Costco building its own chicken facility to keep up with $5 chicken demand

The company has been losing money on the famously cheap staple item for years, but used it as a way to get customers into the store. (iStock)

In an effort to continue selling quality goods at the lowest prices possible, specifically its $5 rotisserie chicken, Costco is building its own production system to supply the warehouse retailer with affordable poultry.

The company has been losing money on the famously cheap staple item for years, but used it as a way to get customers into the store. "We were willing to eat, if you will, $30 to $40 million a year in gross margin by keeping it at $4.99," said Richard Galanti, Costco's chief financial officer, The Seattle Times reports.

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But now Costco plans to take matters into its own hands by opening a $275 million poultry-processing center in Fremont, Neb. By Sept. 2019 to help it avoid losing money on chicken, according to Business Insider.

Once it reaches capacity and is fully operational, the 414-acre plant will aim to produce two million chickens a week, which will supply about 40 percent of Costco's needs, NPR reports. The big box store sells approximately 60 million rotisseries chickens a year.

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The retailer will need to contract around 100 to 125 farmers to grow the chickens and the plant is estimated to employ 800 people.

The chicken factory follows the same model the store uses for its hot dogs, which are produced at a Costco-owned plant in Tracy, Calif.