In what has become the worst-ever outbreak of avian influenza in America, the egg industry is being hit with a heavy financial burden. As of June 1, the USDA reported a record 197 outbreaks of the virus, which has affected more than 44 million chickens and turkeys in the Midwest—nearly 90 percent of which are laying hens.

For the first time since 2008, government forecasts show a drop in egg production, causing both suppliers and restaurant operators to keep a close watch on the product’s shifting price point. What they’re seeing isn’t comforting: the Associated Press reports that liquid egg prices have been climbing at a rate of about five percent a day, and the price of eggs in their shells is steadily increasing as well.

Many operators, like David Brigham, co-founder of brunch hotspot Brigs Restaurant, which has five locations in North Carolina, are facing challenges with supply-chain failures. Brigham says he is concerned with finding a reliable, affordable source for liquid eggs after supplier Michael Foods Inc. announced declining availability for the next 12 to 18 months. Brigham says this spells major financial and logistical problems for breakfast-focused chains.

“When you look at your big breakfast brands—your McDonald’s and your IHOPs—not one of them cracks an egg to make a biscuit sandwich,” he says. “If they run out of liquid eggs, it’s going to cause major problems.”

Whataburger has responded to this supply strain with drastic cuts to its breakfast hours. “While our supply team continues to work diligently to source more eggs, we feel a limited time period to serve our tasty breakfast dishes is a better alternative to stop serving them altogether," the company wrote in a press release.

In the absence of liquid eggs, switching to in-shell eggs affects timing on the cooking line, especially when federal health code regulations ban the process of pooling eggs to avoid potential cross-contamination. What that means is that eggs must be cracked individually for each order, instead of creating the mixture ahead of time or simply ladling a six-ounce scoop of liquid eggs for an omelet.

“I’m looking at the cost of buying more in-shell eggs, but also the labor and the practicality of it,” Brigham says. “You could end up with literally one person whose job is to crack eggs, clean whisks, and make sure we can function at the same speed without liquid eggs while still following all of the regulations.”

Reuters reports that even supply-giants like Sysco are in conversation with its large-volume customers about possible menu changes until egg prices stabilize. In the midst of escalating costs, some operators are looking for menu alternatives to replace the shrinking supply. Hampton Creek, a company providing egg substitute products, has been approached by 14 major food companies—including General Mills—to fill the egg needs of those companies with a less costly alternative. “And that was just in the past week,” says company spokeswoman Morgan Oliveira. She says Just Mix, the ingredient Hampton Creek supplies to companies for use in place of eggs, is 48 percent less expensive than the cheapest caged chicken eggs.

Despite the concern over climbing costs, many major restaurant chains have yet to alter their menus to accommodate price changes.

“Right now, like everyone in the industry, we are monitoring this very closely,” says IHOP’s vice president of marketing, Kirk Thompson. “We’re watching it and making certain we know what all the long-term impacts are and what we need to do to keep ahead. …There is currently no issue in meeting any of our needs.”

While consumers have yet to see menu prices jump, and many operators hope to weather the storm without making drastic changes, this outbreak comes in the midst of tremendous growth for the breakfast daypart, which places eggs at an even more central place on the menu. According to the New York Times, McDonald’s, which began testing daylong breakfast at some locations this past April, is facing supply challenges after large outbreaks at egg operations of Cargill Kitchen Solutions, one of its main suppliers.

In a cruel irony, the larger—and thus more critical—an egg farm operation is, the easier it is for the virus to spread. In Iowa alone, which contributes more to the egg supply than any other state, the virus has affected about 28 million birds, slashing the state’s population of egg-laying hens by more than 40 percent. Experts say the sheer density of egg farms in the state has facilitated rapid transmission of the disease, which can kill 90 percent or more of an entire herd within 48 hours. Even birds that avoid infection are often culled to stop the spread of the disease.

Scientists are still unsure about how this particular strain of avian flu is transmitted, leaving a big question mark looming over the coming summer months. According to the CDC, it’s possible that the summer heat may be instrumental in killing off the virus, or it could cause another flurry of outbreaks if it’s being transmitted from wild birds migrating south for the heat. As of yet, no human cases of the virus have been detected.

While it remains to be seen what this will ultimately mean for the breakfast daypart, some, like Thompson, remain hopeful for the continued growth of this menu segment.

“I think that the breakfastarian movement and breakfast food-love is something that’s well-rooted,” he says. “I anticipate simply that breakfast always will continue to grow.”


By Emily Byrd

Finance, Food Safety, Industry News, IHOP