The cult US$4.99 rotisserie chicken defying inflation

Roasted in ovens in the rear of the retail giant's hundreds of cavernous stores, the birds have cost only US$4.99 since 2009 even as the U.S. retail price of chicken almost doubled. Photo by ZikG/Adobe Stock

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At Costco’s chicken slaughterhouse in Nebraska, some 2 million birds a week are stunned, suspended by their feet, decapitated, picked free of feathers, cleaned, chilled, boxed and trucked to stores where many become a US$4.99 cult item: the retail giant’s beloved rotisserie chicken.

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Demand for chicken — the cheapest meat protein — is on the rise in the United States. The average U.S. resident eats 103lb (47kg) of poultry meat annually, an increase of 6lb from five years ago, even as red meat consumption declined, according to the department of agriculture.

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A significant portion of that meat comes home in a fragrant plastic bag warmed under lamps at a Costco warehouse store. Costco sold 157.4 million rotisserie chickens worldwide last year, almost double the number of a decade ago.

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“It’s US$4.99 and for Costco members, that’s one fantastic deal. I don’t think you can produce it for that,” said Walt Shafer, who oversaw the construction and management of the Nebraska site before he retired from Costco this year.

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Roasted in ovens in the rear of the retail giant’s hundreds of cavernous stores, the birds have cost only US$4.99 since 2009 even as the U.S. retail price of chicken almost doubled. The product has become a textbook “loss leader”, buttressing the loyalty of Costco customers who pay membership fees for the right to shop there.

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When Costco increased membership fees in 2024, chief financial officer Gary Millerchip told analysts that customer complaints were subdued in part because of the goodwill generated by holding the line on chicken.

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The succulent bird has an enthusiastic online following. TikTok videos of “hack” recipes concocted in the bag in which the chicken is sold regularly gain more than 1 million views.

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Customer selecting rotisserie chicken, Costco, Florida. Photo by Lindsey Nicholson/UCG/Universal Images Group via Getty Images

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Former CFO Richard Galanti in 2015 acknowledged that Costco was “willing to eat, if you will, US$30 million, US$40 million a year in gross margin by keeping it at US$4.99”.

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“It’s all the way in the back of the store,” said Amy Smith, a protein analyst at Advanced Economic Solutions who shops at a Costco in Denver. “You’ve got to pass the clothes, the books, the snacks, the miscellaneous items, the breads, the wines. Chances are you aren’t walking out of there with just a rotisserie chicken.”

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On average, the cost to produce the roughly 4.5lb bird sent to rotisserie ovens is about US$3.50, accounting for current livestock feed prices, said Mark Jordan, executive director of Leap Market Analytics, a poultry consultancy. With marinade, transport and cooking costs included, “almost surely they’re a little bit underwater per bird”, Jordan said.

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But Costco has devised ways to mitigate losses on rotisserie sales. One was to construct the US$500 million slaughterhouse, which has reshaped a rural corner of the U.S. Midwest since it started operations in 2019.

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Building the plant gave Costco negotiating leverage with third-party poultry suppliers, according to Shafer, who was chief operating officer at Lincoln Premium Poultry, the Costco subsidiary that runs the Nebraska chicken business.