Where Does Costco Source Its Rotisserie Chicken?

If you're a Costco member, there's no doubt you're aware of the grocery chain's inflation-proof $4.99 rotisserie chicken. But how the company keeps the price so low is a somewhat controversial topic. In a nutshell, Costco does it by keeping production costs as low as possible and by selling the item at a loss as a way to attract customers. We aren't going to get into the business practice of what are referred to as "loss leaders," but we were curious about who exactly was supplying these unbelievably cheap poultry products.

In recent years, Costco has apparently grown unhappy with how it's sourced its rotisserie chicken. In 2016, the company created Lincoln Premium Poultry to vertically integrate the chicken production process to be more under its control — but the straightforward answer is that Costco sources its rotisserie chicken from several different companies. 

The chicken industry has come a long way from how it first began. Just four poultry firms (Tyson, Perdue, Pilgrim's Pride, and Sanderson Farms) now control close to 60% of the entire market. Costco is known to source a good percentage of their chicken from Tyson, but they also source from Pilgrim's Pride, Foster Farms, and very likely several other companies. While you can track down where a specific chicken product is sourced from via its packaging, getting good clean data on Costco's chicken sourcing practices overall isn't as simple as it could be. Why this should be the case is something we can only speculate about.

The poultry industry is infamous for many things, including its questionable treatment of the chickens themselves and the much maligned tournament system which has become so unethical the Department of Justice is investigating the poultry corporations involved. Along the way, these poultry companies have found the time to also aggravate Costco. Tyson and Costco have been duking it out via lengthy legal battles over alleged price gouging and an animal rights group called Mercy for Animals recently went undercover to expose the disturbing environment that Costco chicken suppliers raise their animals in.

Apparently this is all more than Costco is willing to put up with, as the company eventually created its own chicken supply company called Lincoln Premium Poultry. Then, in 2019, Costco invested over $450 million to construct a brand new poultry farm in Fremont, Nebraska. Lincoln Premium Poultry currently aims to supply 6 million chickens for Costco every year. The only problem is that Costco sold 137 million rotisserie chickens in 2023. For context, if Costco chickens were a country they would be the 10th most populous country in the world, just behind Russia.

If you run the numbers, that means Lincoln Premium Poultry is only supplying roughly 4% of Costco's total output. Which means that, despite the company's attempts to bring chicken production more under its own control, it is still sourcing around 96% of its chicken from traditional poultry suppliers like Tyson.