Costco has spent $1 billion to ensure a steady supply of its famous in-store fried chicken and has built its own massive farm and slaughterhouse in Nebraska with 500 chicken coops, each housing 42,000 chickens.
The Washington-based company is the only company with its own processing facility that spans 1,000 acres and 400,000 square feet of plant space.
The company sees the facility as a strategic advantage over its competitors like Target, BJ’s and Kroger, helping its popular $4.99 fried chicken stay in stores — the same price for years to come.
The chicken is seen as a way to attract customers, and Costco has weathered inflationary pressures and, with its own supply chain, the threat of bird flu, and kept the price of its birds stable.
“We tied it, we marinated it, we did all of that,” says Walt Shafer, chief operating officer of Lincoln Premium Processing, which Costco set up to supply the chickens.
“Not only is it a super buy for the consumer, it has literally become the hub of the store and the hub 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 to have its own meat plant
You can see how chickens are moved in the state-of-the-art facility
Much of the work has been automated, reducing the risk of injury and the associated costs
Costco opened the 2019 facility in Fremont, Nebraska and approved it on Friday forbes Access to the extensive complex.
The plant processes two million chickens weekly, sourced from its own network of chicken farmers and their own chicken coops.
Thanks to the Nebraska facility, Costco has secured about 100 million of the estimated 400 million chickens it will sell annually. About half of the plant’s chicken ends up on skewers.
The rest is cut into pieces, wrapped in plastic, and shipped to stores in the Midwest and West Coast.
Costco learned from Tyson, the nation’s largest poultry producer, who was attempting to build a new chicken factory in Kansas but was thwarted by local anger.
Shafer spent two years convincing Nebraska residents that the plant would be of benefit to them and held several meetings with farmers to persuade them to plant chickens in the traditional livestock area.
Walt Shafer, chief operating officer of Lincoln Premium Processing, which Costco set up to provide the chickens
A worker wearing a protective mask removes fried chicken from skewers at a Costco store in San Francisco, California
Costco’s $4.99 fried 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 facility was built in 2019 and now processes two million chickens a week
Workers can be seen processing the chicken at the Nebraska plant
Based in Washington state, Costco has over 600 stores nationwide that are served from Nebraska
Half of the chicken from the Nebraska farm is used for broilers; the other half is processed (above)
The facility relies on chickens raised on their own land as well as chickens sourced from nearby farms.
Most of those who have chosen to supply Costco with chickens are grain farmers who sell their crops in the cash markets and see growing chicken coops as an opportunity for diversification.
They receive a 15-year contract to justify their investment in getting their chicken operation up and running.
“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 the world will throw at us,” Shafer said.
“Our goal is to give Costco all the benefits we can get here so customers can say, ‘That’s why I’m joining Costco.’