Scrambled… poached… over easy… fried… deviled… The list goes on. It’s no secret that Americans LOVE eggs. And the increasingly high cost of eggs has been all over the news for the last few years. Some have even gone so far as to say that the price of eggs was one of the deciding factors of the presidential election.
Yet, despite promises made to bring down the cost of eggs, we’re still finding ourselves shell-shocked at the grocery store, and dealing with supply issues due to bird flu. And it’s impacting restaurants as much as individual consumers. Denny’s recently went so far as to implement an “egg tax,” a surcharge on every meal with eggs. (Meanwhile, Cracker Barrel countered that they wouldn’t raise prices because “there’s nothing hospitable about” surcharges.)
This week on the HerMoney Podcast, Jean Chatzky is joined by Jadrian Wooten, Associate Professor of Economics at Virginia Tech, and Phil Lempert, a leading consumer trend watcher and analyst to crack open the real reasons behind soaring egg prices.
Why The Cost Of Eggs Is Out Of Control
Jean Chatzky: The wholesale price of eggs is now on average more than $8 a dozen up from $2.25 just last fall. That’s an enormous increase. Jadrian, from an economist’s perspective, what’s up with this?
Jadrian Wooten: The main driver is bird flu, and it’s really hit hens much harder than it’s hit the rest of the poultry market. But then there’s human behavior that goes into it. Consumers who might rely heavily on eggs may be in a rush to go out and buy extra eggs, trying to think about what if it goes up again next week or the week after that. So people are also stockpiling eggs, which is not helping the situation at all.
How Grocery Stores Set Their Prices
Jean Chatzky: Phil, when we talk about prices in the grocery store, there are a lot of different factors that go into the soup of how that sticker gets on a particular product. Can you break it down for me in the simplest possible terms, how a grocer prices something on the shelf?
Phil Lempert: You have the cost of goods and then you’ve got a retailer that adds a markup. The markup is dependent on labor. It’s also dependent on where in the supermarket it is. If you’re in the frozen food department or in the refrigerated department, it has a higher cost than those unemotional boxes and jars that are in the center of the store that don’t have that extra energy cost. If you’re in the deli or in the bakery department where you’ve got human beings working, that ups [the cost] even more.
Phil Lempert: The other thing to really understand is competition. So, for example, when Aldi comes to a market, every other grocery store reduces their prices. And then in the case of Walmart, they have very strong relationships and very strong contracts with a lot of produce companies, and year-long deals, so they can offer lower prices even though their stores are that much larger.
How To Save On The Cost Of Eggs and Other Grocery Staples
Jean Chatzky: Phil, you’re an expert in how to navigate a grocery store. What do you want consumers to be doing right now in terms of making the most of their grocery budgets, and then also once they get the food home, how do we get the most meals, and the most nutrition out of whatever we put in our basket?
Phil Lempert: There are some simple steps that all of us can take. Number one, before you go to the store, make a shopping list, but not just any shopping list. Take inventory. I take last week’s cash register receipt and I cross off the things that I don’t need. I add three horizontal lines on the bottom and I allow myself three impulse items.
Phil Lempert: Number two, when you do get to the store, don’t walk into the produce department. The produce department is there because it’s like aromatherapy. Great colors, great aromas, and samples put you in a better mood. When you’re in a better mood you’re going to spend more. And then finally, 40 percent of all of our food in the U.S. is wasted. We’ve got to stop wasting food because not only from a sustainability standpoint but from a cost standpoint, that’s one of the quickest ways that we can reduce.
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