Business

Rising egg prices have restaurants scrambling to adapt

Famous Toastery owners Robert Maynard, left, and Brian Burchill. “We bear the brunt of these price increases,” Maynard said.
Famous Toastery owners Robert Maynard, left, and Brian Burchill. “We bear the brunt of these price increases,” Maynard said. dtfoster@charlotteobserver.com

An outbreak of avian flu in the Midwest has Charlotteans paying more for eggs in the grocery aisles and may soon cause prices to rise for egg-based dishes in restaurants.

Wholesale egg prices have climbed nearly 70 percent since late April, when the disease spread across the Midwest. Egg production in the U.S. is down by 10 percent.

Charlotte restaurants are holding menu prices steady on dishes that feature eggs – for now. But they say if egg prices stay high or climb, they’ll have no choice but to pass the cost on to consumers.

“If you’re in this industry, especially the breakfast and lunch space, that’s all you really talk about,” said Robert Maynard, CEO and co-founder of the Famous Toastery chain. “It’s a problem.”

Eggs are costing Famous Toastery $800 to $1,000 a week at each of its six locations – “a significant hit to the bottom line,” Maynard said. “We bear the brunt of these price increases. You don’t just want to pass things on (to consumers).”

$1.69Cost of a dozen Grade A large eggs in May 2014 at Harris Teeter and Publix in Charlotte

$2.19Cost at both stores this week

There comes a point when raising prices is inevitable, he said.

“We’ve been doing everything we can not to raise prices, but we’re going to be in a position where we have to,” Maynard said.

Consumers are already feeling the impact at supermarkets: In May 2014, a dozen Grade A large eggs cost $1.69 at both Harris Teeter and Publix. This week, the eggs cost $2.19. Representatives of both retailers said prices would be reduced when costs fall.

Roots of the crisis

The average wholesale price for a dozen large eggs rose from $1.19 on April 22 to $2.62 on June 1, a 120 percent increase. As of Tuesday, the average price was $2.01, said Rick Brown, senior vice president of market-research firm Urner Barry.

Many of the hens affected by the avian flu produce eggs that are sold as liquids to restaurants or makers of products such as ice cream, dressings and baked goods, Brown said.

We bear the brunt of these price increases. You don’t just want to pass things on (to consumers).

Robert Maynard, CEO and co-founder of Famous Toastery

The outbreak has not reached North Carolina, which had 14.1 million laying hens as of April, said Jennifer Kendrick, public information officer for N.C. Department of Agriculture.

In a Senate Agriculture Committee meeting Tuesday, U.S. Sen. Thom Tillis, R-N.C., stressed the toll the outbreak has taken on communities in the Midwest.

“Minnesota and Iowa, over the past year, saw somewhere around $1.6 billion in economic impact,” he said. “For every job loss as a processor, we lose about two more other jobs in the supply chain, so these communities are very hard hit by this.”

The virus struck at a time when consumer demand for eggs is high. USDA figures for 2014 show egg consumption is the highest it’s been in 30 years. Per capita consumption, or egg production divided by the population, was 263 in 2014, up from 254 in 2012.

“It’s because of the protein craze across the country,” said John Howeth, senior vice president of food service and egg product marketing at American Egg Board.

Coping with the problem

When the word “egg” is in your restaurant name, talk about these increasing prices is inevitable, said Jason Knoll, vice president of operations for Another Broken Egg Cafe, a franchise that has locations in Ballantyne and SouthPark.

Each location is spending roughly $100 to $200 more per week on eggs than before the outbreak.

The company has chosen to absorb the costs and promote non-egg menu items while testing vegan egg substitutes. Profits have been hurt, but not significantly, Knoll said. If they fall past a certain threshold, the company will look to raise menu prices, he said.

I’ve been in the restaurant industry for more than 10 years, but I’ve never seen it where you can’t get (the cartons).

Mary Jayne Wilson, director of operations for Amelie’s French Bakery

Amelie’s French Bakery uses about 1,000 eggs every day to make pastries and treats for its NoDa location alone. But the cooking staff now have to crack each one – a labor-intensive process – because they can no longer get cartons of egg yolks or egg whites, said Mary Jayne Wilson, director of operations for Amelie’s.

“I’ve been in the restaurant industry for more than 10 years, but I’ve never seen it where you can’t get (the cartons),” Wilson said.

Charlotte-based Terrace Cafe was told by its egg supplier that quantities might need to be rationed.

“That didn’t last very long,” owner Stewart Penick said. “We told them, we have to have eggs.”

Chaney: 704-358-5197; Twitter: @sechaney

  Comments