Market Data
The Tribeca Park Cafe’s Plight: A Microcosm of a Larger Economic Issue
Tribeca Park Cafe, a Manhattan deli, has taken the unusual step of posting a sign explaining that the recent increase in menu prices is not their doing. The sign, taped to the deli counter, explicitly states that the higher prices are a result of rising costs for eggs, dairy products, and coffee. To back up their claim, the cafe has displayed recent news articles about the surge in egg prices, including one titled "Eggs may be expensive forever." Alongside articles from CNN and The New York Times, the cafe assures customers, "We remain committed to providing high-quality products and appreciate your understanding during this time." This transparency reflects the broader struggle businesses are facing as they grapple with inflation and supply chain disruptions.
The explanation is understandable given the current context. Egg prices have soared due to a severe bird flu outbreak, which has led to the loss of tens of millions of egg-laying chickens. When a single chicken tests positive for avian influenza, all chickens on the same farm must be culled to prevent the spread of the disease. This has caused a significant drop in egg production. According to the Bureau of Labor Statistics, the average cost of a dozen Grade A large eggs in the U.S. reached $4.15 in December, up from $2.51 the previous year. Wholesale prices have also skyrocketed, with Midwest large eggs selling for $7.93 a dozen, compared to $3.33 a year ago. These price hikes have hit smaller businesses like Tribeca Park Cafe particularly hard, as they rely heavily on egg-based products.
The Broader Context: Eggs as a Symbol of Economic Volatility
The Tribeca Park Cafe’s situation is emblematic of a larger economic trend. Eggs have become a symbol of the volatile post-pandemic economy, with their prices fluctuating dramatically over the past three years. The bird flu outbreak, which began in late 2020, shows no signs of abating, and egg prices continue to swing wildly. While some businesses have managed to shield consumers from the worst of these fluctuations, others have been forced to pass the costs on.
The food service industry, in particular, has been impacted. Restaurants and cafes often use eggs as a "loss leader" to attract customers, but the recent price hikes have made this strategy unsustainable. Many businesses have resorted to adding egg-related surcharges to their menus. For example, Waffle House introduced a $0.50 surcharge per egg, while Blake’s Lotaburger in New Mexico added a $1 surcharge to egg-containing items. These measures are a direct response to the unprecedented rise in wholesale egg prices, which have increased for nine consecutive weeks.
Despite the challenges, consumers have largely been understanding of these changes. Rob Perez, co-owner of DV8 Kitchen in Lexington, Kentucky, noted that customers have accepted the $0.50 surcharge per egg added to his menu items. He attributes this understanding to the widespread media coverage of egg price increases, which has educated consumers about the forces driving the changes. Perez also acknowledged that while the surcharge is temporary, it may become a permanent fixture if egg prices remain high.
Consumers’ Role: Acceptance and Adaptation in a Volatile Market
The rise in egg prices has not only affected businesses but has also reshaped consumer behavior. Eggs, a staple in many households, have become a focal point of economic uncertainty. Grocery stores across the country are experiencing egg shortages, and some have even imposed limits on the number of cartons customers can purchase. Google searches about egg prices have spiked, and the issue has sparked conspiracy theories, including claims that drones are spreading bird flu.
These developments reflect a broader shift in consumer psychology. People are now more accepting of price increases due to the frequent fluctuations in the post-pandemic economy. While $8 for a dozen eggs might have seemed outrageous a few years ago, it is now a common sight in many grocery stores. Consumers have grown accustomed to sticker shock, and the constant barrage of news about inflation and supply chain issues has desensitized them to price hikes.
This shift in consumer perception has given businesses more leeway to increase prices. Alex Jacquez, a policy expert and former economic advisor in the Biden administration, noted that consumers have shown a willingness to pay higher prices for eggs despite the cost increases. This acceptance has emboldened businesses to pass on higher costs to their customers, often under the guise of surcharges or price adjustments.
The Phenomenon of "Excuse-Flation": Profiting from Chaos
The egg price crisis has highlighted a broader economic phenomenon known as "excuse-flation," where businesses use external factors like supply chain disruptions or inflation to justify price increases that exceed actual cost rises. This practice has been particularly evident during times of economic uncertainty, such as the COVID-19 pandemic and the Russia-Ukraine war.
During these crises, companies have taken advantage of the chaos to boost their profit margins. For example, when tariffs were imposed on imported goods during the Trump administration, businesses often used the uncertainty surrounding these tariffs to increase prices beyond what was necessary to cover the actual cost increases. Similarly, during the pandemic, companies cited "supply chain problems" as a justification for higher prices, even when their actual costs had not risen proportionally.
In the case of eggs, the bird flu outbreak and subsequent supply shortages have provided businesses with a convenient excuse to raise prices. While some of these increases are undoubtedly justified, others are likely the result of opportunistic pricing. For instance, a farm that has not changed its production costs can still raise the price of its eggs simply because consumers are primed to expect higher prices due to the media coverage of the egg shortage.
The Future of Egg Prices and the Economy: A Canary in the Coal Mine
The egg price crisis serves as a warning sign for broader economic trends. As businesses continue to grapple with inflation and supply chain disruptions, the phenomenon of excuse-flation is likely to persist. Eggs, with their frequent price fluctuations and high visibility, are a prime example of how external factors can be used to justify price increases that benefit companies at the expense of consumers.
Looking ahead, the egg industry faces an uncertain future. The bird flu outbreak shows no signs of abating, and egg prices are likely to remain volatile for the foreseeable future. Businesses will continue to adapt by changing their pricing strategies, and consumers will have to decide whether to accept these changes or seek alternatives.
In the meantime, the egg price crisis offers a glimpse into the larger economic challenges facing the country. As companies take advantage of the current uncertainty to boost their profits, it remains to be seen how consumers and policymakers will respond. One thing is certain, however: the humble egg has become an unlikely symbol of the turbulence and unpredictability of the modern economy.
