Chicken Change

The $4.99 rotisserie chicken at Costco is legendary. It is a wildly popular dinner-in-a-box that makes for a quick, hot meal.

The chicken had been a loss leader for years, meaning that Costco lost money on that sale for the opportunity to get a customer in the door. They were fine losing 50 cents a bird just to get foot traffic that they couldn’t get otherwise.

It is brilliantly placed at the back of the store, requiring that you have to walk past a hundred yards of irresistible merchandise to get it. Costco knew that if they could get you in the door, that you would buy more than just the chicken. In fact, shoppers would commonly walk in to buy a chicken and walk out with a cart full of hundreds of dollars of merchandise.

Despite this brilliantly simple loss leader technique, it was time for a change.

A few years ago, they decided to not lose money on the chicken anymore and invested in the chicken supply chain throughout the Midwest. They built and financed untold numbers of gigantic buildings for farmers, developed the meat packing systems, and knocked a whole dollar off of their cost.

This effort resulted in a $90 million bump to the bottom line!

What an incredible way to turn a loss into a win.

What loss leader is hiding in your business, that can become a profit center?

Onward and upward,
Simon Trask