Navigating Rising Restaurant Costs: How to Stay Profitable Amid Egg Price Spikes and Tariffs

The restaurant industry is facing significant financial challenges as 2025 unfolds, primarily due to soaring egg prices and the imposition of tariffs on essential imports. These factors are straining profit margins and compelling restaurateurs to seek innovative solutions to maintain financial stability.

Escalating Egg Prices

A severe outbreak of avian influenza has led to the culling of millions of egg-laying hens, resulting in a dramatic reduction in egg supply. Consequently, the average price for a dozen Grade A eggs in U.S. cities reached a record high of $4.95 in January 2025, marking a 53% increase compared to January 2024.   

This surge in egg prices has significantly impacted restaurants, especially those specializing in breakfast items and baked goods. For instance, Waffle House, known for its extensive breakfast menu, serves approximately 272 million eggs annually and has implemented a surcharge of $0.50 per egg to offset rising costs. (source)

Impact of Tariffs on Restaurant Costs

In addition to escalating egg prices, the introduction of tariffs on imported goods from key trading partners has further strained the restaurant industry. A 25% tariff on food and beverage products imported from Mexico and Canada is projected to cost U.S. restaurants more than $12 billion, potentially leading to a 30% profit loss for the average independent restaurant operator. (source)

These tariffs affect a wide range of products essential to restaurant operations, including fresh produce and beverages. For example, Mexican restaurants in the Bay Area are adjusting their menus and prices in response to the tariffs, with some introducing new items like chickpea-avocado guacamole and reducing the use of certain ingredients to manage costs. 

Strategies for Financial Stability

To navigate these economic challenges, restaurants are adopting various strategies to maintain financial stability:

• Menu Diversification: Introducing dishes that rely less on high-cost ingredients. For example, The Broken Yolk Cafe is offering more non-egg items such as pancakes and plant-based chorizo wraps to mitigate the impact of soaring egg prices. 

  
  

• Supplier Negotiations: Engaging with suppliers to secure better pricing on essential goods. Some restaurants are exploring sourcing from local farms to ensure a steady supply of ingredients at more stable prices. 

  
  

• Operational Efficiency: Streamlining operations to reduce waste and improve cost-effectiveness. This includes optimizing staffing, reducing energy consumption, and implementing inventory management systems.

Embracing First-Party Delivery with Sauce

An effective approach to bolster financial resilience is adopting an efficient online ordering and delivery system. First-party delivery platforms, such as Sauce, enable restaurants to manage their delivery services without relying on third-party providers, thereby retaining control over customer experience and reducing commission fees.

Sauce offers a seamless integration of online ordering directly through a restaurant’s website, allowing for:

• Enhanced Profit Margins: By eliminating third-party commissions, restaurants can retain a larger portion of their revenue, which is crucial during times of increased operational costs.

  
  

• Direct Customer Relationships: Maintaining direct communication with customers fosters loyalty and provides valuable insights into ordering behaviors.

  
  

• Fully-managed Delivery: Sauce manages full delivery process for your business, including live customer support for your diners. That enables restaurants to save additional head counts and costs.

Implementing Sauce’s first-party delivery solution can be a pivotal step for restaurants aiming to navigate the current economic landscape successfully. By leveraging technology to streamline operations and enhance customer engagement, restaurants can mitigate the financial pressures arising from escalating ingredient costs and tariffs.

Book a free demo now with Sauce team and learn more.

FAQs:

Q1: How are rising egg prices affecting restaurant menus?

A1: The surge in egg prices has led restaurants to adjust their menus by introducing more non-egg items and exploring alternative recipes to manage costs while still offering appealing dishes to customers.

Q2: What impact do import tariffs have on restaurant operations?

A2: Import tariffs increase the cost of various food and beverage products, leading to higher operational expenses for restaurants. This may result in menu price adjustments and necessitates strategic sourcing and cost management practices.

Q3: How can first-party delivery platforms like Sauce benefit restaurants during economic challenges?

A3: First-party delivery platforms enable restaurants to manage their delivery services directly, reducing reliance on third-party providers and associated commission fees. This approach helps maintain profit margins, enhances customer relationships, and allows for customized branding, contributing to financial stability.

By proactively adapting to these economic challenges and embracing innovative solutions like first-party delivery, restaurants can continue to thrive and meet customer expectations in a dynamic market environment.