Breakfast is booming at US restaurants. Is it also contributing to high egg prices?

It's a chicken-and-egg problem: Restaurants are struggling with record-high U.S. egg prices, but their omelets, scrambles and huevos rancheros may be part of the problem.

Breakfast is booming at U.S. eateries. First Watch, a restaurant chain that serves breakfast, brunch and lunch, nearly quadrupled its locations over the past decade to 570. Eggs Up Grill has 90 restaurants in nine southern states, up from 26 in 2018. Florida-based Another Broken Egg Café celebrated its 100th restaurant last year.

Fast-food chains are also adding more breakfast items. Starbucks, which launched egg bites in 2017, now has a breakfast menu with 12 separate items containing eggs. Wendy’s reintroduced breakfast in 2020 and offers 10 items with eggs.

Reviews website Yelp said 6,421 breakfast and brunch businesses opened in the United States last year, 23% more than in 2019.

In normal times, producers could meet the demand for all those eggs. But an ongoing bird flu outbreak, which so far has forced farms to slaughter more than 145 million chickens, turkeys and other birds, is making supplies scarcer and pushing up prices. In January, the average price of eggs in the U.S. hit a record $4.95 per dozen.

The percentage of eggs that go to U.S. restaurants versus other places, like grocery stores or food manufacturers, is not publicly available. U.S. Foods, a restaurant supplier, and Cal-Maine Foods, the largest U.S. producer of shell eggs, did not respond to The Associated Press' requests for comment.

But demand from restaurants is almost certainly growing. Foot traffic at U.S. restaurants has grown the most since 2019 for morning meals, 2019, according to market research firm Circana. Pre-lunchtime hours accounted for 21% of total restaurant visits in 2024.

Breakfast sandwiches are the most popular order during morning visits, Circana said, and 70% of the breakfast sandwiches on U.S. menus include eggs.

Eggs Up Grill CEO Ricky Richardson said breakfast restaurants took off after the COVID pandemic because people longed for comfort and connection. As inflation made food more expensive, customers saw breakfast and lunch as more affordable options for eating out, he said.

The growth in restaurant demand reverses a pattern that emerged during the pandemic, when consumers tried to stock up on eggs for home use but restaurants needed fewer of them, according to Brian Earnest, a lead economist for animal proteins at CoBank.

Changing preferences since then have caused further market strain. Americans are increasingly looking for protein with few added ingredients, and eggs fit that bill.

“Consumers think eggs are really fresh, so if you’re making something with eggs, you know it’s fresh,” Earnest said.

To address animal rights concerns, McDonald’s and some other companies have switched to 100% cage-free eggs, which limits the sources they will buy from. Ten states, including California and Colorado, have passed laws restricting egg sales to products from cage-free environments.

“It makes the market much more complicated than it was 20 years ago,” Earnest said.

The higher prices are hitting restaurants hard. Wholesale egg prices hit a national average of $7.34 per dozen last week, according to the U.S. Department of Agriculture. That was 51% higher than at the beginning of the year. Wholesale costs may be higher than retail prices since grocers use eggs as a loss leader to get customers in the door.

Some chains, like Waffle House, have added a surcharge to help offset the cost of eggs. Others may turn to egg substitutes like tapioca starch for some recipes or cut egg dishes from the menu, said Phil Kafarakis, the president and CEO of the International Foodservice Manufacturers Association.

First Watch President and CEO Chris Tomasso said eggs are critical for the chain's brand and are found in the majority of its offerings, whether at the center of the plate or as an ingredient in batters. So far, he said, the company has been able to obtain the eggs it needs and isn't charging extra for them.

First Watch is also increasing portion sizes for non-egg items like meat and potatoes, Tomasso said.

Richardson, of Eggs Up Grill, said he recently met with franchisees to discuss adding a surcharge but they decided against it.

“Eggs have always been and will continue to be an important part of American diets,” Richardson said.