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Alicia Love usually buys the most popular coffee lab roasters in one year contract with coffee importers. But at the end of last year, the price was too high and she decided to wait for the market.
On the contrary, prices are rising even higher. With the supply low, she signed purchase orders for three months supply orders and hoped that prices would be easy soon.
“At the time, I thought, should we wait to sign this new deal?” Love, owner of Tarrytown, New York, told CNBC. “I’m kicking myself in my ass now because I don’t do that.”
The initial deal will make the love price around $4 per bag, which is 130 pounds or 152 pounds, depending on the variety. The three-month deal she just signed was about $5 per bag.
The soaring cost of coffee is Egg prices are also rising No purpose is seen. Both products are the backbone of American breakfast and have long been one of the cheap meals to enjoy at home or on the go. Rapid prices mean consumers are changing their habits and businesses are working hard to react.
Rapid rise
In the latest Consumer Price Index report, Bureau of Labor Statistics data show the price of eggs in the United States Year is 53%. However, the pace of returns is fast. From December to January, the average cost per FRED data is 15%. JPMorgan said the weekly increase of 7% brought the average price above $8 per dozen for the week ending March 3.
Although egg production is suffering from a devastating avian flu outbreak, it has resulted in millions of hens being eliminated. Some say that the integration of the industry is exacerbating the problem. On Friday, According to the Wall Street Journal U.S. Department of Justice Started the investigation Enter the antitrust practice that may be working.
At the same time, coffee has also reached record prices. Drought in Brazil belongs to crop yields, which is largely wrong. Futures prices have more than doubled in the past 12 months. Last month, the price of coffee on the Intercontinental Exchange exceeded $4 per pound for the first time.
Futures trading in coffee has soared over the past 12 months.
“I want us to be stable in the market. Driving volatility is very challenging and consumers will struggle with it,” said Andrew Blyth, manager of trade operations at Royal New York New York Coffee. “You can’t change menu prices once a month, especially for things like … regular coffees.”
The consumer received the message. Morgan Stanley said in a note on Wednesday that its survey of consumer sentiment marked the first negative reading since June 2024. Inflation is expected to get worse In the short term.
Robert Byrne, senior director of consumer research at Technomic’s Food Service, said breakfast has been extending consumer wallets in recent years.
“When it comes to breakfast, over the past few years we have seen affordability ratings for family style chains (IHOP, Cookie barrel,,,,, Danny’setc.) Byrne said in an interview: “The pressure on other restaurant segments is high.
This led to diners changing their behavior, Bourne said.
“Breakfast is the easiest thing to replace with something simple, or even skip it altogether,” Bourne said, adding that a recent technical survey found that on average, consumers use some type of food service, about 1.2 times a week.
“With inflation affecting all consumers – even wealthy diners are retreating frequency – the idea is that consumers are skipping other types of occasions and instead saving feasts for weekend splurges, which could be dinner,” he said.
Technomic’s research also shows that consumers are taking Dunkin or like Dunkin’ or McDonald’s. Byrne said when they go now, it is usually an “impulsive” order, or a order to splurge in a restaurant.
Profits under pressure
The impact was felt throughout the catering industry. Dine Brands, a parent of breakfast staple IHOP, has withdrawn more than 13% of its shares this year, while the stock was on Wednesday’s 52-week low after providing a disappointing 2025 look. Most analysts surveyed by Factset maintain a hold rating.
“For IHOP…we expect unit inflation costs to be low to the middle of the year. That’s really – it’s really driven by eggs,” Dining brand Chief Financial Officer Vance Zhang said on the company’s earnings call. “Other than that, I think there are some bacon and coffee headwinds.”
Dine Brands expects domestic same-store sales to drop IHOP by 1% to 2% in fiscal 2025.
Faced with similar pressures, Waffle House and Danny recently Surcharges are levied For menu items containing eggs, not directly rise. Such a move may be more tolerant for consumers because the surcharge is considered temporary increase, Bourne said. McDonald’s already holds the line and says the company will No egg surcharge is implemented.
The inventory of restaurants that offer a strong breakfast menu menu has taken a huge hit over the past year, except for McDonald’s.
“My feeling is that consumers may rise because it is considered a temporary surcharge rather than a general price because it means that when things change, the price will return,” Bourne said. “On the other hand, the print menu is expensive and the operator may not be able to do so quickly.”
Restaurant stocks have performed poorly over the past year. McDonald’s has been an outlier over the past year, but Danny’s stock has fallen by more than 55%, while cookie barrels have fallen by 38% over the same period.
The impact of tariffs
More bad news may appear for coffee drinkers. Coffee Lab Love says some decaffeinated coffee traveling back and forth between the U.S. borders could be affected by proposed tariffs.
She explained that if the roaster is using a washing method to decoffee his coffee, the landscape used in the process comes from Mexico, but pre-baked beans can be sent to Canada for processing. This means President Donald Trump’s tariffs on Mexico and Canada could add new price pressure.
“This fee will be fully displayed,” Love said. “Canadian tariffs will make DeCaf coffee cost more than it would have been high.”
Bryce is not quite sure DeCaf coffee will be hurt by the White House’s trade policy, but shows that there is still a lack of clarity.
“So far, we don’t think this will cause tariffs, but we just don’t know. Hopefully there will be more guidance to help drive unknowns in the coming days.”
