Store Rotisserie Chicken versus Homemade


 
Van DeWald

Van DeWald

TVWBB Fan
Why is store rotisserie chicken so cheap? Costco sells them for 4.99, already cooked. If I were to buy the same chicken raw, and roast it on a beer can stand in my WSM, it will cost me more than twice as much. Raw whole chickens are going for about $2.49 / lb, then add in the cost of charcoal, and the time and effort, I might as well just buy the cooked rotisserie bird from Costco and save $6. What am I missing here?
 
I believe that the chickens and the other cooked foods at Costco are loss leaders. They actually lose money on them but their thinking is that once you are in the store, to pick up a chicken, you'll buy something else.
 
Interesting question. I did some googling and the consensus seems to be that stores funnel produce and meat that's about to hit its sell-by date into their prepared foods departments. It's a way to get some revenue out of stock that would otherwise have to be thrown out. Here's an excerpt from Cat Vesko's article "Grocery Store Economics: Why Are Rotisserie Chickens So Cheap?"

The answer lies in the curious economics of the full-service supermarket. For instance, the Gelson's by me offers, among other amenities, a hot bar, a salad bar, a bakery, a gelateria, a full-service deli and an olive bar, because we live in L.A. so why not. But how can it afford to put out all of this food fresh every day?
It can't. Neither can Ralphs. Even Whole Foods' notoriously inflated prices don't offset that level of production. Instead, much like hunters who strive to use every part of the animal, grocery stores attempt to sell every modicum of fresh food they stock. Produce past its prime is chopped up for the salad bar; meat that's overdue for sale is cooked up and sold hot. Some mega-grocers like Costco have dedicated rotisserie chicken programs, but employees report that standard supermarkets routinely pop unsold chickens from the butcher into the ol' rotisserie oven.
Though supermarkets are loath to admit as much, likely for fear of turning off the squeamish, the former CEO of Trader Joe's cheerfully confirmed in a recent interview that meat and produce are recycled into prepared foods. And the vendor of one of the leading commercial rotisserie ovens offers, as a complement to its wares, "culinary support" that, among other things, aims to "develop programs to minimize food shrinkage and waste" and "improve production planning to optimize the amount of fresh food that is available during both peak and down times."
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My local Sam's Club sells (and I buy) Chicken Salad made from Rotisserie Chicken (according to the label) and Chicken Alfredo. Good way to use their about to expire Rotisserie Chix! 8)
 
The idea of transforming about-to-expire fresh foods into prepared foods is a tale as old as time. Just got back from visiting Smitty's Market in Lockhart TX and Louie Mueller Barbecue in Taylor TX, and the history of both include butcher shops selling fresh meat that turned leftovers into smoked sausage and other forms of barbecued meat that would keep a bit longer for sale to the locals.

As for Costco, I have several family members who work for Costco as store managers and they tell me that the company basically makes all its profit from membership fees and no profit from the sale of merchandise. You read that right.
 
Chris Allingham said:
The idea of transforming about-to-expire fresh foods into prepared foods is a tale as old as time. Just got back from visiting Smitty's Market in Lockhart TX and Louie Mueller Barbecue in Taylor TX, and the history of both include butcher shops selling fresh meat that turned leftovers into smoked sausage and other forms of barbecued meat that would keep a bit longer for sale to the locals.
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Just read the angry comments below that Cat Vasko article claiming the "transformation theory." People who work for grocery stores and delis seem to refute the idea that stores upcycle older meat/produce. Too bad:(. The idea of reducing food waste that way is so attractive, especially these days, when most grocery stores consider a perfectly good but slightly ugly tomato to be garbage.

Chris Allingham said:
As for Costco, I have several family members who work for Costco as store managers and they tell me that the company basically makes all its profit from membership fees and no profit from the sale of merchandise. You read that right.
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Wow. Given that info, I'm amazed membership fees have stayed relatively stable over the years. I've probably just jinxed us all by saying that out loud.
 
Chris Allingham said:
As for Costco, I have several family members who work for Costco as store managers and they tell me that the company basically makes all its profit from membership fees and no profit from the sale of merchandise. You read that right.
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You can't always believe the inside scoop, Costco (COST) had $1.7B (yes, that's billion) net profit in 2012 and $2B in 2013 & 2014 and it appears that they'll have $2.3B net profit in 2015

I assure you, you don't have $B net profit from just "membership fees"

http://www.nasdaq.com/symbol/cost/financials?query=income-statement
 
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ChuckO said:
You can't always believe the inside scoop, Costco (COST) had $1.7B (yes, that's billion) net profit in 2012 and $2B in 2013 & 2014 and it appears that they'll have $2.3B net profit in 2015

I assure you, you don't have $B net profit from just "membership fees"

http://www.nasdaq.com/symbol/cost/financials?query=income-statement
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Well, let's see here. Costco had 44 million members as of May, 2014. That number is always trending upwards. 44 million x $55 is a minimum of $2,420,000,000, since many memberships are more expensive than $55, with executive or business memberships costing over $100 per year. So if they cover their overhead, tax, costs, and other liabilities with sales it's pretty fair to say their profits come from membership fees.


Really it's just a nuance of accounting, anyway.
 
Interesting ideas. I've eaten several of the Costco rotisserie chickens, and they are always wonderful. At the same time, I could buy the uncooked whole chicken for $10 to $12, depending on size, use a couple chimneys full of charcoal, and a couple of hours of my time and produce something similar.
 
Costco can afford to sell the rotisserie chickens so cheaply because they buy millions and millions of chickens. Really that's all there is to it. I find their spinners a little salty and usually slightly overcooked. But in a pinch they're great.
 
Van DeWald said:
Interesting ideas. I've eaten several of the Costco rotisserie chickens, and they are always wonderful. At the same time, I could buy the uncooked whole chicken for $10 to $12, depending on size, use a couple chimneys full of charcoal, and a couple of hours of my time and produce something similar.
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Costco's chickens are pretty tasty, and they make great stock. There's really no way to beat the convenience, either. My only issue is that they're quite salty, and can be too fall-apart tender. Sometimes I want a firmer, more succulent texture. I'll bet your homemade chickens would taste better because you have more control over seasoning, cook time etc. . .
 
This:

DSCF0638.JPG


Versus this:


IMGP7089.JPG


Decide for yourself, but as for me, I'll stick with my bird spun over charcoal any day.
 
Dave from Denver said:
Well, let's see here. Costco had 44 million members as of May, 2014. That number is always trending upwards. 44 million x $55 is a minimum of $2,420,000,000, since many memberships are more expensive than $55, with executive or business memberships costing over $100 per year. So if they cover their overhead, tax, costs, and other liabilities with sales it's pretty fair to say their profits come from membership fees. Really it's just a nuance of accounting, anyway.
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I downloaded their 2014 filing and sure enough their membership revenue line greatly resembles their net profit line (within $370M) I wouldn't have thunk it...I guess the old saying is true: "Membership has it's privileges"
 
ChuckO said:
I downloaded their 2014 filing and sure enough their membership revenue line greatly resembles their net profit line (within $370M) I wouldn't have thunk it...I guess the old saying is true: "Membership has it's privileges"
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Funny you mention this since Costco is parting ways with American Express next year.
 
Bob, I'm with you! Although we buy and enjoy store made rotisserie chicken on occasion, I'll take my own home spun chicken-(or yours!), over store made any day.
 
last time I bought a store-cooked rotisserie bird I got it kind of last minute when I wanted chicken enchiladas. It was good.

Re: Costco - drives me nuts how hard they push the membership upgrades. They sure talk up the $$ back but the coupon I receive always less than the upgrade fee.
 
With store priced rotisserie chicken so cheap it's hard to justify doing itself on price alone, I think you just have to enjoy doing and/or like the results better
 
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