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Inflation is driving up the price of all kinds of items at the grocery store, but one staple seems to be immune: rotisserie chicken.
That’s not to say the poultry industry isn’t suffering from skyrocketing costs. National chicken prices rose 16.4% in the year to April, according to the Consumer price index. And pointing to the ongoing avian flu epidemic, the United States Department of Agriculture expects wholesale poultry prices to rise 15-18% this year.
Ernest Baskin, associate professor of food marketing at Saint Joseph’s University, recounts morning edition that this is an example of drag pricing, a marketing strategy in which companies sell certain products below their market cost in order to attract buyers – and, often, other more expensive products in their baskets.
Roasted chicken is a loss leader: visible and affordable
“It’s a way for the store to give you a discount on a very important item and then make money on some of the other items in the store,” he explains.
Prices for most products are rising at all grocery stores, Baskin adds, so retailers are trying to differentiate themselves by offering discounts on items that are particularly appealing to customers. In the case of stores like BJ’s and Costco, it’s the beloved $4.99 roast chicken.
During earnings call last month, BJ CEO Bob Eddy said the store kept the price low “just because it’s such an important thing for our members.” He said the chain was making similar investments in other “key items of member value” like paper and water.
Roast chickens in particular are a marketable combination of visible and affordable produce, Baskin notes.
“It’s also in the store an aura of saying, ‘Look, our prices are usually very low. We only increase them if we absolutely have to,'” he says. “They give a cheap aura to the store, which is helpful for consumers when they are concerned about their purchasing power.”
Even if shoppers are filling their baskets with other products that have gone up in price, he adds, they’re probably feeling a little better because they’ve saved money on at least one highly visible item.
Grocery Stores Put the Best Value in the Back for a Reason
And once shoppers are inside, they’ll usually have to walk through several aisles to get to the chicken, passing many other products along the way. It is not a coincidence.
“The store really wants you to walk around the store, see what other items the store has on offer, and ideally consider putting them in your cart or putting them in your shopping cart,” Baskin says.
Costco sells rotisserie chickens in the back of its stores for this reason. Keeping rotisserie prices low is so crucial to the company that it even opened a poultry plant in 2019 to supply its own poultry to its stores, such as CNN Business reports. The Nebraska facility processes more than 100 million chickens annually.
And chicken isn’t the only prepared food Costco is selling at a discount. Costco executive Bob Nelson took a moment during last month’s earnings call to dispel a rumor that the chain was raising the price of a food court favorite.
“The price, when we introduced the hot dog and soda combo in the mid-’80s, was $1.50,” he said. “The price today is $1.50, and we have no plans to increase the price at this time.”
The audio for this story was produced by Ben Abrams and edited by Ally Schweitzer.