Why Costco's Rotisserie Chickens Are Still $4.99 Despite Inflation
With inflation continuing to climb and supply chain issues in full force, higher than normal grocery store prices have become the new normal for shoppers across the U.S. From packaged goods to fresh produce, it seems like no food item is off limits. One product, however, has remained noticeably unaffected: The rotisserie chicken at Costco.
While other chicken products have increased by 16.4% over the past year, CNN Business reports that the wholesale club has managed to keep their ready-to-eat rotisserie chicken at $4.99 — and the reason for this is entirely strategic. As CNN explains, rotisserie chickens are considered a "loss leader." What that means is that Costco makes up for the money lost from its cheap rotisserie chickens with higher prices on other foods.
Food marketing expert Ernest Baskin, an associate professor at Saint Joseph's University, also pointed out that even when shoppers come into the store planning to buy only rotisserie chicken, they'll typically end up buying something else too. To Costco, rotisserie chickens are a way to keep and attract customers, and for those customers, it's an affordable meal option.
Costco's rotisserie chicken price has been maintained for over a decade
Back in 2009, Costco first began selling its rotisserie chickens for $4.99, and since then, the price has never so much as wavered, The Humane League reports. To be able to consistently maintain this amid inflation, Costco essentially became its competitor. Instead of sourcing its chicken from major producers like Tyson Foods, Costco opened its own Nebraska-based poultry farm, Lincoln Premium Poultry. According to Forbes, Costco invested $450 million in the endeavor, and it proved to be a smart move because Costco now has complete control over its chicken prices.
Forbes elaborates that Costco supplying its own chicken has been so effective in preventing price changes that even when its farm became infected with bird flu in March 2022, rotisserie chickens still stood at a firm $4.99. That was even when the company lost 500,000 birds. It resulted in a temporary shortage, but as long as people are buying rotisserie chickens, it seems Costco will keep the price the same, and can comfortably afford to do so.