Name: Food Theory: Costco DOESN’T Save You Money!
Uploaded: 2023-10-05T00:45:15.000Z
Duration: 13 min 53 s
Description: Thousands of YouTube videos with English-Chinese subtitles! Now you can learn to understand native speakers, expand your vocabulary, and improve your pronunciation...

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 out.

What can I say? Inflation is crazy. *phone notification* Oh, would you look at that? 

Hello, Internet! Welcome to Food Theory.  The only show that stretches your mind and  

your hard earned dollar. Man, inflation has  been brutal lately. Higher interest rates,  

egg shortages, even price hikes on *gulp*  Diet Coke. And you know what they say things  

are likely going to get worse before they  get better. So 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 cheese. 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. consumerism. 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 that'll stick it to you faster  

than a 50 ounce bottle of maple syrup. But 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. And 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. But 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  

alone. 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. If 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. But 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. So 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. And 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. And 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 pennies. 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. If 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. Look 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. 

Next, 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.  

Yep. All those tiny little crackers with goat  cheese that money bloggers want to convince  