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NJ Restaurants Navigate Rollercoaster of Food Costs

ByDom Castellano

New Jersey restaurant owners are cautiously optimistic as egg prices have begun to decline from record highs, but many remain wary of other looming food cost increases that could further squeeze their already thin profit margins. While wholesale egg prices have dropped 44% since February, restaurant operators across the Garden State are now bracing for potential price increases in coffee, beef, and produce that could create new menu pricing challenges.

Spiro Hadjiyerou, owner of the Colonial Diner on Route 18 in East Brunswick, told New Jersey 101.5 that the cost of eggs had risen to nearly ten times what he was paying a year ago before recent decreases. “In the beginning, we were just dealing with it. It wasn’t that bad. But as it got higher, we started using the smaller-sized eggs. We went from extra large to large. That saved some money,” Hadjiyerou explained.

Photo Source: Mdurson/DepositPhotos

Creative Cost Management Strategies

Rather than immediately raising prices, many restaurant owners have sought creative workarounds to handle the egg price surge. Hadjiyerou revealed that his establishment began substituting cage-free or brown eggs when their prices became competitive with conventional eggs. “We started getting cage-free or brown eggs, because they were still the same as the price of regular eggs went up, cage-free and organic eggs stayed the same,” he said.

The diner owner has so far resisted raising prices on popular egg-heavy items like omelets, which typically contain three to four eggs each. This restraint has surprised his customers, who expected price increases given the widely publicized egg inflation. “The omelet is our diner go-to item on a Sunday brunch and you can’t be chintzy. People rather pay and get what they’re used to,” Hadjiyerou noted.

Broader Food Cost Pressures

While egg prices have captured headlines due to their dramatic rise and recent fall, restaurant owners are increasingly concerned about other food categories experiencing inflation. According to CNBC, wholesale egg prices have dropped to $4.83 per dozen, a 44% decline from their peak of $8.58 per dozen on February 28. But this relief may be overshadowed by increases in other key ingredients.

Hadjiyerou warned that beef prices have increased “tremendously” in the past month, while this year has seen the worst season for Arabica coffee beans, which most restaurants serve. Additionally, Trump administration tariffs on Mexican imports threaten to impact the cost of numerous produce items popular with diners.

“A lot of vegetables are coming in from Mexico. Anything avocado on your menu sells like crazy. Tomatoes are coming from Mexico,” Hadjiyerou explained. “It’s just a matter of time before you have to look at your menu. Do you take items off your menu? Do you increase the prices? And most likely, you’ll increase prices.”

Independent Restaurants May Have Advantage

As food costs fluctuate, New Jersey Restaurant & Hospitality Association President & CEO Daniel Klim believes that local independent restaurants are better positioned to weather the storm than national chains. He points to recent closures of chain restaurants like TGIFridays and On The Border in Toms River as evidence of this trend.

“I think restaurants like Spiros, the independent operators, the community supports them. They are among the community and they are involved at the local level. So that’s why I think you’ll see the sustainability for them,” Klim told New Jersey 101.5. “They don’t want to raise prices. But unfortunately, with the environment where we’re at and prices increasing everywhere, it just becomes a nature to stay in business.”

Photo Source: Mdurson/DepositPhotos

Why Egg Prices Peaked and Then Fell

The dramatic egg price swings resulted from a deadly outbreak of bird flu that killed millions of egg-laying chickens and restricted supply. According to NBC News, the average cost of a dozen large white eggs peaked at $8.64 on March 5 before falling to $4.90 more recently.

A recent lull in bird flu outbreaks has allowed production to recover, helping to reduce shortages. The USDA noted in a recent report that “as shell eggs are becoming more available, the sense of urgency to cover supply needs has eased and many marketers are finding prices for spot market offerings are adjusting downward in their favor.”

Declining consumer demand has also contributed to price decreases. Many households stockpiled eggs when prices were climbing, creating a temporary reduction in current demand. Additionally, the later timing of Easter this year (three weeks later than in 2024) has given the market more time to adjust prices downward ahead of the holiday demand season.

Looking Ahead

For New Jersey restaurant owners, the challenge of managing food costs remains a daily concern even as egg prices moderate. Many establishments have absorbed increased costs rather than raising menu prices, but industry experts suggest this approach may not be sustainable long-term.

As Hadjiyerou contemplates future price adjustments, he remains focused on customer expectations and value. “The price of eggs has gone down in the last three or four weeks, but it’s still way higher than it was last year,” he noted, adding that decisions about menu prices will ultimately depend on whether the current downward trend in egg prices continues and how other food costs evolve in the coming months.

With more than half of New Jersey restaurants still reporting negative profit margins compared to pre-pandemic levels, according to industry surveys, the volatility in food prices presents yet another hurdle for an industry that has faced challenge after challenge since 2020.

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