A $1.50 Costco Hot Dog Costs $18 on This New Delivery App

Costco's $1.50 hot dog and soft drink combo costs $18 on No Tip, a new Southern California delivery app — a 1,100% markup on the retailer's most famous bargain.

No Tip is the work of Jack Chen, a longtime software engineer who launched the platform two months ago. According to a report from SFGate, the service covers all of Southern California through 66 fulfillment locations. The mechanics are simple. A customer orders from the Costco food court menu through No Tip. Someone drives to Costco, waits in line, buys the food and delivers it. Chen promises refunds for late deliveries, and he says the listed fees are all-inclusive — no tip, no add-ons.

The markups are steep across the menu. A whole pizza that costs members $9.95 at the food court runs $30 through No Tip. The $7.99 rotisserie chicken chef salad jumps to $28 on Chen's menu. The hot dog combo carries the biggest premium of all: $18 delivered, against $1.50 in the store.

Who actually pays $18 for a hot dog?

Chen's answer: companies, not individuals. He built the site to feed crowds, not solo lunch orders — though he will take those too. No Tip can serve groups of up to 200 people and includes plates and forks with each delivery. The host sets up and serves the food.

"A lot of offices are ordering from me," Chen told SFGate in a phone interview. "It's the company's money. As long as you're not too expensive, I mean, they've got the money to blow."

At the 200-person scale, the math hardens fast. A company ordering 200 hot dogs through No Tip would pay $18 each — $3,600 for food that costs $300 inside the warehouse.

Chen says repeat demand also comes from a specific kind of craving. "You'd be surprised how some people are just craving it specifically," he said. His pitch rests on the idea that Costco food court items hold a loyalty that rival delivery options do not.

What the business looks like today

The operation is lean. Chen handles some deliveries himself. Friends and "some guys" he pays "on the side right now" cover the rest of the orders. He wants to move to in-house drivers as the service grows.

The pricing gap between Costco's shelf and Chen's menu is the business model in one line: buy at food court prices, sell at catering prices, and pocket the spread plus the convenience premium. Late deliveries carry a refund promise rather than a penalty fee, which puts the delivery risk on Chen rather than the customer.

How the idea started

The origin story dates to Chen's time living near Venice Beach. He wanted Costco pizza for dinner one night. Getting it meant driving to Costco and braving the food court lines. That friction became the product: Chen bet that other Costco fans would also pay extra to skip the trip.

"I know my friends have paid, like, $30-plus dollars for some terrible Domino's in the past," he said. "So why not try to do this?"

The comparison is the whole wager. Chen is not competing with Costco's $1.50 counter price. He is competing with $30 delivery pizza — and betting that Costco's food court commands enough loyalty to win that matchup.

Two months in, No Tip operates with contract labor, a 66-location footprint and an office-catering customer base. The open question is whether the in-house driver plan and the 200-person order volume can sustain an arbitrage built on a $16.50 spread per hot dog.