As the old adage goes, you can’t make an omelet without breaking some eggs. But when they’re sold at record-breaking prices, many restaurants can’t afford to buy eggs without also breaking the bank – or raising their menu prices.
According to the latest consumer price index, egg prices reached a record high in January, with a dozen Grade A eggs costing $4.95 on average in U.S. cities.
The bird flu outbreak is responsible for much of the spike, which has killed nearly 158 million birds since it began.
It gets especially hard to see the sunny side when you run a breakfast or brunch joint, where eggs are a menu staple – and the top-ordered item at Waffle House. The national breakfast chain reportedly serves 272 million of them annually and recently instituted a surcharge of $0.50 per egg to offset the spike.
“The dramatic increase in egg prices is a tough challenge for restaurant operators,” said Bo Davis, the CEO of MarginEdge, a restaurant-tech company with a network of 10,000-plus clients and a restaurant owner himself.
“Operators need to take more proactive measures for managing food costs, like tracking ingredient trends, identifying cost-effective substitutions, and refining menu offerings,” Davis told The Food Institute.
Restaurants Hatch a Plan
So, how are other restaurants weathering the storm?
“We’re lucky to have great suppliers,” David Barlam, the owner of Mass Ave Diner, told FI. Even still, the egg crisis has affected its bottom line, prompting the diner to impose a temporary egg surcharge as well.
“Most customers are aware of what’s going on and have been very understanding. Regardless, we’ve made it clear why we’ve had to do so,” said Barlam.
Mike Sebazco has taken a slightly different approach as the president of Famous Toastery, a chain with 11 locations across the Carolinas.
“We have to this point absorbed the impact of the price increase on eggs by mitigating it in other areas, such as labor and focused LTOs,” Sebazco said.
Davis agrees with this strategy, elaborating that “LTOs provide an opportunity to shift customer demand toward alternatives that maintain quality and appeal without the elevated price tag. Spotlighting dishes that rely on cost-effective ingredients can help balance overall food costs while keeping the menu fresh.”
Beans & Brews Coffeehouse, another smaller chain that serves egg sandwiches on its breakfast menu, has also managed to avoid increasing prices.
“Our strategic vendor partnerships have allowed us to keep Q1 pricing stable and avoid the need to increase prices for our operators or guests,” CEO Doug Willmarth said.
But although strategies like these have helped restaurants cope for now, the egg crisis is likely to persist for a while.
Walking on Eggshells
In early February, the USDA said it expects egg prices will increase by another 20% this year, and that prediction came before the federal agency “accidentally” fired several employees on its H5N1 avian flu response team recently – an issue it’s “working to swiftly rectify,” according to a USDA spokesperson.
In the meantime, the National Grocers Association has some recommendations for addressing the crisis, which it sent in a letter to USDA Secretary Brooke Rollins on February 18, including for the agency to “leverage all scientific resources available to mitigate the effects and spread of HPAI and protect U.S. poultry populations.”
And for restaurants specifically, Barlam offered the following advice:
“It’s important to have a direct supplier for produce! Middlemen are often inconsistent and can sometimes elevate prices during shortages, so it’s good to go to your city’s local food terminal and buy from the source.”
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