Costco Spent $1 BILLION Building a Massive Poultry Farm in Nebraska
Costco has spent $1 billion to ensure a steady supply of their famous rotisserie chicken – setting up their own massive farm and slaughterhouse in Nebraska, with 500 chicken coops that hold 42,000 chickens each.
The Washington-based company is the only one with its own processing plant, spread over a 400-acre site and 400,000-square-foot factory.
It sees the facility as a strategic advantage over its rivals like Target, BJ’s and Kroger, helping to ensure that its popular $4.99 rotisserie chicken can stay in stores — at the same price for years to come.
The chicken is seen as a way to attract customers, and Costco has been able to withstand inflationary pressures and, with its own supply chain, the threat of bird flu, keeping the price of its birds static.
“We bundled it, we marinated it, we did all that,” said Walt Shafer, chief operating officer of Lincoln Premium Processing, which Costco founded to supply the chickens.
“It’s not just a super buy for the consumer, it’s literally become the centerpiece of the store and a centerpiece for Costco.”
‘That’s why we’re here. That’s why we exist.’
Costco has opened a massive chicken processing plant in Fremont, Nebraska – the only retailer with its own meat plant
Chickens are moved in the state-of-the-art facility
Much of the work is automated, reducing injuries and costs
Costco opened its factory in 2019 in Fremont, Nebraska, and on Friday May Forbes access to the sprawling facility.
The factory processes two million chickens a week, coming from its own network of chicken farmers and its own chicken coops.
Thanks to the Nebraska facility, Costco has secured about 100 million of the 400 million chickens it estimates to sell annually. About half of the plant’s chicken ends up on the spit spit.
The rest is cut up, wrapped in plastic, and shipped to stores in the Midwest and West Coast.
Costco learned lessons from Tyson, the nation’s largest poultry producer, who tried to build a new chicken factory in Kansas and failed amid anger from the locals.
Shafer spent two years trying to convince Nebraskans that the plant would be beneficial to them, holding multiple meetings with farmers to convince them in the traditional ranching area to add chickens.
Walt Shafer, chief operating officer of Lincoln Premium Processing, which Costco founded to supply the chickens
A worker in a protective mask removes rotisserie chicken from skewers at 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 huge factory was built in 2019 and now processes two million chickens a week
Workers can be seen at the Nebraska factory processing the chicken
Based in Washington State, Costco has 600 stores nationwide, delivered from Nebraska
Half of the chicken from the Nebraska plant is used in rotisserie chicken; the other half is being processed (above)
The facility relies on chickens raised on their own land as well as chickens brought in from nearby farms.
Most of those who have signed up to supply Costco with chickens are grain farmers who sell their crops in the money markets and see adding chicken coops as a way to diversify.
They are given a 15-year contract as a way of justifying their investment in starting their chicken business.
“My goal is to make this the best poultry complex in the US, to prepare our team for the future to meet the challenges the world will throw at us,” said Shafer.
“Our goal is to provide Costco with all the benefits we can squeeze out of this so that customers can say, ‘This is why I’m joining Costco.’