Egg-stra Costs or Holding the Line? Restaurant Chains Grapple with Bird Flu’s Impact on Egg Prices

The humble egg, a breakfast staple and a versatile ingredient in countless dishes, has become a focal point of economic pressure for restaurant chains across the United States. A recent outbreak of Highly Pathogenic Avian Influenza (HPAI), more commonly known as bird flu, has led to significant egg shortages and a corresponding surge in prices. This disruption has forced restaurant chains to make difficult decisions: pass the increased costs onto consumers through surcharges, or absorb the financial hit themselves in an effort to maintain customer loyalty and value perceptions.

The impact of HPAI on the egg market has been undeniable. The disease, devastating to poultry populations, has led to the culling of millions of birds, drastically reducing the supply of eggs. This scarcity has sent wholesale egg prices soaring, creating a ripple effect that has reached restaurants and consumers alike.

Some restaurant chains, facing mounting pressure on their bottom lines, have opted to implement temporary surcharges on menu items featuring eggs. Waffle House, a beloved breakfast institution with approximately 2,100 locations nationwide, announced in early February that it would add a 50-cent surcharge per egg. In a public statement, the chain cited the ongoing egg shortage and the dramatic increase in egg prices as the driving force behind the decision.

Denny’s, another prominent diner chain with over 1,300 locations, followed suit, announcing its own temporary surcharge on meals containing eggs. However, Denny’s adopted a more nuanced approach, stating that the pricing decision would be made on a "market-by-market, restaurant-by-restaurant" basis, acknowledging the regional variations in the severity of the egg shortage. The company emphasized that it was working closely with its procurement team and franchisees to make informed decisions that balanced business needs with the desire to maintain value for its customers.

While Waffle House and Denny’s chose to implement surcharges, other major restaurant chains have taken a different approach, opting to absorb the increased egg costs rather than pass them on to consumers. McDonald’s and Cracker Barrel, two iconic brands with a strong focus on value and customer satisfaction, have publicly stated that they will not implement egg surcharges.

Cracker Barrel even went a step further, offering customers "double pegs" (referring to their signature side items) on all egg dishes for a limited time following the announcement, demonstrating their commitment to maintaining customer value despite the challenging market conditions. In a statement, Cracker Barrel emphasized the importance of "country hospitality" and its commitment to not charging extra for eggs. McDonald’s also offered Egg McMuffins for just $1 in late February, a move that underscored their commitment to affordability.

The decision by McDonald’s and Cracker Barrel to forgo surcharges highlights the diverse strategies that restaurant chains are employing to navigate the egg crisis. While some prioritize maintaining profit margins by passing on costs, others prioritize customer loyalty and brand perception by absorbing the financial impact.

USA TODAY reached out to numerous restaurant chains to inquire about their plans regarding egg surcharges. Several companies responded, including Bojangles, First Watch, Wendy’s, Starbucks, and CKE Restaurants Holdings (the parent company of Hardee’s and Carl’s Jr.). All of these companies stated that they had no plans to implement egg surcharges.

Wendy’s explicitly stated that it has "no plans to raise prices on eggs," while CKE Restaurants Holdings affirmed that it would not implement a surcharge at either Hardee’s or Carl’s Jr. First Watch, in an emailed statement, said, "We have not taken any pricing action directly related to eggs. We continue to monitor the environment while keeping our customer top-of-mind." Bojangles also confirmed that it "does not have any plans for an egg surcharge at this time."

Starbucks, a major player in the breakfast and beverage market, took a broader stance, stating that it would not be increasing menu prices this fiscal year as part of its "effort to ensure that every Starbucks visit is worth it for our customers." This commitment to overall value suggests a long-term strategy focused on building customer loyalty and maintaining brand reputation.

However, not all restaurant chains were willing to publicly disclose their plans. Companies such as Subway, Taco Bell, IHOP, Burger King, and Chick-fil-A either did not respond to USA TODAY’s request for comment or declined to comment, leaving their intentions regarding egg surcharges uncertain.

Adding another layer of complexity to the situation, the United States Department of Agriculture (USDA) released a report indicating that wholesale egg prices had recently dropped by $2.70 to $4.15 per dozen. The USDA attributed the price decrease to the absence of major HPAI outbreaks in March and a decrease in demand for eggs due to consumer resistance to high prices.

Despite the drop in wholesale prices, the USDA noted that these decreases "have yet to be reflected at store shelves," and until they are, demand is expected to remain "dampened." The agency also stated that grocers have made progress in maintaining a more consistent stock of shell eggs, but this is partially due to a lack of price incentives, which has reduced the "panic and opportunity buying" seen in February.

The discrepancy between wholesale and retail egg prices underscores the complexities of the supply chain and the time lag involved in translating price changes to consumers. It also highlights the potential for consumer behavior to influence market dynamics, as resistance to high prices can lead to decreased demand and, ultimately, lower prices.

The egg shortage and its impact on restaurant chains serve as a reminder of the interconnectedness of the food system and the vulnerability of supply chains to disruptions such as disease outbreaks. Restaurant chains, as key players in the food service industry, are faced with the challenge of balancing economic realities with the need to maintain customer satisfaction and brand loyalty.

The decisions made by these chains regarding egg surcharges reflect their individual strategies and priorities. Some prioritize short-term profitability by passing on costs, while others prioritize long-term customer relationships by absorbing the financial impact. As the egg market continues to evolve, it remains to be seen which strategies will prove most successful in navigating this challenging landscape. The humble egg, once taken for granted, has become a symbol of economic pressures and strategic decision-making in the restaurant industry.