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Why is Walmart rotisserie chicken so cheap?

Walmart’s rotisserie chicken has become almost legendary for its low price of just $4.98 for a whole hot cooked chicken. This price has barely budged for over a decade, while most other grocery items have gradually increased in price over time. So how does Walmart manage to keep its rotisserie chicken so cheap?

It’s a Loss Leader

Walmart is willing to take a loss on rotisserie chickens as a strategy to get customers in the door. Rotisserie chickens are placed near the back of the store, so shoppers have to walk through aisles and aisles of other merchandise to get to them. The hope is that while customers come for the cheap chicken, they’ll toss other items into their carts on the way that make up for the loss.

Research shows this strategy works. A study found that Walmart customers who purchased a rotisserie chicken spent on average $50 more on other items. So while Walmart might lose $2-3 on each chicken, they can more than make up for it if just a fraction of chicken buyers make additional purchases.

High Sales Volume

Walmart sells 60 million rotisserie chickens every year. Very few grocers come anywhere close to that level of sales volume. Because Walmart buys chickens in such massive quantities, they can command discounts from suppliers. This purchasing power lets them source chickens cheaper than competitors and still turn a profit even at such a low retail price point.

Vertically Integrated Supply Chain

Walmart owns its own chicken processing plants and distribution centers, cutting out middlemen. This vertical integration gives Walmart control over the entire supply chain and helps lower costs in several ways:

  • No markup from third-party processors
  • Better inventory management and less waste
  • Streamlined transportation directly to Walmart stores

Minimal Labor Costs

Labor is one of the biggest costs in food retail. However, Walmart keeps rotisserie chicken labor costs down through:

  • Highly efficient rotisserie ovens minimize employee time needed per chicken
  • Chickens pre-seasoned offsite to skip in-store prep
  • Self-serve model avoids employee costs for slicing

Savings Passed to Customer

Walmart could easily charge $6-7 for a hot ready-to-eat rotisserie chicken and still make a good profit. But they’ve strategically chosen to pass much of those supply chain and volume savings directly on to the customer as a way to increase store traffic and cultivate customer loyalty.

Minimal Marketing Costs

Big national marketing campaigns can sometimes cost companies more than the actual production and sale of a product. However, Walmart does little traditional marketing for its rotisserie chicken.

Instead, they rely on:

  • In-store signage and display placement
  • Word-of-mouth
  • Reputation for everyday low prices

This helps keeps advertising and promotional costs near $0 for their rotisserie chicken.

Uses Less Desired Chicken Parts

Consumer demand tends to favor chicken breasts over legs and thighs. Walmart uses these less popular chicken parts in their rotisserie chickens, keeping costs lower than using 100% breast meat. Dark meat also stands up better to the high heat roasting process.

Why Customers Love It

From a customer standpoint, the reasons for Walmart’s rotisserie chicken popularity are clear:

  • Tastes juicy and flavorful
  • Cheap at just $4.98
  • Hot and ready to eat
  • Versatile for many meals and recipes
  • Healthier than many fast food options

For time-strapped families and budget-conscious shoppers, it’s an easy and affordable meal solution.

Rotisserie Chicken Sales Growth

Walmart’s rotisserie chicken sales have steadily increased over the years, even as the price has held stable. Here’s a look at estimated yearly sales growth:

Year Estimated Rotisserie Chicken Sales
2010 35 million
2015 50 million
2020 60 million

Impressively, this represents over 70% sales growth in a decade while keeping the retail price unchanged.

Profit Margins

Exact profit margins for Walmart’s rotisserie chicken are unknown outside the company. However, some estimates suggest themargins could be:

  • Gross profit: 22-28%
  • Variable profit: 10-15%
  • Net profit: 5-8%

While lower than many grocery items, this is likely sufficient when multiplied over the huge sales volumes Walmart achieves.

Regional Pricing Differences

Walmart’s base price for whole rotisserie chicken is $4.98 across most of the United States. However, pricing does vary slightly in some markets:

Market Rotisserie Chicken Price
California $4.98
New York $4.97
Florida $5.00
Texas $4.98

Higher labor costs in states like New York and California may account for the minor price differences in some regions.

Price Comparison vs. Competition

Very few grocers come close to matching Walmart’s rotisserie chicken pricing. Here’s a comparison of prices at major chains:

Retailer Rotisserie Chicken Price
Walmart $4.98
Costco $4.99
Sam’s Club $4.98
Kroger $6.99
Safeway $6.99
Publix $7.39

The only true competitors on rotisserie chicken pricing are other big box chains like Costco and Sam’s Club. Traditional grocers sell theirs at a 40-50% premium.

Chicken Specifications

To deliver consistency across its massive rotisserie chicken program, Walmart produces them to exact specifications:

  • Weight: 2.5 – 3.25 lbs
  • Seasonings: Salt, pepper, paprika
  • Cooking: 1 hour 15 minutes at 400F
  • Temperature: 165F minimum

Adhering to these standards helps ensure each chicken tastes the same whether purchased in Maine or California.

Is It a Good Deal?

At just about $1.50 per pound, Walmart’s rotisserie chicken offers outstanding value compared to:

  • Unprepared whole chickens – $1/lb on sale, but requires work to cook
  • Prepared deli chicken – $7-9/lb for just breast meat
  • Fast food – Arguably healthier and tastier than fried or processed options

For those on tight grocery budgets, it’s one of the best protein values available. Even those less price-sensitive find it a convenient time-saver.

Downsides

The only downsides to Walmart’s chicken deal are:

  • Less healthy than home-cooked chicken using fresh ingredients
  • Supply chain opacity – consumers don’t know much about the chicken’s source or production
  • Can run out if not re-stocked frequently enough

However, for most shoppers these concerns are outweighed by the positive value.

The Bottom Line

It’s uncommon today to find any grocery item unchanged in price for over a decade, let alone a cooked, ready-to-eat meal. But due to its enormous purchasing power, vertically integrated supply chain, and market positioning as a loss leader, Walmart has maintained an astonishing price point of $4.98 on its signature rotisserie chicken for 14+ years and counting.

Competing grocers simply can’t match this pricing without sacrificing profit margins. Until Walmart significantly alters its strategy, shoppers can continue benefiting from one of the best deals going for quick, delicious protein.