Costco has spent $1 billion to ensure a steady supply of its famous in-store rotisserie chicken – establishing its own farm and slaughterhouse in Nebraska, with 500 chicken coops each holding 42,000 chickens.
The Washington-based company is the only one with its own processing plant, which spans a 400-acre site and a 400,000-square-foot factory.
He sees the facility as providing a strategic advantage over rivals such as Target, BJ’s and Kroger, and helping to ensure his popular $4.99 rotisserie chicken can stay in stores – at the same price for years.
Chicken is seen as a way to attract customers, and Costco has been able to weather inflationary pressures and, with its own supply chain, the threat of bird flu, to keep the price of its birds static.
“We tied it up, we marinated it, we did all of that,” says Walt Shafer, chief operating officer of Lincoln Premium Processing, which Costco founded to supply the chickens.
“Not only is it a great buy for the consumer, it’s become the center of the store, literally, and a centerpiece for Costco.
That’s why we are here. This is why we exist.
Costco has opened a sprawling chicken processing plant in Fremont, Nebraska – the only retailer to have its own meat plant
Chickens are seen being moved around the state-of-the-art facility
Much of the work has been automated, reducing injuries and costs involved
Costco opened the factory in 2019 in Fremont, Nebraska, and licensed Friday Forbes access to the sprawling facility.
The plant processes two million chickens a week, sourced from its own network of chicken farmers and their own barns.
Through the Nebraska facility, Costco has secured about 100 million of the estimated 400 million chickens it sells each year. About half of the factory chicken ends up on rotisserie spits.
The rest is cut into pieces, wrapped in plastic, and shipped to stores across the Midwest and West Coast.
Costco learned the lessons of Tyson, the nation’s largest poultry producer, who tried to build a new chicken plant in Kansas and failed amid anger from locals.
Shafer spent two years trying to convince Nebraskans that the plant would benefit them, and held several meetings with farmers to try to convince them to add chickens to the traditionally cattle-raising area.
Walt Shafer, COO of Lincoln Premium Processing, which Costco founded to supply the chickens
A worker wearing a protective mask removes roast chicken from skewers inside a Costco store in San Francisco, California
Costco’s $4.99 rotisserie chicken is a big selling point for the retailer
Workers process chickens for Costco at the Lincoln Premium Poultry plant in Fremont, Nebraska
The sprawling factory was built in 2019 and now processes two million chickens a week
Workers are seen at the Nebraska plant processing the chicken
Costco, which is based in Washington state, has 600 stores nationwide, supplied from Nebraska
Half the chicken from the Nebraska plant is used in the roast chicken; the other half is processed (above)
The facility relies on both chickens raised on their own land and those brought in from neighboring farms.
Most of those who have signed up to supply Costco with chickens are grain farmers who sell their crop in cash markets and see adding chicken coops as a way to diversify.
They get a 15-year contract, as a way to justify their investment in setting up and running their poultry farm.
“My goal is to make this the best poultry complex in the United States, to prepare our team for the future to meet the challenges that the world will throw at us,” Shafer said.
“Our goal is to give Costco every advantage we can get from here so that customers can say, ‘That’s why I’m joining Costco.