Trial Now ►
*👀 Watch MORE Theories:*
How Long Could You SURVIVE a Grocery Store? ►►
Spicy Food Can Actually KILL You ►►
They’re Stealing from You! ►►
*SUBSCRIBE to Food Theory!*
*Join Our Other YouTube Channels!*
​🕹️ @GameTheory
​🎥 @FilmTheory
👔 @StyleTheorists
Writers: Matthew Patrick and Brittany Leigh Turnbull
Editors: Tyler Mascola and Danial "BanditRants" Keristoufi
Sound Designer: Yosi Berman
#Costco #GroceryShopping #SaveMoney #Grocery #GroceryStores #MoneySavingTips #MoneyHacks #CostcoHaul #EggPrice #Inflation #Theory #FoodTheory #Matpat


Agh, that's higher than it was last week.

[Employee] Excuse, me, sir., Just gonna, squeeze right by you.

Oh, come on!.

I haven't even had time to check.


What can I say? Inflation is crazy.

*phone notification* Oh.

Would you look at that? Are you serious!? Hello, Internet! Welcome to Food Theory.

The only show that stretches your mind and your hard earned.


Man, inflation has been brutal, lately.

Higher interest, rates, egg shortages, even price hikes on *gulp* Diet, Coke.


You know what they say: things are likely going to get worse before they get better.


Today, I'm going to inflate your brain with some money, saving tips, and expose a couple of food myths along the way.

If you're.

A fan of dough and I know that you are considering this as a food channel, after all, hit that subscribe button, so you're always notified of when we post a new video.

For many of us, shopping at Costco is a rite of passage.

From purchasing your first years’ supply of toilet paper to unlocking the secret, that is the 4.99 rotisserie chicken.

Costco has become the place where you go for a jumbo pack of toilet paper and you walk out with a camping, tent, a food processor, and 12 lb of mozzarella.


Just leave your manners at the door and hover over that sample table like the pizza vulture that you are., Bulk, bulgogi and giant teddy bears aside.

The point of Costco is that you get a lot in one stop and you save a lot by buying in bulk.

In case you’re, not familiar with this pinnacle of U.S.


Let me, explain., Costco's model is based on offering a limited stock of bulk.

Only products at lower rates than anywhere else.

The premise is that for any item you know you'll use, whether it's paper, towels, blueberry, muffins or TVs?, I guess, Costco- can sell you an enormous amount of that thing for what should be a lower price., That said.

All of this so-called cost savings is going to come with its own heaping helping of traps, pitfalls and marketing ploys.


Stick it to you faster than a 50 ounce, bottle of maple syrup.


What if I told you that I have the secret to beating every trick in the old Costco handbook? In, fact, I know the single best technique for saving you, the most money on meals.


You can do it whether you're a family of one or 11., Come on, grab a flatbed cart, that's big enough to carry a mattress, and, let's start talking about the Costco pro-strats.

To begin, before we even enter Costco, we're going to need to get past that bouncer waiting out front., You see, Costco is a members only store, meaning that we can't get in without flashing this piece of plastic, with our own little face staring back at us., As of today, Costco offers four types of memberships:: a basic or gold star level, starting at 60 bucks and a premium or executive member level that will run you 120.

These memberships are designed to be an investment in yourself, where you're, basically betting, that you can save $60, the cost of membership, over the course of the entire year, a few pennies at a time on each gallon tub of Gray Poupon that you're lugging home.


This isn't always a bet that you know you're going to be able to win unless you've done some serious math to calculate how many rolls of toilet, paper, pounds of salmon and bags of frozen broccoli you actually buy in a year.

And Costco is well aware of this.

They know that some people with a membership are only going to enter the store a couple of times a year, meaning that they just collect a membership fee and walk it straight to the bank.

In fact, memberships are where Costco's raking in the most cash to the tune of 72% of their entire operating budget.

You heard that right.

Nearly three quarters of their entire operation is covered by membership costs.


In 2021.

They collected $3.9 billion from 61 million members, which means that even when the cost of their products fluctuates or customers are shopping less for a few months because of things like massive inflation, Costco is going to be doing just fine.

But memberships are doing a lot more than extracting just some upfront.

Cash from you.

It's also doing something much darker and more sinister.

It's, manipulating your mind.

You see.

One reason companies require memberships is because they're powerful tools that get you to come back more often.

Since our brains, see those membership dues as sunk costs or money that can't be recovered.

When you buy something.

You always want it to be worth it, right? Whatever.

That means to you.


You buy a cool jacket.

You want to use it enough times to feel like you got your money's, worth.

If, it's food,! You want it to taste good and live up to the price that you pay.


How does this work with a Costco membership? Well,? You paid all this money to get the membership upfront on the promise that you'll save money later when you actually shop in the store.


What does this make your brain want to do? Buy a ton of stuff in the store, so you can get back the price of that membership and savings.

Seriously, spending money on a Costco membership makes your brain want to make up for it by spending even more money at Costco., It's.

Actually, brilliant.

This is what's known as the Sunk Cost Fallacy, or the idea that we're more likely to invest in an action if we feel it'll make prior investment seem justified.

This is true, even when the action no longer brings us joy., Despite, being the opposite of what economic theory tells us is rational.

These sunk costs have been shown to have a massive impact on your behaviors.

So geez.

We're, already dealing with an upfront investment, followed by the psychology of sunk costs and crippling guilt that comes with it.


We haven't even stepped foot in the store, yet.

That said, it's only after we're over the threshold, pushing our shopping cart, the size of a rowboat that the mind games get even more intense.

If you're, familiar with our video on how grocery stores trick your brain into spending more than you think, well.

You probably know where this is going, but Costco actually takes things up to a whole other level.

You see, a major key to Costco success is impulse purchases.

Items that you wouldn't normally buy, but you do it on a whim.


You can bet over the years that they've come up with some pretty sneaky tactics.

To get you to do just that.

The first comes with the brand itself, making.

You think that you're in a quote, unquote: cheap store., That's, right.

They're, not leaving all the floors as concrete, and all the heating pipes expose just the pinch.


They're doing it to make you think they're, pinching, pennies., They're, saving, money.

They're, passing those savings on to you.

We're, all on the same team, here, right?, Wrong.


You feel like you're in a thrift store, you won't be as careful about checking prices.

You'll feel, like those prices are better.

Even when they're not.

And leaving everything barebones makes you feel like you're in a place.

That's attainable.

A place, that's not outside of anyone's league.

On top of that.

They start, you right off at the front door with an interesting mix of stuff.

Some things that you need and some things that you want.

They want you seeing something that you use everyday.

The second you walk in.

That way, even if you're not running low, you might as well pick it up to save time later or use eventually.

Vitamins, big volume, snacks, toothpaste.

Those, are the things that are going to meet you right at the front door because who doesn't need to stock up on stuff like that? The.

Other thing, that's flashing in front of your face when you walk in are the TVs, the stereos, the expensive, electronics, things that represent aspirational purchases, that most people aren't buying every time they go to the store.

But, you could potentially buy them one day if you managed to save enough money by shopping at Costco.

They, give you a goal to shoot: for.

And hey,! If you said no to that 70 inch OLED for a couple thousand dollars at the door.


How much you just saved.

Might as well reward yourself with an extra tray of 24, fresh cinnamon buns from the bakery: Only 11.99 bating, you with expensive items that you want, makes it a lot more likely that you'll impulse buy something much smaller later to feel like you, weren't completely depriving yourself, when in reality, you wouldn't have wanted anything extra in the first place.

If you didn't see beautiful displays of MacBooks.

All you came in for was just several cows worth of milk.


Have you noticed how things kind of seem randomly sprinkled throughout Costco? Like, some cheese over there, some blenders over here, some random barrels of pretzels somewhere in the middle.

It's, no accident., In fact: Costco's distribution of the staples you actually need:, produce, milk, condiments and snacks.

They're, all designed to be a treasure hunt through the store that forces you to stumble across a huge array of products that you didn't actually need or didn't realize that you needed.

But, well, while you're here you might as well pick them up, right?, And.

All of that wandering and hunting around helps you to feel just a little bit more peckish, right in time to pass by their most devious tactic of all, the free samples.


All, those tiny little crackers with goat cheese that money bloggers want to convince you constitute as a free, meal.

All of those nice little freebies are actually just putting their hands down in your wallet.

A study from the University of New York showed that when a grocery store offers free, samples, impulse purchases in that category, go up over 50%.

But, just think about what that means.

For Costco.

If, you like a free, sample, you're, not just buying one small wedge of cheese or one little packet of cocktail.


You're buying the farm.

Free samples are especially valuable at Costco, because every time they convert a single sale, what they're really doing is converting 2 to 4 sales worth of a regular store.


You are now the proud owner of 20 pepperoni pizza, because you like that one little two by two inch square.

That, is some serious marketing.

Psychology, no matter how you slice, it., But okay.

Let's say that you've come in incredibly prepared.

You have your budget, you have a list, you've arrived on a full stomach, ready to resist even the most inviting little old lady proffering you a free, Tuscan, meatball.


If I genuinely only buy the staples? Will I save a lot of money? Well, I did an analysis of what it would cost to buy common groceries at Costco compared to Walmart.

I, looked at common food items like eggs and milk, produce like potatoes and broccoli.

Even meats like chicken and beef.

I, even threw in a pair of AirPods just to see if tech was where I'd save it was not.

What I found was Drum roll, please., On, average, you're saving, $1.14 per product.

Shopping at Costco., Yay? Is, that a win? Fun, fact., The biggest savings actually came from coffee and only $0.42 per serving.

So, hey.

You can rest easy, knowing that you do in fact save by shopping at Costco, provided you buy at least 53 items there in any given calendar year.

Instead of buying those items at another retailer, and that you use everything that you buy.

That right.

There is the biggest sticking point, isn't it? You only save money.

If you use the stuff that you bought.

You see, the average price of an item at Costco is a lot more than a smaller item at another store, meaning that you're going to have to be ready to make an investment in that food and you're going to be eating it like every day until it runs out.


My analysis of Staples that I would need to buy at Costco instead of buying at a regular grocery store or Walmart.

I would need to spend over $400 to buy the bulk versions of all of those things.

And in the end, on an average basis.

When you normalize for the amount of products you bought, you only save yourself, $20.


What happens if I don't use everything I just bought? Well, then it goes to waste, of course.


That I just have to go back and buy more.

And chances are.

Unless my meal planning is prodigious and I know exactly how much my family is eating, each day, I'm not going to get it right.

What, the heck am I going to do with 5 lb of lemons, four dozen eggs? I better, be a baker or Gaston or my entire family, better be eating omelets every day, which will also help me use up the pounds and pounds of cheddar cheese that are now weighing down my refrigerator.


And you see.

This is where most people fall into the Costco.


Food goes to waste and you just end up buying it all again, or you end up eating the same thing every day out of obligation.

Not, because it was the best choice for you based on your nutrition, but because you felt guilty.

Because wasted food equals wasted.


So sure, in some scenarios, shopping at Costco, makes sense.

Say you're an affluent, college, educated homeowner, with both a family and enough disposable income to make buying in bulk a good option to stock your enormous refrigerator and freezer.

Because theorists, that right, there? That, is Costco's.

Target customer.

You might be led to believe that the average Costco shopper is lower income or a blue collar worker.

On a shoestring.

But, you couldn't be more wrong.

According to their own accounts, who they're actually targeting are professional women between the ages of 35 and 45, who make on average over $125,000 per year and are spending well over $100 per shopping.


When I found this out, I was seriously shocked.

Like, This is Costco’s biggest secret.

A story that markets itself as discount is actually a store for rich people.


You know, rich people who want to feel like they're saving, money.


Also, why you see Costco stores focused around suburban areas.

It's, just not that practical for an 18 year old living in a cramped college dorm to buy in bulk, you're, going to need a home with a garage and a freezer and another freezer, and probably a shed.

Oh, and when it comes to non-food items like their electronics, these are just price matched with other stores or Best.


But Costco doesn't have any kind of student discount options because students, again, are not on the budget or the demographic that they're looking for.

Does that mean that all is lost for your Costco membership? Not exactly.

You see, with today's unbridled inflation, I do actually believe that there's a place for that Costco membership.

And, it's not where you think.


If I told you that a Costco membership could save you money, even without you stepping foot into the store? Enter, the $1.50 hotdog deal.

Introduced back in 1985.

The legendary hot dog deal is one of the main attractions at Costco's food court, which is what they call the snack stand that sits immediately inside or outside the door at most stores.


This thing completely: slays everything., The average yearly sales for Costco hotdogs, outperform all of the major League Baseball stadiums combined by a factor of four.

Stand aside there, Dodger Dog, the true king has arrived.

What's even more impressive, though, is that this hot dog deal should be running you about $4.16.

In today's money.

But against all odds.

The price has stayed the same at $1.50 for over 35 years., It's, actually pretty fair to call this one.

Inflation, proof., This legendary meal consists of a quarter pound all beef frank, a bun and a 20 ounce soda with free refills.

I, ran the numbers to see how much it would really cost someone to make this meal at home.


What I found was actually shocking.

A quarter, pound, all beef frank will cost you a $1.18.

The bun, another $0.35., A 20 ounce, soda plus refill $1.27, coming to a grand total of $2.80.


Don't know if you realize just how big of a deal that is.

You're saving $1.30 per meal by eating at Costco and not cooking your meal at home., The old, saying of save money by bringing your lunch from home.

Yeah might be true in every other case, but the next time you hear this from a friend or a coworker.

You just send them straight over to Costco.


You know what? You can even sometimes send them there without a membership.

Many online forums, including Reddit, have documented users visiting their local Costcos, where the food court is right outside the store.


They just pay for the combo in cash.

So you can walk up anytime and buy an inflation proof meal at a member's.

Only club, price.

And, you don't have to have a membership and you can get away with it.

Every time.

It feels like you just hacked The Matrix.


If you are a member, well, in just 47 meals, less than one Costco hotdog meal per week for any member of your family.

You've just made back your entire membership and you didn't even have to wash a single dish.

A family of three could start saving in as little as 16 weeks.

And, because hot dogs are one of like three foods that my preschooler currently eats, you'll, probably find me at the Costco tomorrow.

In, a time where all the good stuff seems like it's getting more expensive or going away.

It's good to know that you can still have dinner and a drink at your friendly neighborhood Costco.

Just, don't listen to that little old lady trying to lure you inside with her cheese, cubes.

No, no.

You stay back, Edna.

And as always, remember, my friends.

It's just a theory.

A FOOD THEORY! Bon, appetit., And, hey, if you're interested in saving money at your normal, regular grocery store.

That video is on the left.

Or, if you're interested in figuring out ways to save money on your makeup.

That video is on our newest channel Style Theory.

That one's on the right.

As always.

My friends, I'll see you next week.

Top Articles
Latest Posts
Article information

Author: Foster Heidenreich CPA

Last Updated: 17/11/2023

Views: 5257

Rating: 4.6 / 5 (56 voted)

Reviews: 95% of readers found this page helpful

Author information

Name: Foster Heidenreich CPA

Birthday: 1995-01-14

Address: 55021 Usha Garden, North Larisa, DE 19209

Phone: +6812240846623

Job: Corporate Healthcare Strategist

Hobby: Singing, Listening to music, Rafting, LARPing, Gardening, Quilting, Rappelling

Introduction: My name is Foster Heidenreich CPA, I am a delightful, quaint, glorious, quaint, faithful, enchanting, fine person who loves writing and wants to share my knowledge and understanding with you.