Egg prices are record high, and shoppers know the pain of trying to buy them and finding only empty shelves and horrible prices. But do you know how it’s a hit to your favorite weekend breakfast spot?
In a move showing how much the price of eggs has affected, Waffle House recently announced it has added an extra charge per 50 cents to its customer bills. The Georgia-based chain told CNN that it monitors egg prices and will “adjust or remove” additional charges based on market conditions.
“The continuous egg shortage caused by HPAI (Avian Flu) has caused a dramatic rise in egg prices,” Wafflehouse told the news network. “Customers and restaurants are forced to make difficult decisions.”
And that’s a really difficult decision for restaurant owners, says Bo Davis, CEO and co-founder of the restaurant management platform that helps clients track costs and adapt to price changes.
On the one hand, egg-centric restaurants already operating at thin margins deal with infeasible math problems, Davis says. The median price of a dozen eggs was $7.55 nationwide (wholesale), according to margin dialect data collected from over 10,000 restaurant clients in the week of February 3rd.
But on the other hand, customers are tired of high prices after years of inflation and will go somewhere if their favorite diners become expensive.
“At the end of the day, it’s just hard,” Davis says. “Your profitability will be wiped out until this is fixed. If you are an egg concept or breakfast concept, you cannot charge enough money to get a healthy profit for the egg at that price. .”
Nerdwallet spoke with Davis about what customers would like to know about how restaurants adapt to price spikes. The interviews have been compiled for length and clarity.
NERDWALLET: For restaurants, how big a deal is it when the price of a single ingredient becomes this volatile?
Davis: We have quite a few clients who are breakfast places. And for them it’s really, really challenging and boundary catastrophic.
In traditional types of menu plans, restaurants expect 25-30% of the costs they charge their clients for food costs. And there’s an additional 30%, which is basically labor. And there is about 20-30%, which is other costs. And usually you have a margin of about 10% at the end of it. So, when you think about that mathematics, if you go to food with a 10% profit margin of $0.30, but that food goes up 33%, then you’re broken.
If you take something like an omelette where the cost is almost entirely egg-based and the price doesn’t rise by 33%, moving from 30% plate cost to 90% plate cost, it’s 30% plate cost. You have the same labor, you have the same rent, you are the same, you know, you know, clean supplies and packaged goods, and other restaurants I have everything that does. But now it’s 50 or 60% negative for that omelette. Even a 50-cent upcharge can be seen how it can be tough to cover that cost.
NERDWALLET: How are restaurants so expensive egg prices?
Davis: The first thing you do is try to direct your customer to another menu item. The next thing you can do is adjust the operations to make sure you are running as efficiently as possible. The eggs are not lost.
The next thing you can do is increase the price. It’s really hard to see prices like this spike on its own. An example of a 50-cent waffle house for eggs – it’s difficult to do and it’s hard to get back the costs completely.
Another thing you can do is to lower the amount you put on the plate, which is also difficult, right? How small does the customer accept the omelette before it stops working?
I think the last thing I would say is you can lower the quality. So if you’re using cage-free eggs, you can exchange them for cheaper non-organic eggs. If you are using them, you can trade eggs in liquid and liquid.
NERDWALLET: Why use Waffle House as an example to apply an additional fee instead of increasing the price of a menu?
Davis: They believe it is temporary. Using menu prices is the easiest way to push customers aside, so we try our best to adjust as slowly as possible.
They also imagine training servers to tell people: So is us too. You have to do this for a minute. We hope it will go away soon. “And I think it will dramatically minimize the impact on customers, or at least not let the customers change their permanent purchase decisions.
Additional charges are rare. And I think that’s because this is such an abnormality. The interesting thing about eggs is that the price movement is so intense that if it’s an egg concept, its change is so dramatic that its other food prices are bouncing back, it won’t offset them. That’s what it means.
NERDWALLET: Do you think restaurant participants will see additional fees like Waffle House?
Davis: Yes. When prices soared around supply chain issues and Covid-19’s, what happened was very clear, they were temporary, the supply chain was present and it kind of frozen.
This is not the case. This is not a few boats stuck. The chickens are gone. You have to raise new chickens and the bird flu is not gone. So I feel this hasn’t disappeared in the short term. Surcharges hopes to continue, but more and more restaurants are trying to find ways to feed their customers with alternative products. Because it’s more and more difficult to charge.
And honestly, consumers are hammering about it, right? you. I. And then go out to eat, it’s even more expensive at the same time. I think we will continue to promote alternative products whenever possible.
Taryn Phaneuf writes for Nerdwallet. Email: tphaneuf@nerdwallet.com.
The article’s cage-free egg supply is a huge hit as a bird flu surge originally appeared in Nald Wallet.
Original release: February 24, 2025, 1:39pm
