Case Study: '5 Buck Cluck'

Overview

In response to volatile commodity prices disrupting profitability, Costco needed a strategy to preserve margins on its highly popular “5 Buck Cluck” poultry product. Fluctuations in feed costs—particularly corn and soybean meal—posed significant commodity price risk that threatened consistent pricing and operational efficiency.

Challenge

The rising grain prices were squeezing Costco’s operating margins and making cost planning unpredictable. Exposure to supplier-driven price fluctuations jeopardized one of their most essential product lines.

Solution

HedgeStar provided bespoke commodity hedging strategy. By applying their independent valuation and derivative risk management expertise, HedgeStar helped Costco reduce reliance on volatile input costs and gain control over their pricing model. This forward-looking approach mitigated risk while supporting stable margins.

Impact

The tailored hedging solution empowered Costco to better manage commodity risk, preserve pricing consistency for members, and protect profitability in a competitive, cost-sensitive environment. This case underscores HedgeStar’s ability to deliver precise, defensible solutions for corporate hedging needs.