3 days Ago By [email protected] (Betsy Parks)
Whether you slice it up for meal prep, shred it for tacos, quesadillas, and salads, or just rip a drumstick off in the car before you even leave the store parking lot (no judgment), it's unthinkable to make a Costco run without picking up one of their irresistible $4.99 rotisserie chickens . But, how do they manage to keep the price so low when other companies charge several dollars more? The answer is simple: The company sources all of its rotisserie chickens from a $440 million poultry farm and processing operation it owns in partnership with Lincoln Premium Poultry in eastern Nebraska.
Because of this investment, the company controls the number of chickens that it raises for meat, and also how they're processed when they're grown up and ready for market. Costco is able to control costs by processing the meat themselves so that it isn't subject to supply chain issues or labor disputes on the open market. Costco potentially loses money on rotisserie chickens Even though Costco's chicken farming setup provides the company with 100 million chickens a year, that's still only 40% of the chickens it sells.
The rest of the chickens are still subject to what's available on the market at any given time. Combine that with its longstanding commitment to the $4.99 price, and it' not a big surprise that Costco isn't making millions on cheap chickens.
Instead, they're what's known as a loss leader. In 2015, former Costco chief financial officer Richard Galanti told the Seattle Times that Costco was losing as much as $30 to $40 million a year by keeping the price so low. Although, in 2019 the company's senior vice president of fresh foods, Jeff Lyons, declined to comment if the company was still losing money on chicken since opening the facility, ( CNN ).
While rotisserie chickens are not a major direct revenue source, they are a tasty ploy to get you in the door to spend more. Costco knows that when people come to the store week after week, on the way to the deli section, they'll walk past electronics, three-and-a-half pound pies , and even literal barrels of Jack Daniel's whiskey . These additional items have a way of jumping into the cart, especially when you're shopping on an empty stomach.
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