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Thread: Costco, losing money for years on their $4.99 chickens, now has purchased a huge farm in Nebraska to grow their own

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    Owner Dan Druff's Avatar
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    Costco, losing money for years on their $4.99 chickens, now has purchased a huge farm in Nebraska to grow their own

    Interesting article, especially for those who regularly eat Costco rotisserie chicken: https://www.cnn.com/2019/10/11/busin...ken/index.html

    I had wondered in recent years how they profit selling whole chickens at $4.99. The answer is that they don't. They lose over $30 million per year on it, but it's a loss leader to entice people to visit the store more often.

    Anyway, to cut costs, they are going to have their own chicken farm in Nebraska, which will eventually process 100 million chickens (!!) per year.

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    Platinum FRANKRIZZO's Avatar
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    I love costco barbecue chicken great deal and easy meal when the go with no time to cook.

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    Gold SPIT this's Avatar
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    Hack: You don't need to be a member to shop at Costco. You just need a Costco Cash Card (gift card). You will need a member to buy a card for you tho, or you can buy one on ebay at a mark-up.

    If you do want a membership, they occasionally have Groupons that brings the effective price down to like $20.

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    Plutonium big dick's Avatar
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    One of the few decent large compainies left in this country

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    Plutonium Sanlmar's Avatar
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    Quote Originally Posted by big dick View Post
    One of the few decent large compainies left in this country
    Don’t know much about chicken but I have heard that Costco pays their retail help well and offer full benefits.

    I will never set foot in a Walmart. You gotta live by some kind of code.


    Well.... I have always understood the cooked chicken in stores represents those that have hit their freshness date deadline and graduate to the ovens.

    Guys talk, you hear things

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    Platinum Krypt's Avatar
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    dude there are regular costco employees who’ve been with the company for 15+ years that have 401k’s with 1M + easy. I’ve seen it personally, and it’s not a rare occurrence. You might ask how it is possible for someone with no post-secondary education to attain so much in a retirement account, and the answer is quite simple: the company used to allow their employees to divert 100% of their biweekly contributions to their company stock. So you have a bunch of complete mouthbreathers luckboxing their entire retirement savings into COST stock for 15-20 years of compounding gains. Diversification is indeed overrated.

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    100% Organic MumblesBadly's Avatar
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    Article says that Costco sold 91 million of them last year. That means they lost an average of $0.33 per chicken sold. Given that the average unit cost the chickens they buy is probably about 1/2 the retail price, and their suppliers likely only net 5%-8% of that wholesale price after all allocated operating costs, I think it’s going to be tough to squeeze 33 cents out of the cost of those chickens and maintain the quality they are planning on putting into them.

    But if they can achieve only half of that AND become experts in raising such high quality chickens, Costco could use this as a stepping off point to eventually become a player in chicken/chicken product biz. So, who knows.
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    Stupid capitalists, $30 million is nothing but chicken feed to giant company like Costco.
    Socialism is the transitional period of capitalism being taken over by Communism.

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    Nova Scotia's #1 Party Rocker!!!!11 DJ_Chaps's Avatar
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    THEM CHICKENS ARE GOD. VERY PLEASED TO HEAR THEY'RE GONNA KEEP EM COMING.
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    I'm sure many have heard this one, but for those who haven't, Costco also loses money on their famous $1.50 hot dog and soda deal which is sold in their deli at the front of the store.

    The price has been the same since 1985 and apparently they intend to hold that price until hell freezes over. Again, this is by design to of course encourage patrons to visit the store in the hopes that they will do further shopping

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    Owner Dan Druff's Avatar
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    Quote Originally Posted by Gordman View Post
    I'm sure many have heard this one, but for those who haven't, Costco also loses money on their famous $1.50 hot dog and soda deal which is sold in their deli at the front of the store.

    The price has been the same since 1985 and apparently they intend to hold that price until hell freezes over. Again, this is by design to of course encourage patrons to visit the store in the hopes that they will do further shopping
    Not sure about that one. Hotdogs are cheap, and sodas are very cheap.

    I'm not saying they are making big money, but even i could buy a package of hotdogs at a supermarket and pour you a soda from a 2-liter bottle, and it would cost me less than $1.50.

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    Diamond Pro Zap_the_Fractions_Giraffe's Avatar
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    Quote Originally Posted by Dan Druff View Post
    i could buy a package of hotdogs at a supermarket and pour you a soda from a 2-liter bottle, and it would cost me less than $1.50.
    would you though?

     
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      splitthis: And a pack of sticks

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    Owner Dan Druff's Avatar
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    Quote Originally Posted by Zap_the_Fractions_Giraffe View Post
    Quote Originally Posted by Dan Druff View Post
    i could buy a package of hotdogs at a supermarket and pour you a soda from a 2-liter bottle, and it would cost me less than $1.50.
    would you though?
    I could, would, and have.

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    Canadrunk limitles's Avatar
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    Quote Originally Posted by Zap_the_Fractions_Giraffe View Post
    Quote Originally Posted by Dan Druff View Post
    i could buy a package of hotdogs at a supermarket and pour you a soda from a 2-liter bottle, and it would cost me less than $1.50.
    would you though?
    I have been in a Costco one time. No joke no lie I was scared off.

    Fast forward twenty years today. Do you not get a sense of impending doom when you walk into any supermarket and see the packaging that goes into every shelf item?

    I can't get past it

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    Quote Originally Posted by Dan Druff View Post
    Quote Originally Posted by Gordman View Post
    I'm sure many have heard this one, but for those who haven't, Costco also loses money on their famous $1.50 hot dog and soda deal which is sold in their deli at the front of the store.

    The price has been the same since 1985 and apparently they intend to hold that price until hell freezes over. Again, this is by design to of course encourage patrons to visit the store in the hopes that they will do further shopping
    Not sure about that one. Hotdogs are cheap, and sodas are very cheap.

    I'm not saying they are making big money, but even i could buy a package of hotdogs at a supermarket and pour you a soda from a 2-liter bottle, and it would cost me less than $1.50.
    Yes, you may have a point, but anyone can get it done cheaper if you do it yourself.

    Obv there are other costs that factor in when having it served to you from a store vs doing it yourself (employee pay, overhead etc). Not to mention the fact that you are probably getting a better quality dog - I mean, I will admit I haven't tried them, but I'm assuming this based on the fact that I haven't heard any real negative reviews and I know Costco has a good habit/reputation of seeking out better quality ingredients than the competition.

    Everything else aside, am genuinely curious what the profit margin really is for something like that though.

    Edit: forgot to add that on one hand you're talking about the negative profit margin of rotisserie chickens that they prepare, and then countering about the supposed negative margins of the hot dogs and soda stating that you can make them yourself at home much cheaper. Well, fwiw I can also prepare at home a rotisserie chicken for less than $ 4.99; most of the time if I comparison shop and pay attention to ads, I will be able to find a fresh or previously frozen one for less than $5.
    Last edited by Gordman; 10-11-2019 at 04:51 PM.

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    Only Hotdogs worth buying are Hebrew National. They are the only ones that dont give me the shits and taste the best.



    Right devidee?

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    Quote Originally Posted by OSA View Post
    Only Hotdogs worth buying are Hebrew National. They are the only ones that dont give me the shits and taste the best.



    Right devidee?

    Obv some confusion here. We're talking about hotdogs that you eat, not the ones that you cram in your dirt box.

     
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      Muck Ficon: LOL

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    Platinum splitthis's Avatar
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    Quote Originally Posted by SPIT this View Post
    Hack: You don't need to be a member to shop at Costco. You just need a Costco Cash Card (gift card). You will need a member to buy a card for you tho, or you can buy one on ebay at a mark-up.

    If you do want a membership, they occasionally have Groupons that brings the effective price down to like $20.
    You just need friends that have a membership and pay with cash. They never look at the picture and it is such poor quality it could be anyone.
    Freedom is never more than one generation away from extinction. We didn't pass it to our children in the bloodstream. It must be fought for, protected, and handed on for them to do the same.

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    100% Organic MumblesBadly's Avatar
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    Quote Originally Posted by Dan Druff View Post
    Quote Originally Posted by Zap_the_Fractions_Giraffe View Post

    would you though?
    I could, would, and have.
    You are only considering gross profit (Revenue minus Cost of Goods Sold). New restaurants routinely go belly up because their owner/managers didn’t properly plan for labor and overhead.
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    Red face

    Since people are talking about finding loopholes in getting a Costco membership to periodically shop there, I might as well mention that if you purchase a Costco membership, it is 100% refundable through your membership year. Yes, the refund isn't even prorated. You could literally purchase a membership and get a full refund nearly a year later with zero penalties.

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