Egg costs peck away at budgets for consumers and businesses

If the price of a dozen eggs at the grocery store seems severe, imagine cracking hundreds per day.

Diners, bakeries and other businesses that go through eggs by the case, not the dozen, say the impact of the past year's spike in egg prices is staggering.

"We're paying $2,000 more per week compared to this time last year," said Sam Turner, owner of the Nicollet Diner in Minneapolis, which brings in about $10,000 in revenue a day. "That can be very painful."

Whether in omelets, scrambles, meringues or cakes, higher costs for eggs are getting baked into the prices customers pay.

"Egg prices have had an enormous impact on us, and we've had to raise menu prices," Turner said. "We're a small business. At this point we lose a day of revenue every month" to the higher cost of eggs compared to a year ago.

Turner said last January he was paying about $25 for a case of eggs — that's 15 dozen. Now it's about $69.

The worst may be over for home chefs and commercial bakers alike. U.S. Department of Agriculture data shows egg prices backing off a late-December peak with no indication they will spike again soon.

But as with many consumer goods, prices that rise quickly are often slower to fall.

"The way we buy tends to reinforce prices going down slowly," said Mark Bergen, marketing professor at the University of Minnesota's Carlson School of Management. "If firms can get higher prices they're going to hold on to that margin as long as they can."

"We just have to shop [around] more," he added, "finding the stores that are lowering prices faster, and finding producers lowering prices."

In December, the national average price for a carton of eggs sold at grocery stores hit $4.11, rising even higher later in the month, according to the USDA. Compare that to December 2021 when a carton cost on average just $1.80.

Why prices are up

Many factors are to blame for the surge in egg prices: elevated demand early in the pandemic; not enough workers, truckers and eggs to meet that higher demand; higher costs for egg operations; bird flu wiping out some commercial flocks and reducing supplies; and continued high demand as people cook more meals at home than pre-pandemic times.

The price of eggs would come down faster if people stopped buying so many of them. But despite the grocery store sticker-shock and consumer complaints dotting social media, eggs are a staple and often end up in grocery carts no matter the price.

"It's a combination of good taste, high protein, relatively inexpensive, a staple for baking and a huge part of our meals," Bergen said. "When it tends to be more of a necessity, one you can't easily shift out," there is less price sensitivity.

Egg prices have also been relatively stable for decades, according to federal data, which makes any rapid changes more noticeable.

The last major spike in egg prices was 2015, when a bird flu outbreak killed tens of millions of egg-laying hens. But prices fell almost as quickly as they spiked.

Even as farms have repopulated following the 2022 outbreak, there are far more circumstances — like high feed prices, labor shortages and difficulty getting goods to market — keeping prices higher for longer.

Which all leads to more stress for businesses contemplating more price increases or other changes.

Peak possibly has past

For "breaking stock" — or bulk eggs used primarily by food manufacturers — prices have started to drop, and the USDA reported Thursday that demand is "light to moderate."

"There does seem to be some relief on the horizon, and we'll take what we can get," Turner said.

Honey & Rye Bakehouse in St. Louis Park is paying $55 per case and had seen prices reach $93 — on top of higher costs for flour, butter and milk. The bakery has been able to hold prices steady after raising them early in 2022, but there are "no great solutions" for what comes next.

"That really, really impacts our bottom line," said Anne Andrus, owner of Honey & Rye, which goes through 900 eggs a week in its current slower season. "But there's a threshold for food prices — who's going to pay $5 for a cookie?"

Where there are substitutes available — like pre-cracked liquid eggs or vegan alternatives — prices aren't much better. Some bakeries have had to make fewer products.

Businesses largely just have to wait out the storm.

"Whatever egg prices get to, we'll figure it out," Andrus said.

U professor Bergen said that attitude is key for businesses and consumers for the foreseeable future. Even as inflation backs off recent records, prices are probably going to keep going up faster than they typically had for the past several decades.

"Learning to cope with inflation — to navigate it, not fear it — is a good skill to develop," Bergen said.

In the long run, Bergen said lingering high prices could force trade-offs, for consumers and businesses, like smaller portions or fewer egg-heavy offerings: "How important are eggs in our diets and recipes?"

But the pendulum could swing back to low prices before menu changes become permanent.

"The high demand and high price is a reason to start investing in more birds," he said. "The fundamentals suggest there is reason to think prices might come back down."