Does Costco Actually Profit On Its Rotisserie Chicken?

Costco's rotisserie chicken is the stuff of legend. It's always fresh and ready to eat as the chicken is never kept out past its two-hour shelf life. Most impressively, this meal costs just $4.99, the same price it sold for when it was first introduced. Thus far, Costco has fought to keep its rotisserie chicken affordable, but how? Costco members famously buy rotisserie chickens by the millions. Yet, even at this volume, Costco can't make a real profit at only $4.99 per bird. However, that doesn't mean the retail corporation hasn't tried. In 2019 , Costco even built a chicken processing facility in Fremont, Nebraska, to keep production costs down.

By selling its rotisserie chicken at a loss, Costco is employing a popular grocery store marketing tactic called a "loss leader."  In essence, Costco's popular product, sold below cost, convinces customers to enter the store and pass by dozens of enticing (and otherwise profitable) products on their way to pick up a chicken at the back of the store. In 2023, Costco's then-Chief Financial Officer Richard Galanti explained that the rotisserie chicken price-lock is a way to help boost membership and promote sales.

Clearly, the $4.99 rotisserie chicken is a storewide mainstay, just like the iconic $1.50 hot dog combo deal found at the Costco food court. No doubt, management is betting that you won't be able to resist buying a few extra items since you're already inside. The national retailer might not make a profit off its trademark chicken, but it certainly gets customers in the door.

According to the Austin Business Journal, Costco sold 137 million rotisserie chickens in 2023, which was 20 million more than in 2022. It's easy to see why Costco's chicken is a true bargain in these inflationary times. In many parts of the United States, you cannot buy a three-pound chicken and cook it yourself for that price. Costco's rotisserie chicken truly is a great deal. But beyond the loss leader strategy, why does Costco put so much effort into roasting delectable chickens? Well, in 2022, Rutgers Business School professor John Longo told The Hustle that there are two additional reasons.

The first is that such a good deal on rotisserie chicken promotes the idea that Costco offers excellent value. Customers will, the theory goes, tell their friends about the $4.99 chicken, and perhaps those friends will buy Costco memberships. Secondly, Longo argues that Costco gains customer goodwill by keeping the price of rotisserie chicken unchanged. Costco did not raise rotisserie chicken prices during the 2022 inflationary period, even though customers likely would have understood if it had. Sticking with the $4.99 price despite spiraling production costs allows Costco to project a customers-first image. It keeps us coming back for that great deal on rotisserie chicken, too.