As a trusted partner to consumer packaged goods (CPG) manufacturers, grocery companies, and restaurants, Carl Marks Advisors has helped countless businesses navigate unforeseen challenges. Today, companies are recovering from recent supply chain shocks, adapting to post-inflation pricing pressure, and scrambling to overcome rising egg costs.
A key economic indicator and staple food item, eggs are cracking down budgets across industries, increasing production costs, and pressuring bottom lines for retailers and restaurants. With their short shelf life, fluctuations in the egg supply translate into price increases. Below are the four critical developments CMA is tracking:
The Avian Flu’s Lasting Impact:
The Avian Influenza (HPAI) outbreak continues to strain the nationwide egg supply. Since 2022, nearly 60 million birds have been lost, including 20 million in Q4 of 2024 alone. As a result, egg production has dropped 5–7%, and the USDA has lowered its 2025 forecasts.
The CEO of the American Egg Board estimates a six to nine months recovery timeline for flock culling, and with no guarantee the virus won’t return, volatility remains a top concern.
The Cost to Consumers:
Once considered an affordable source of protein, eggs are now hitting grocery budgets and harming lower-income households. Restaurant chain Waffle House instituted a 50 cent per egg surcharge in February, and others have followed suit, from larger organizations down to the corner breakfast cart.
In response, consumers are now seeking egg substitutes, adjusting their consumption habits, and opting for locally sourced options.
How Companies Will Adjust:
Supermarket chains have raised prices, often steeply, but that has not prevented shortages. Many have implemented purchase limit policies to prevent hoarding. Food manufacturers, meanwhile, are looking at reformulating recipes to reduce egg usage. In addition, many restaurants have removed egg-heavy items from their menus or changed their stocking and storage strategies.
The Long-Term Outlook:
If the intensity of the Avian flu diminishes and prices start to moderate, the impact on the CPG, grocery, and restaurant industries may be shorter-term.
However, taking steps to prevent such crises in the future has its own cost implications. Cage-free laws, which several states have implemented, increase production costs. Similarly, the new infrastructure that egg farmers have to invest in to safely restart operations will continue to drive up costs in the short to medium term.
Organizations navigating the egg crisis are looking for creative ways to manage costs in an environment where consumer debt remains high and shoppers have become cost-conscious. To stay ahead of the curve, businesses must sustain profitability and meet consumer demand by rethinking production methods, altering their offerings, implementing operational changes, or adjusting their pricing and sales strategies.
