In addition to the $1.50 hot dog combo, the $4.99 signature rotisserie chicken is also a hot-selling food item at the warehouse-style chain store Costco. However, this ultra-cheap rotisserie chicken has once again landed the company in legal trouble.
Since 2009, the price of Costco’s signature rotisserie chicken has remained at $4.99, despite continuous inflation. According to Richard Galanti, Costco’s former Chief Financial Officer, this pricing strategy has resulted in an annual loss of $30 million to $40 million in gross profit for the company, but they have no plans to raise the price.
However, according to court documents, Costco is facing a class-action lawsuit alleging false advertising of their Kirkland Signature brand rotisserie chickens as not containing preservatives.
Fox Business News and ABC7 News reported that the lawsuit was filed last Thursday, January 22nd, in the Southern District of California federal court, claiming that Costco’s in-store signage and website “give the overall impression that the rotisserie chicken does not contain added preservatives.” However, the lawsuit further points out that these claims are false and argues that “the chicken contains two preservatives – sodium phosphate and carrageenan.”
“The chicken contains sodium phosphate and carrageenan, which contradicts the overall impression created by Costco’s advertising of ‘preservative-free’,” wrote plaintiffs’ representatives Anastasia Chernov from Escondido, California, and Bianca Johnston from Big Bear Lake, California.
The plaintiffs argue that customers, including themselves, make purchasing decisions based on whether a food item is “preservative-free,” and they were unable to determine if Costco’s rotisserie chicken contained added preservatives before purchasing it.
The lawsuit notes that any mention of product ingredients by Costco, if any, is only printed in small font on the back label and does not explain their preservative purpose. The lawsuit alleges that these disclosures are insufficient to refute Costco’s prominent display of “preservative-free” advertising.
The lawsuit also accuses the company of withholding information about the mechanisms of the ingredients from consumers, despite clearly having knowledge of them.
Undeniably, this rotisserie chicken has been hugely successful in Costco’s deli section, attracting many fans. According to “Eat This, Not That,” Costco has sold over 100 million rotisserie chickens annually since 2020.
To maintain low prices, Costco has established its own poultry processing plant in Nebraska, saving the company 35 cents per chicken. However, this decision has also sparked controversies regarding animal welfare. A few years ago, two shareholders accused Costco’s Fremont, Nebraska factory of “illegally neglecting and abandoning” the farmed chickens, which later became the $4.99 rotisserie chickens sold in stores.
This new lawsuit is part of the increasing legal challenges against “clean label” marketing campaigns. In recent years, similar class-action lawsuits against other companies’ “natural” and “preservative-free” advertisements have been on the rise.