Costco sells the world’s best grocery store rotisserie chicken at a budget-friendly cost of only $4.99. How is Costco able to keep the prices so low? It’s because they don’t make a profit—seriously!
Here’s Why the Price of Costco Rotisserie Chicken Won’t Change
It’s the same reason why the famous soda and hot dog combo hasn’t budged from $1.50 since the deal was introduced in the early 1980s.
Costco could make a giant profit by raising the prices by only $1 (they sold 87 million rotisserie chickens in 2017 alone). But instead they keep the prices low on their famous rotisserie chickens and other staples as an incentive to get shoppers in the door.
Costco’s Thinking Behind the Decision
As a warehouse members-only club, the majority of their products are sold in bulk. As such, most shoppers would ordinarily stop by the warehouse once a month or so to stock up on big-batch items. However, low-cost rotisserie chickens help to ensure shoppers visit more often. And, as the rotisserie chickens are typically located in the back of the store, the hope is that customers will fill their carts with other items as they make their way through the aisles. (The same is true for this other kitchen staple.)
Costco Chief Financial Officer Richard Galenti explained their business philosophy in 2015. “I can only tell you what history has shown us: When others were raising their chicken prices from $4.99 to $5.99, we were willing to eat, if you will, $30 to $40 million a year in gross margin by keeping it at $4.99,” Galanti said, The Seattle Times reported. “That’s what we do for a living.”
Perhaps the old saying should be amended: “…in this world nothing can be said to be certain, except death, taxes and $4.99 Costco rotisserie chicken.”
Article by Susan Bronson for Taste of Home. View the original article here.