The company has kept the price of its popular Kirkland Rotisserie Chicken at $4.99 since 2009. Costco willingly loses money on the chickens to maintain customer loyalty and draw visits that result in sales of other profitable products.
How much money does Costco lose on rotisserie?
They just don’t care. Richard Galanti, chief financial officer of Costco, recently spoke to the Seattle Times about Costco’s consistent chicken pricing. According to the Times, Costco loses about $30 to $40 million every year in chicken prices because they refuse to raise them higher than $4.99.
How much does Costco lose per year on rotisserie chicken?
That’s an expensive move as it’s widely believed that the company loses $30-$40 million per year selling rotisserie chicken.
Do stores lose money on rotisserie chicken?
Technically, stores that sell their rotisserie chickens for so cheap are selling them at a loss. They’re actually losing money on these chickens. These types of products are known as “loss leaders,” and they essentially work by attracting customers to the store.
Why are Costco chickens so cheap?
Instead, the store keeps the prices low on its famous rotisserie chickens and other staples as an incentive to get shoppers in the door. While the retail grocery chain is technically losing money on their famous chicken, the price is also subsidized by the fact that shoppers have to pay a Costco membership fee.
What items do Costco lose money on?
Costco actually loses money on each chicken they sell.
There are also a few items I would recommend skipping at Costco and purchasing elsewhere:
- Baking supplies: especially flour, baking powder, and yeast.
- Spices.
- Short-cut meals.
- Diapers.
- Olive oil.
Why is rotisserie chicken so cheap at Costco?
In 2015, Costco said it was able to maintain its low price because the company considers the rotisserie chicken a “loss leader.” That means its purpose isn’t to bring in profits, but rather to bring in customers to buy more of the wholesale retailer’s bulk toilet paper and five-packs of deodorant. And it works.
Does Costco lose money on their hotdogs?
After all, Costco actually loses money on every single combo sold, which adds up to around 135 million hot dogs per year. Tweaking prices, even a little, could dramatically impact the company’s bottom line.
How much does a Costco rotisserie chicken cost?
About 900m of the 9B chickens we consume on an annual basis are rotisserie chickens — precooked, seasoned, ready-to-eat birds. And of those 900m, 106m are sold by one retailer: Costco. The chain debuted its popular rotisserie chickens around 2000, pricing them at $4.99. More than two decades later, they’re still $4.99.
How many rotisserie chickens does Costco sell every year?
Costco sells 100 million rotisserie chickens every year—and they’ve been the same price for more than a decade!
Is rotisserie chicken a loss leader?
Rotisserie chicken is a loss leader: visible and affordable
“It is a way of the store giving you a discount on a very highly prominent item and then making up the money on some of the other items in the store,” he explains.
Does Walmart lose money on rotisserie chicken?
In 2015, CFO Richard Galanti said the company loses money with each rotisserie chicken sold in the deli, but that they are willing to keep the price low for members. The deal is a huge draw for many.
Is it cheaper to make or buy rotisserie chicken?
It’s because they’re smaller. So although it seems like the chickens are the same price, you’re actually paying more for the ready-made rotisserie, pound for pound. “Rotisserie chickens tend to the small side,” Klein writes — “maybe two to two and a half pounds.
Why is rotisserie chicken so cheap?
Rotisserie chickens are also a loss leader according to retailers such as Rowe Farms. This means grocers actually lose money on them, and sell them below cost as a way to get customers into stores to ostensibly buy more items.
Why is Costco not selling chickens?
To better control the price and size of its chickens, Costco decided to wean itself off major poultry producers and build its own supply network in the Midwest, where the company created an entire infrastructure from scratch.
Is poultry cheaper at Costco?
While Costco does sell good quality meat and poultry, their prices tend to be much higher than local grocery stores.
Does Costco make money on their food?
Costco’s food court makes $1 billion in sales each year
The warehouse chain generates quite a lot of money from food court sales.
What is Costco’s biggest loss leader?
Since 1985, Costco has offered a hotdog meal for $1.50. This should actually cost around $4 today, but the store is still able to extract value from the deal. Costco’s hotdog is an example of a loss leader. “They bring that family in to eat that hotdog meal, which is a bargain at $1.50.
What is Costco’s most profitable item?
Its most popular item is Kirkland Signature Bath Tissue, of which Costo sells over a billion rolls per year, bringing in $400 million from this product alone. In second place comes Costco’s rotisserie chicken, from which the company makes around $30-$40 million annually.
Where does Costco get their rotisserie chicken?
In 2019, Costco opened a $450 million poultry processing plant in Nebraska to produce millions of its staple $4.99 Kirkland Signature rotisserie chickens.
Is rotisserie chicken cheaper than chicken breast?
In most supermarkets, rotisserie chickens aren’t any less expensive, they just seem it. That’s because the “per chicken” price looks better at the deli counter while the per pound price is best in the meat aisle, Priceonomics reports.