How Much Money Does Costco Lose On Its Rotisserie Chickens?

Sometimes you've got to lose money to make money. In the case of Costco, it's not just the $1.50 hot dog deal that's costing the business money. The beloved (if sometimes green) rotisserie chicken sold at Costco actually costs the warehouse chain more money to sell than it does for you to buy at its fixed $4.99 price tag, which means the store takes a loss every time you buy one.

Back in 2015, Costco's Chief Financial Officer claimed the company was willing to lose $30 million to $40 million that year to keep the rotisserie chicken price locked in. Costco has never confirmed the exact dollar amount it loses by maintaining that price, so no one knows for sure. With recent changes to the packaging of the rotisserie chicken (and rising food costs), it's very likely that number has increased substantially. In early 2024, Costco switched the packaging of its rotisserie chickens from a plastic, domed container to a resealable bag. This was done in an effort to reduce the chain's carbon emissions and overall environmental impact. But, the packaging update likely resulted in a roughly $380 million financial loss annually for Costco, per industry analysts.

Considering the fact that Costco sold 137 million rotisserie chickens in 2023, you may be wondering why Costco doesn't just raise the price to make some profit. The short answer is that Costco is willing to sacrifice a little dough to bring in the bigger bucks from members.

Many (including Costco's own leadership) have reasoned that the financial loss of keeping the rotisserie chickens so affordable is offset by what it does to attract customers, who then spend more money buying other items at the store. The idea behind the rotisserie chicken's set price is to subtly influence customers into becoming more comfortable spending more money in other areas of the warehouse (including membership costs) because of the perceived cost-savings.

The faith Costco has in this "loss leader" item is exemplified by the fact that its raw, frozen Kirkland chicken products are priced higher than the fully cooked, rotisserie chickens. Similarly, Costco's $1.50 hot dog combo has been fiercely defended by the warehouse chain's founder in the past. In 2022, the CFO of Costco explained that other areas of the company's success are part of the reason the warehouse chain has been able to maintain the $1.50 hot dog deal for so long and will continue to do so.

Costco has long maintained these iconic deals, but the brand has made plenty of changes like increasing membership costs and cracking down on non-members mooching off the benefits of paying members. So, don't feel too bad about the affordability of those whole roasted birds, Costco is doing just fine.