Starting the day with breakfast is becoming a pricey luxury
Consumers are shifting their morning routines, recent data shows. This comes as prices for eggs and coffee, two staples of breakfast in the U.S., remain at record highs.
The price of eggs in the U.S. is up 53% year over year, according to the latest Bureau of Labor Statistics data. Alicia Love, an owner of Coffee Labs Roasters, has seen the impact firsthand. She typically purchases the most popular beans in a one-year deal with her coffee importer. However, at the end of last year, prices were so high that she decided to wait the market out. Instead, prices climbed even higher. With supplies running low, she signed a purchase order for a three-month supply, and hopes that prices will soon ease.
The initial deal would have cost Love roughly $4 per bag, which is for either 130 pounds or 152 pounds, depending on the variety. The three-month deal she just signed was for roughly $5 per bag.
The skyrocketing cost of coffee comes as egg prices are also rising without any end in sight. Both products are pillars of an American breakfast, which has long been one of the cheaper meals to eat either at home or on the go. The quickly escalating prices means consumers are changing their habits and businesses are scurrying to react.
A rapid rise
In the latest consumer price index report, Bureau of Labor Statistics data showed the price of eggs in the U.S. up 53% year over year. But the pace of gains has been rapid. From December to January, the average cost of a dozen spiked 15%, per FRED data. In the week ended March 3, a 7% week-over-week increase brought average prices above $8 a dozen, JPMorgan Chase said.
While egg production is suffering from a devastating avian flu outbreak, which has resulted in the culling of millions of hens. Some say the consolidation of the industry is exacerbating the problem. On Friday, the Wall Street Journal reported that the U.S. Department of Justice opened an investigation into antitrust practices that might be at play.
Coffee, meanwhile, is also reaching record-high prices. A dry spell in Brazil, which has hit crop yields, is largely at fault. Over the past 12 months, futures prices have more than doubled. Last month, coffee prices on the Intercontinental Exchange surpassed $4 per pound for the first time ever.
“I’m hoping that we just have stability in the market. It’s very challenging to navigate the volatility, and the consumers are going to struggle with that,” said Andrew Blyth, coffee trading operations manager at Royal New York. “You can’t have menu prices changing once a month, especially for something as … routine as coffee.”
Profits under pressure
The impact is being felt across the restaurant industry. Dine Brands, the parent of breakfast staple IHOP, has seen its stock pull back more than 13% this year and shares hit a 52-week low on Wednesday after providing a disappointing 2025 outlook. The majority of analysts polled by FactSet maintain a hold rating.
“For IHOP … we’re expecting sort of low to mid single-digit inflation cost for the year. And that’s really primarily – it’s really driven by eggs,” Dine Brands Chief Financial Officer Vance Chang said on the company’s earnings call. “Outside of that, I think there’s some headwinds with bacon and coffee as well.”
Facing similar pressures, Waffle House and Denny’s recently imposed a surcharge for menu items containing eggs as opposed to a straight up price hike. Byrne said such a move may be more bearable for consumers because it’s assumed the surcharge is a temporary increase. McDonald’s has held the line and said the company will not implement an egg surcharge.
The impact of tariffs
More bad news could be coming for coffee drinkers. Coffee Labs’ Love said some decaffeinated coffee travels back and forth over the U.S. border and could be impacted by proposed tariffs.
She explained that if a roaster is using a washing method to decaffeinate their coffee, the mountain water used in the process comes from Mexico, but pre-roasted beans can be sent to Canada for processing. This means President Donald Trump’s tariffs on Mexico and Canada could add a new layer of price pressures.
“This cost will show across the board,” Love said. “The Canada tariff will make decaf coffee cost a lot more on top of the already high price.”
Blyth is less sure that decaf coffee will be hurt by the White House’s trade policy, but signaled there is still a lack of clarity.
“As of now we don’t believe it would incur a tariff, but we just don’t know yet. Hopefully there is more guidance in the coming days to help navigate the unknowns,” Blyth said.
Conclusion
The rising cost of eggs and coffee is forcing consumers to reevaluate their morning routines. As prices continue to climb, businesses are struggling to maintain profitability. The impact is being felt across the restaurant industry, with many chains imposing price increases or surcharges to offset the rising costs.
FAQs
* What is driving the rising cost of eggs and coffee?
+ The price of eggs in the U.S. is up 53% year over year, while coffee prices have more than doubled over the past 12 months.
* What are the main factors contributing to the rising cost of eggs?
+ The devastating avian flu outbreak and consolidation in the industry are exacerbating the problem.
* How are businesses responding to the rising cost of eggs and coffee?
+ Many chains are imposing price increases or surcharges to offset the rising costs, while others are trying to find new suppliers or adjust their menu offerings.
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