The cost of breakfast staples like coffee and eggs is on the rise, leaving consumers and businesses scrambling to adapt. Alicia Love, the owner of Coffee Labs Roasters in Tarrytown, New York, found herself navigating skyrocketing coffee prices, forcing her to make tough decisions about supply and pricing. Love typically secured popular beans from her coffee importer in annual deals, but with prices soaring, she had to alter her approach by signing a purchase order for a three-month supply at a higher cost. The unexpected surge in prices has left many in the industry reeling, with ripple effects impacting other breakfast items like eggs.
Egg prices have surged by 53% year over year, with a 15% spike from December to January alone, driving the cost of a dozen eggs to over $8. The avian flu outbreak has decimated egg production, leading to the culling of millions of hens and exacerbating supply chain issues. Meanwhile, coffee prices have also reached record highs due to a dry spell in Brazil, causing futures prices to double over the past year. The uncertainty of market stability has posed challenges for coffee traders like Andrew Blyth, who stress the difficulty of managing price volatility in consumer markets.
Consumer Behavior Shifts
The rising costs of breakfast staples have led to significant changes in consumer behavior, impacting the restaurant industry as a whole. Robert Byrne, a consumer research expert at Technomic, notes that affordability ratings for family-style chains like IHOP, Cracker Barrel, and Denny’s have come under pressure in recent years. As breakfast becomes less affordable for many, consumers are opting to prepare meals at home or skip breakfast altogether. Technomic’s research indicates that consumers are cutting back on breakfast outings, with the average person using foodservice for breakfast only 1.2 times per week.
According to Byrne, inflation is affecting all consumers, leading even affluent diners to reduce their spending on routine breakfast outings. As a result, quick-service restaurants like Dunkin’ and McDonald’s are seeing changes in consumer habits, with many opting for impulse purchases or saving up for less frequent dining splurges. The impact of rising costs is evident in the stock market, with companies like Dine Brands, parent company of IHOP, experiencing stock declines due to increased input costs like eggs, bacon, and coffee.
Tariffs and Trade Uncertainty
As if rising prices weren’t enough, the threat of tariffs looms over the coffee industry, potentially adding to the financial strain faced by businesses. Love from Coffee Labs warns that proposed tariffs on Mexico and Canada could further raise costs for decaffeinated coffee, which relies on cross-border processing methods. The uncertainty surrounding trade policy has left many operators in the dark, unsure of how tariffs may impact their businesses in the coming months.
Blyth echoes the sentiment of uncertainty, highlighting the need for clarity and guidance from policymakers to navigate the evolving trade landscape. While the full extent of the impact of tariffs on coffee remains unclear, the potential for additional price pressures looms large, further complicating an already challenging market environment.
The convergence of rising prices, supply chain disruptions, and trade uncertainties has created a perfect storm for the breakfast industry, forcing consumers and businesses alike to adapt to a rapidly changing landscape. As the cost of morning staples continues to climb, the true test lies in the ability of industry players to weather the storm and emerge stronger on the other side.
