“Making It Work” series highlights small-business owners navigating challenging economic conditions.

Recent bird flu outbreaks have had a significant impact, wiping out about 15 percent of the nation’s egg-laying chickens and pushing wholesale egg prices to over $8.50 a dozen in February. This has led to increased costs for grocery shoppers and prompted major breakfast chains to add surcharges to diners’ bills. However, for small eateries, the potential to pay double or triple for such a critical ingredient could spell financial ruin.

In response, these business owners are getting creative, by changing recipes, using liquid or powdered eggs, and selling items that don’t include eggs such as falafel, packaged snacks, or even fresh flowers.

Prices have decreased slightly in recent weeks but remain higher than usual. Concerns about potential future outbreaks keep business owners on edge. The U.S. Department of Agriculture revised its prediction, stating egg prices will likely increase by nearly 58 percent this year. Demand remains high due to trends like all-day breakfast menus and protein-rich diets, according to CoBank’s analysts.

Eggs are perishable goods that cannot be stockpiled, and small businesses typically do not have extra funds for refrigerator space to keep extra eggs, even for brief periods, said Rob Handfield, a professor and director at North Carolina State University’s Supply Chain Resource Cooperative.

“There is no way to stock up on a month’s worth of eggs,” he said. “Small businesses are highly reliant on weekly or daily deliveries of eggs.”

Restaurant and bakery owners could raise the prices of their baked goods and breakfast items, but are hesitant to do so, fearing that this increase would deter customers.

“That’s the main challenge for many owners right now,” stated Holly Wade, executive director of the NFIB Research Center at the National Federation of Independent Business.

Here is how four small businesses are finding creative ways to adapt to the rising price of eggs.

For 24 years, Ted Karounos and his wife, Ann, operated the Square Diner in New York City’s TriBeCa neighborhood, where egg prices typically stayed between $30 to $35 per case of 30 dozen eggs. During the pandemic, prices rose as high as $100 a case.

Today, Mr. Karounos would be content with that price. “This year has been frightening,” he said. “I’ve never seen $200 before.” Currently, he is shelling out $239 per case—an unavoidable cost considering the diner uses around 360 eggs daily. Eggs are a cornerstone of the restaurant’s signature omelets and the “lumberjack” breakfast platter featuring eggs and pancakes, both of which include eggs in the batter. About 60 percent of the menu offerings contain eggs.

Mr. Karounos increased prices by 7.5 percent last year to keep up with inflation and is considering another hike. The margins for as common a meal as a two-egg breakfast have shrunk dramatically, he said: “You’re talking about a dollar per plate of lost profit.”

“This is an ingredient we cannot do without,” he added. “Right now we’re just absorbing the loss.”

Oh My Cupcakes!, Sioux Falls, S. D.

At least 90 percent of what Melissa Johnson sells includes eggs, which is typical for a bakery. However, Ms. Johnson, the founder and CEO of Oh My Cupcakes! in Sioux Falls, S.D., said she started stocking other items due to escalating egg prices.

“We’re creating more products that don’t need eggs but still help our bottom line,” she said. She added bags of snack mix and dry pancake batter mix to the shelves, along with gift items like candles and fresh flowers.

Ms. Johnson considered adding a surcharge to offset the increasing egg costs. However, she worried that even a minimal increase (25 cents) could deter customers, who are already spending less than in previous years.

“We could easily price ourselves out of the market,” she said. “Cupcakes are not a necessity. We recognize that people are making tough choices about how they spend their hard-earned money.”

The sweet breads, cakes, and pastries that Mark Burgos sells at his family-owned bakery in Central Los Angeles’ Pico-Union neighborhood are typically rich in Mexican flavors and egg content.

“Very few items don’t contain eggs,” he said, listing favorites like kings cake, tres leches cake, and flan. His flan recipe alone, which yields two dozen servings, requires 260 eggs. “There isn’t much room to maneuver,” he said.

Mr. Burgos has been buying fewer eggs and looking into liquid and powdered eggs to preserve whole eggs for recipes where substitution isn’t possible. “We’ve had to use everything we could find,” he said, noting that he found liquid eggs in January but not in February.

Mr. Burgos reported a 20 percent price increase, but said the rise, along with the economic impact of recent Los Angeles wildfires, had adversely affected business. “When things are costly, the business slows down,” he said. “Everybody is struggling.”

Side Piece Kitchen, Tacoma, Wash.

Eggs are a staple on the menu at Side Piece Kitchen, a Tacoma, Wash., restaurant that specializes in brunch. Their sandwiches are adorned with poached or fried eggs and egg-based sauces. Even their latkes—an alternative to breakfast potatoes—use eggs as a binding agent.

Yet the owner, Hailey Hernandez, who opened the restaurant with her mother and husband in 2022, works to minimize the use of eggs in her new menu items or omit them altogether. Due to the rising cost of eggs, she halved the number on their signature sandwich and now sets a daily market price for eggs ordered apart ($6.50 for two eggs in mid-March).

Side Piece’s specials no longer feature eggs. “We spend more time revamping ingredients,” stated Ms. Hernandez, aiming to elevate cheaper options, such as making falafel from scratch.