Speaking this week to analysts about the wholesale club’s quarterly earnings, Costco chief financial officer Richard Galanti answered a question about the company’s philosophy on the cheap chickens.
“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,” he explained, according to the Seattle Times. “That’s what we do for a living.”
In 2014, Costco sold 76 million of these chickens, just about one per club cardholder. Just like the $1.50 hot dog and soda combo (and other low-priced menu items) at the Costco in-store snack bars, they appear to be helping to get customers in the doors where they can make purchases on higher-margin items.
The price of chicken has remained flat in the last year, but that might change due to a recent outbreak in avian flu, though many of the chickens that have died or been euthanized were raised for egg production.