In 2019, Costco opened a $450 million poultry processing plant in Nebraska to produce millions of basic $4.99 Kirkland roast chicken.

The company has sold them this product for $4.99 for more than a decade as a point of sale to lure customers into stores. The company sold 106 million cooked poultry last year.

Costco is facing a lawsuit from two shareholders alleging that the company and its top executives violated animal welfare laws and, in the process, violated their fiduciary duties. The lawsuit questions how far Costco went to keep its basic product cheap.

The lawsuit claims that “Costco illegally neglects and abandons its chickens,” the suit, filed this month in Seattle, claims. Company executives, the lawsuit states, “caused, [are] aware of, and consciously disregarded clear signs of Costco’s ongoing mistreatment of chickens.”

As part of the operation, Costco has recruited farmers in the region to raise raise broilers that will be shipped to a processing plant in Nebraska.

But the lawsuit alleges that Costco carried out crosses that intentionally resulted in chickens too big to stand and that “deficient birds are slowly dying of starvation, injury and disease.”

It follows accusations from another animal rights group over 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 resulted in a story by a prominent New York Times opinion writer titled “The Ugly Secrets Behind the Costco Chicken”.

In response to the article, Costco defends its treatment of animals. She said she follows the standards set by the National Chicken Council, a trade association.

But Costco’s practices could hurt demand for roast chicken, cause lawsuits and damage the company’s reputation.

“As more consumers learn of the mistreatment of Costco chickens, the benefits reaped using loss-leading rotisserie chickens to drive customer traffic and purchases . . . will vanish or greatly diminish because consumer preferences to not buy products made illegally or unethically will trump the lure of a ‘cheap’ chicken.”