(CNN Business) – In 2019, Costco opened a $450 million poultry processing plant in Nebraska to produce millions of basic $4.99 Kirkland rotisserie chicken.
It was an unusual move for a retail company, but it was a sign of how valuable roast chicken is to the Costco business. The company has sold them for $4.99 for over a decade, less than most competitors, and uses them as a selling point to attract customers to stores. Costco sold 106 million cooked birds last year.
But Costco now faces a lawsuit from two shareholders alleging the company and its top executives violated animal welfare laws and, in the process, breached their fiduciary duties. The lawsuit questions how far Costco has gone to keep its staple cheap.
“Costco is illegally ignoring and abandoning its chicken,” says the lawsuit, filed this month in Seattle. The lawsuit says the company’s directors “caused, [son] He knowingly and intentionally ignored the obvious signs of continued costco chicken mistreatment.”
Costco did not immediately respond to a request for comment on the lawsuit.
As part of the operation, Costco has recruited farmers in the area to raise poultry that will be shipped to a processing plant in Nebraska.
But the lawsuit alleges Costco intentionally bred these broilers too large to defend themselves on factory farms and that “disabled birds are slowly dying from starvation, injury, and disease.”
It follows accusations from another animal rights group about Costco’s treatment of its chicken.
In 2021, Mercy for Animals filmed secret scenes of injured chickens in a crowded factory on a farm. The video led to a story by a prominent New York Times opinion writer called “The Ugly Secrets Behind Costco Chicken.”
In response to the article, Costco defended its treatment of animals, saying it adheres to standards set by the National Chicken Council, a trade association.
But Costco’s practices could hurt demand for rotisserie chicken, cause lawsuits, and damage the company’s reputation.
“As more consumers learn about the mistreatment of Costco chicken, the benefits that can be gained from using loser rotisserie chicken to drive customer traffic and purchases… will disappear or be greatly diminished because consumers’ preferences do not buy illegally or unethically manufactured products. Beat the allure of “cheap” chicken.