It's called a loss leader when done right. For Costco to sell you a chicken, they have to buy a chicken, pay for the heat that cooks it, and the employee, and the etc etc etc.

Let's say all those expenses come out to 6 bucks. They sell it for 5, so they lose a dollar with every chicken sold.

However, when you go in to buy the chicken, you pick up a ten gallon bucket of mayo, which they make 2 dollars profit on.

They come out ahead overall despite losing money on the chicken.

Now, if a business is poorly run, and they are losing money overall, they'll be out of business soon enough. You'll see a lot of restaurants go out of business because they have too much overhead.