Good eggs are hard to find
June 2, 2015
by Erica Shaffer
Foodservice operators will be challenged to find adequate egg supplies, but they can weather the storm through leveraging relationships and forecasting demand.
KANSAS CITY, Mo. – US Department of Agriculture data shows more than 44 million birds have died from highly pathogenic avian influenza or been euthanized to contain the outbreak since December 2014. Laying hens and turkeys have been hardest-hit by the disease — an estimated 38 million laying hens have died and those losses have spurred supply shortages of fresh and liquid eggs.
Prices of US eggs and egg products are going up, although no one can say just how much of an increase foodservice operators can expect. However, foodservice operators can take steps to soften the blow of short egg supplies, reports Consolidated Concepts, a Waltham, Mass.-based purchasing partner for more than 170 restaurant brands.
“There is a lot of panic about the shortage, but restaurants will adjust where necessary and will ride out the storm,” said Wade Winters, vice president, Supply Chain. “Menu options will get adjusted and menu prices will get adjusted. Customers will understand if the all-you-can-eat omelet station isn’t going to be available for a few months.”
Consolidated Concepts developed best practices for foodservice operators to follow that will help them cope with the crisis. For example, foodservice operators should address the issue now — don’t procrastinate.
“A restaurant that primarily relies on breakfast for sales will need to react sooner than a restaurant with sales that are distributed among more day parts,” Winters said. “Having a diverse menu will help since more choices can be offered and promoted.”
The firm also recommends substituting liquid and cage-free eggs for shell eggs, but foodservice operators should be prepared for strong competition from food manufacturers.
“It’s the law of supply and demand,” Winters explained. “If supply of conventional eggs can’t meet up with demand, operators should start looking at the alternatives.
“However, the alternatives will be in higher demand which means the supply of the alternatives will be limited — high demand and low supply equal higher prices. But eventually, behaviors will change. Operators will start limiting the items on the menu that include a high percentage of eggs or egg ingredients. Operators will increase prices for the items containing eggs that stay on the menu. Customers will eventually hit their limit on how much they will pay for something. Demand will eventually drop. As they say, high prices fix high prices.”
Consolidated Concepts recommends de-emphasizing eggs on menus.
And while egg replacers may act as a stopgap solution, consumers will probably be able to tell the difference in taste and texture and may resist buying the new formulations, cautioned Richard Broad, egg expert and vice president of Bender, Goodman Co., Inc., during a presentation at the Sosland Publishing Purchasing Seminar, held this week in Kansas City, Mo.
Consolidated Concepts recommends substituting egg stations with smoothies, hot cereals, grain bars, fruit and granola.
Restaurant operators should ensure that they have reasonable package sizes of eggs and egg products to meet customer demand while minimizing waste, Winters added.
“If product expires before they are able to use it, they should adjust their pack size,” he said. “Forecasting becomes critical. Operators should adjust forecasts and consider any changes to their menu, customer order behavior changes, sales mix ...”
De-emphasize eggs on menus, pull them from limited-time offerings and consider shifting to summertime continental breakfast menus where feasible. Foodservice operators also should consider looking beyond their regular distributors.
“Most foodservice operators have specialty distributors such as produce and dairy,” Winters said. “This is common since produce and dairy are a more specialized category, and require more frequent deliveries due to the perishable nature of the categories.
“Produce and dairy distributors often stock eggs and egg products, he added. This is the time to utilize those alternative distributors to secure product. Supplier relationships come into play when times are tough, so it’s time to leverage those relationships.”