As the prices of essential breakfast staples continue to surge, American consumers are feeling the impact. Recent reports highlight the escalating costs of both coffee and eggs, two key components of the traditional morning meal.

Escalating Coffee Prices

Alicia Love, owner of Coffee Labs Roasters in Tarrytown, New York, typically secures her coffee supply through annual contracts. However, faced with unprecedented price hikes last year, she opted to delay her purchasing decision. This waiting strategy backfired as market prices continued to rise. Looking back, Love wished she had committed sooner to a more favorable deal.

The price of coffee, which struck $4 per pound for the first time on the Intercontinental Exchange last month, has seen its futures pricing double over the past year. Brazil’s ongoing dry conditions have adversely affected coffee yields, contributing significantly to these price increases.

The Egg Price Surge

Inflation isn’t limited to coffee; egg prices have also skyrocketed. Recent data from the Bureau of Labor Statistics revealed a staggering 53% increase year-over-year in the cost of eggs. A particularly sharp jump occurred recently, with prices rising 15% in just one month. Contributing factors include a severe avian flu outbreak causing the culling of millions of hens, as well as potential industry consolidation.

In response to these rising costs, the U.S. Department of Justice has initiated investigations into possible antitrust practices within the egg supply chain, underscoring the serious nature of the crisis.

Consumer Behavior Shifts

As consumers grapple with these price increases, changing habits are evident. Andrew Blyth, a coffee trading operations manager at Royal New York, emphasized the challenges of fluctuating prices, noting that consistent pricing is vital for business stability. He remarked, “You can’t have menu prices changing once a month, especially for something as routine as coffee.”

Market surveys from firms like Morgan Stanley indicate a downturn in consumer sentiment, marking the first negative outlook since mid-2024, prompting consumers to rethink their dining choices. Breakfast has become an increasingly fraught decision for many, with individuals opting to substitute more affordable home-cooked meals or forgoing breakfast altogether.

Implications for Restaurants

The ramifications of rising ingredient prices are reverberating through the restaurant industry. Companies like Dine Brands, which operates IHOP, report significant stock declines due to inflationary pressures primarily driven by egg costs. Dine Brands’ Chief Financial Officer noted anticipated low to mid single-digit inflation for the year, largely influenced by egg prices.

To manage costs, restaurants such as Waffle House and Denny’s are instituting surcharges on egg-inclusive menu items, a strategy designed to cushion consumer reactions to rising prices. Alternatively, McDonald’s has opted not to impose such surcharges.

Future Considerations

Looking ahead, more challenges may arise due to proposed tariffs potentially impacting coffee importation and processing. Love noted that certain decaffeinated coffee products may face additional costs depending on trade policy decisions between the U.S., Mexico, and Canada. She articulated the concern, stating, “This cost will show across the board.”