For grocery stores, rotisserie chickens have become a golden goose.
Continue Reading Below
The spit-roasted birds emerged as a supermarket staple in the 1990s, paving the way for the array of prepared foods that grocery stores sell today. Now they are many grocery stores' best-selling hot food item and a rare bright spot in an industry struggling to adapt to a shift away from packaged foods.
Americans bought 625 million rotisserie chickens at supermarkets in 2017, according to market-research firm Nielsen and Costco Wholesale Corp., a few million more than the year before. Costco sold 87 million in its 2017 fiscal year, compared with 51 million in fiscal 2010.
With labor costs and competition rising, more stores are relying on rotisserie chickens to draw customers. To continue selling them for $5 to $7 each, executives are working to trim supply-chain costs, cook chickens more efficiently and throw fewer of them away unsold.
"We are relentlessly focused on keeping that price point," said Russ Richardson, vice president of deli and bakery for Kroger Co., the second-largest U.S. food retailer. "It's the hallmark item."
One reason executives say it is so important to hold down rotisserie prices is that shoppers often buy higher-margin side dishes and beverages to round out a meal. "If they get a chicken, a salad, and maybe they pick up a bottle of wine -- now we're really talking," said Don Fitzgerald, vice president of merchandising at Mariano's, a Chicago grocery chain that Kroger bought in 2015.
Continue Reading Below
Grocers also are tweaking their marketing strategy to make their chickens stand out. Some have introduced lemon pepper and barbecue flavors, as well as organic and antibiotic-free chickens. Others are placing chicken warmers in checkout aisles to inspire last-minute purchases.
"When they're right by the checkout, the smell always gets you," said Katie Cooksey, who buys rotisserie chickens for herself and her 9-year-old daughter at a Kroger store in Sandusky, Ohio.
The rotisserie craze started in the early 1990s when Boston Chicken, now Boston Market, opened drive-through restaurants selling chicken dinners and sides. Families liked the convenience of a meal that was seen as cheaper and healthier than fast food. Costco and Kroger began selling rotisserie chickens in 1994.
"Nothing else from the '90s is still this popular today," said Mariano's Mr. Fitzgerald.
While Kroger and Mariano's display their chickens near the front of the store, Costco puts them at the back, hoping people will end up buying more than a chicken. Costco has sold rotisserie chickens for $4.99 since 2009. When a bird flu outbreak prompted culling that created a chicken shortage in 2015, Costco took a $30 million to $40 million profit hit to keep rotisserie prices steady.
The chain also has bought bigger, more-efficient ovens and saved millions of dollars by packing the chickens in containers that use less plastic. Now Costco is building its own roughly $300 million chicken-processing plant in Nebraska, which should be cheaper than buying ready-to-cook chickens from suppliers.
Costco's chickens weigh at least 3 pounds cooked, while rivals' usually weigh one-and-a-half to 2 pounds. Costco worked with chicken farmers to develop a feeding plan that consistently produced larger birds.
That means more meat for shoppers like Tiffany King of Lexington, Ky., who strips the chicken off the bone for use in enchiladas and soups. "I will buy sometimes up to three and make that my project for the day," said the mother of four. "But if you have teenage boys, you better get it in the freezer quickly."
Some stores sell deboned rotisserie-chicken meat at a higher price.
Some of Costco's supply-chain tweaks have alienated customers. Frani Muni of Boca Raton, Fla. called Costco's corporate offices last year to complain that the rotisserie chickens she had purchased were dry and bland. Costco, which removes rotisseries after two hours under heat lamps to avoid dryness, told her the changes were due to a temporary supplier switch and that it would be fixed.
"I can tell by looking at them that they are still missing the flavor," said Ms. Muni, who now buys her rotisseries at BJ's Wholesale Club Inc.
Rising rotisserie sales have been a boon to Mary Pitman of Mary's Free Range Chickens. Her family focused on growing chickens for rotisserie broilers in the 1990s just as the food was taking off. Today the third-generation family farm sells twice as many chickens for rotisseries as it does birds for butchering into raw breasts and wings.
"When we were trying to figure out how to stay in business, my husband predicted this," Ms. Pitman said.
Write to Annie Gasparro at firstname.lastname@example.org
(END) Dow Jones Newswires
January 04, 2018 05:44 ET (10:44 GMT)