Why Costco May Never Raise Prices on $4.99 Chickens, $1.50 Hot Dogs

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Why Costco May Never Raise Prices on $4.99 Chickens, $1.50 Hot Dogs - by Brad Tuttle/ Everyday Money/ Shopping/ Money/ Time.com

"Price points are untouchable.

This week, Costco chief financial officer Richard Galanti was asked a deep, open-ended question in an earnings call with analysts. “What is your philosophy on chickens?” asked Meredith Adler, of Barclays.

Rather than prompting a chicken-or-egg discussion—a subject debated for centuries, dating back to the ancient Greek philosophers—the query was more rotisserie in nature. Specifically, Adler was wondering about Costco’s cooked, takeout rotisserie chickens, which have been priced at $4.99 since ancient Greek times, or at least as far back as we can remember. What’s puzzling to some is that rotisserie chickens cost less than uncooked chicken, and that Costco has consistently decided against raising prices on the item even though it easily could...

...Costco reportedly sells more than four times the number of hot dogs sold at all Major League Baseball stadiums combined each year. According to a 2012 documentary on Costco, the chain sells in excess of 300 million hot dogs, pizza slices, and other ready-to-eat items annually..."


Richard

 

[MuranoJo]

And why is that? Is it because you are so tired of fighting through the crowds and exhausted and ready for a break when you finally check out? (Referring to last paragraph in Richard's post above.)

 

[falmouth3]

That price is a steal. They are bigger and less expensive than the local grocery store. I think I may pick one up today.

 

[MichaelColey]

It's pretty simple. They know that if you go in for a $1.50 hot dog combo or a $4.99 rotisserie, you'll probably leave with several hundred dollars of other stuff. It's rare that we leave Costco (or Sam's) without spending at least $300.

 

[Passepartout]

And to top that, Costco's chickens (IMO) taste far better than the paltry $7- 3 pounders at my neighborhood grocer's. DW and I regularly get 6-8 meals from one Costco chicken, it's a bargain of the first order.

I suppose our enthusiasm would be tempered if our Costco was one of the giant mega-stores with crowded parking and elbow crunching lines inside, but ours is a manageable size and we have learned to stay away on weekend afternoons.

Frankly, they could give the hot dogs away free and I'd still not take them, but each to their own.

Jim

 

[CO skier]

The cheapest and best tasting chickens in town is a combination that cannot be beat.

About $500/month of other Costco items follow our chickens out of store. One time it was an irresistible flat screen TV.

You have to respect a chief financial officer who knows the company's customers and does not pander to the analysts.

 

[CO skier]

DW and I regularly get 6-8 meals from one Costco chicken, it's a bargain of the first order.

The carcasses also make the best homemade chicken stock.

 

[Passepartout]

The carcasses also make the best homemade chicken stock.

Yup. First meal is some breast slices and a drumstick or wing or two. Then next time it's sort of a reprise of #1 or more slices into sandwiches. Sometimes there is another meal of semi-recognizable bits, then the carcass goes into the stockpot to be simmered for a couple of hours, de-boned and veggies added for a pot of soup. This maybe extended with some noodles or rice- or not.

Gotta love those chickens! You guys made me hungry, so now I know what might pass for dinner tonight.

 

[slip]

Man, I have to work on my portion control. DW and I routinely get one meal
Out of a Costco chicken.

 

[Kal]

It's also interesting that you can't purchase packages of hot dogs or the buns in the warehouse store. Of course, how long would it take to consume a pallet of hot dog franks??

 

[dioxide45]

It's also interesting that you can't purchase packages of hot dogs or the buns in the warehouse store. Of course, how long would it take to consume a pallet of hot dog franks??

They do sell the Kirkland Signature 1/4lb Plus hot dog links in their warehouse. It is a big pack, but we vacuum seal two of them in to FoodSaver bags and then freeze them. Though they don't sell the buns in the warehouse.

 

[dioxide45]

We have picked up three or four rotisserie chickens since Costco move in less than five minuted from our house. Have the carcasses in the freezer to turn in to stock some day.

One thing I really wish is that there would be more options in their stores for sides to go along with them. From the potato department, they only have mashed and scalloped. Sam's has great twice baked potatoes in the refrigerated cases. I would kinda like something like that or even mac and cheese available that can be heated in the oven to go along with the rotisserie chicken.

 

[Zac495]

Costco pays their employees very well and treats them right. And look! They don't need to raise prices to do it. Walmart could learn a thing or 20.

 

[CO skier]

Chicken Pot Pie
(Serves 4-5)

Vegetable blend:
1 cup sliced carrots
2-3 peeled and diced potatoes
1 cup diced onion or 1 Tbsp. dried onion flakes
1 cup frozen peas, thawed

Spice blend:
1½ teaspoon McCormick Perfect Pinch Rotisserie spice blend
½ rounded teaspoon dried rosemary
1/2 teaspoon garlic salt or regular salt (optional, but recommended)

4 tablespoons butter or vegetable oil
4 tablespoons flour
2 cloves roasted or 1 clove raw garlic, minced (if not using garlic salt)
2 cups chicken broth, divided
1 or 2 tablespoons dry white wine (optional)
1½ cups milk
3 cups diced Chicken (one breast and trimmings from Costco Rotisserie chicken)
1 frozen puff pastry sheet, thawed at room temperature for 45 minutes


1. Cook carrots and potatoes in microwave on high for 5 minutes, stirring every minute. Add onion (optional – saute separately for a deeper flavor), mix and microwave on high for 2 minutes, stirring well at 1 minute, then add peas. Reserve.

2. Heat butter or oil in 2.5 liter ovenproof serving dish (oblong Corning bowl). Whisk in flour and microwave 2 minutes on high, stirring every minute. Add minced garlic and cook on high for 1 minute. Add spice blend and stir to combine. Microwave on high for 30 seconds to activate spices.

3. Whisk in 1 cup chicken broth. Microwave on high 1-2 minutes until thickened, then whisk in remaining 1 cup of chicken broth and wine. Microwave on high until boiling (about 2-3 minutes), then add reserved vegetable blend and cook on high for 5 minutes. Gradually add milk, removing mixture to large, greased ramekins at each individuals’ desired consistency.

4. Stir in chicken to each ramekin.

5. Roll out pastry dough and cut out four circles the size of ramekins. Bake pastry at 400F for 10-15 minutes. (Optional: Brush pastry with egg wash before baking).

6. Heat ramekins in oven or microwave. Top with baked pastry cut-outs.

 

[MichaelColey]

We eat two between the five of us, and usually have just a little left over.

 

[BevL]

Costco and Walmart are both called the $100 stores - we never get out of either without buying a hundred bucks worth of stuff and that includes when we go in for a hot dog or (here in Canada) to share a poutine.

 

[Beaglemom3]

Loss Leader

Interesting article in Bloomberg last year:

Costco Is Losing on Cheap Chicken, but Kale Margins Are Healthy


http://www.bloomberg.com/bw/article...s-a-beating-on-cheap-chicken-switches-to-kale


And (2013)

Costco Stands Behind Its Cheap Rotisserie Chicken Strategy

http://www.bloomberg.com/bw/article...-behind-its-cheap-rotisserie-chicken-strategy


-

 

[Luanne]

Someone told me a few years ago that Costco had the absolute freshest rotisserie chicken (and that was the only place to buy it) due to their high turnover with the product.

 

[Ken555]

Thanks, all! I knew there was something I forgot to do this week and that was go to Costco. Of course, I'll pickup a $4.99 chicken while there, too.

 

[tante]

Now i want to go to costco and get a chicken.

 

[Beaglemom3]

Now i want to go to costco and get a chicken.

Me, too.

I must have one !


:hysterical:


-

 

[Kel]

I think I'll go get a $300 chicken too.

 

[PearlCity]

It's pretty simple. They know that if you go in for a $1.50 hot dog combo or a $4.99 rotisserie, you'll probably leave with several hundred dollars of other stuff. It's rare that we leave Costco (or Sam's) without spending at least $300.

The trick is don't grab a cart!

 

[davidvel]

The trick is don't grab a cart!

They thought of this too. They keep them super hot, in the black bottomed package that doesn't cool quickly. Most people can't carry one without burning themselves (or thinking they are).

 

[MuranoJo]

Seriously, we also like their roasted chickens, but don't get them too often.
My sis loves their chicken salad, which is supposedly made from their roasted chicken.

Re. the kale, one of my favorite items from Costco these days is the double pack of the Sweet Kale-broccoli salad.

Count us as another couple who don't get out of Costco without dropping $200-300 or so.