Weekly Wrap March 3: The Egg Crisis, Taxes on Tips, and More

Even the typically high-flying Texas Roadhouse has not been immune to some of the forces bothering the restaurant industry to start 2025.

Through the first seven weeks of the new year, the steakhouse chain’s same-store sales were up 2.9% year over year. For many brands, that number would be cause for celebration. But it’s unusually low for Texas Roadhouse, which has not seen quarterly same-store sales dip below 7% since 2020. 

And it came with little warning. In the last quarter of 2024, the chain’s same-store sales rose 7.7%, including 7.9% in December, and they were up 8.5% for the year.

Executives largely blamed the slow start on cold and snowy weather, which was bad enough to force some locations to close in January. They noted that winter storms have been more widespread than in recent years. And they also said illnesses such as COVID and the flu have taken a toll on some communities. 

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“I don't believe any of this is a slowdown in the guests’ or consumers’ desire to come to Texas Roadhouse,” said Michael Bailen, senior director of investor relations. “I just believe we're in a little bit of an environment right now where the consumer is just acting a little bit differently, and I think you're hearing that from others as well.”

Indeed, many restaurant chains have complained of sluggish demand to start the year, particularly among lower-income consumers as inflation ticks up. Severe weather, from wildfires in California to freezing temperatures across much of the country, has also played a role. And there have been calendar shifts, such as Valentine’s Day on a Friday and New Year’s Day landing mid-week.

When influencers were still a young social media phenomenon, it used to be enough for marketing teams to simply use a recognizable social media star to get eyeballs on the product and to garner engagement. But as social media marketing has matured as a business, the bar has been raised for campaign standards, and now — according to influencers themselves — organic, authentic marketing and influencer partnerships are more crucial than ever.

PR agency Belle Communication built Brilli, an influencer insights tool that surveys influencers on trends that they and their followers are seeing or want to see from restaurants and food operators.

“Influencers aren’t just online celebrities or video creators; they are experts in their niche, have a direct pulse on cultural trends, and are armed with powerful comment sections and analytics that show exactly what makes their followers tick,” Kate Finley, founder and CEO of Belle Communication, said. “Think of influencers as your secret weapon for market research and a faster way to understand and predict the preferences and actions of your customers.”

Last month, influencers were asked to predict foodservice trends for 2025, and this month they’re talking about what makes a successful (and not-so successful) social campaign. Authenticity topped the list.

“What used to work but doesn’t anymore includes overly polished, commercial-style ads that audiences now find less engaging compared to authentic, relatable content,” Trinh Carreon (@Trinhdoesthings) said. “Hashtag stuffing, which was once a common strategy to boost reach, is now ineffective as platforms prioritize relevance and engagement.”

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Authenticity doesn’t just apply to creating or responding to viral social media moments. Influencers are also passionate about being trusted to use their own voice and creative instincts when partnering with brands.

“Campaigns tend to fall flat when brands overly dictate the creative direction,” Danny Kim (aka @DannyGrubs) said. “Social media content performs best when it feels authentic and true to the creator’s voice, rather than forced or constrained by rigid, overly specific creative briefs. If the content feels overly ‘paid’ or promotional, viewers will swipe up.”

Forcing social media campaigns clearly does not resonate with younger generations, particularly Gen Z. But besides authenticity, another key winning social marketing technique is pop culture nostalgia. Celebrities or pop culture moments and fast-food brands have been a winning combination for years even before social media marketing existed, and that is still the case now.

Egg prices are surging nationwide after the ongoing bird flu outbreak led to the culling of tens of millions of chickens last year. That’s forcing many of America’s bakeries to consider raising prices, if they haven’t already done so, while they attempt to figure out how to manage the country’s egg crisis.

“We’ve really never had to think about the cost of eggs until now,” Auslander said.

Scrambling for solutions

The highly pathogenic H5N1 virus, or bird flu, infected flocks across the country last year, resulting in the deaths of more than 40 million egg-laying birds, according to the US Department of Agriculture. That’s driving today’s egg shortage, which has caused prices to soar.

Wholesale fresh egg prices were 186% higher in January compared to the same month a year earlier, according to government data. That was the fourth-biggest annual increase on records going back to 1992.

Prices for bakery products haven’t risen meaningfully yet, according to the Consumer Price Index, but that could change if bakeries don’t get a break from surging egg prices anytime soon. Aside from raising prices, bakeries are trying to figure out other ways to survive.

Werner Simon, owner of Manhattan Sweets Boutique Bakery on Long Island, New York, said the bakery is planning to raise prices in the coming weeks, but it’s also considering using so-called egg replacers, a product that “has some egg yolk and soy in it, and replaces about 5% to 10% of eggs.” He said that he’s wary of using too much of it in order to avoid compromising the “integrity” of the bakery’s pastries.

Eat Just Inc., which makes several plant-based egg products designed to mimic chicken eggs, has seen demand soar in recent weeks. Sales to retailers including Walmart, Whole Foods, Kroger and Publix were five times higher over the past month compared to the same period last year, according to data the company shared with CNN.

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But the headaches lately for bakeries don’t just revolve around eggs. ”None of this is sustainable because we’re also dealing with sky-high cocoa prices,” Simon said. “There’s not much more we can do at this point.”

Auslander of Bread Furst said he trained a new staff member last week to make sure they use the entire egg when baking or cooking, even if it means taking more time to shake out the entire contents of the egg before throwing away the shell.

Will consumers be understanding?

Raising prices is usually a tough decision for businesses because it almost always results in losing customers, said Charles Lindsey, a marketing professor at the University at Buffalo School of Management.

But, in some cases, it is necessary for a business to survive, and a business can limit how many customers it loses after raising prices if it communicates effectively the reasoning behind it, Lindsey said.

“It all boils down to how well a business can explain why and how they’re sharing the pain,” Lindsey said. “The last thing you want to do is raise prices and not be transparent about it.”

Kerri Francis Bradley, co-owner of D Light Cafe & Bakery in the Adams Morgan neighborhood of Washington, DC, said she and her husband have personally absorbed the rising costs of eggs. She said before the egg crisis, the bakery could buy a 30-dozen box of eggs for roughly $50, but now that same box costs more than $200.

Bradley said she will likely have to raise prices, but noted the communication around any future price hike will be key.

“When you make any price change, people get upset no matter what you do,” Bradley said. “Whenever we do, we’ll probably post it on our social media page, make sure our front-of-house are educated on what to say and how to explain it, and put some signage up so people know — and hopefully people will continue supporting small business.”

President Donald Trump in late January reiterated his pledge to end taxes on tips during a Nevada rally, echoing a campaign promise he debuted while campaigning there.

Speaking at the Circa resort and casino in downtown Las Vegas, Trump said he'd work with Congress in the ensuing weeks to get a bill on his desk.

"If you're a restaurant worker, a server, a valet, a bellhop, a bartender, or one of my caddies ... or any other worker who relies on tipped income, your tips will be 100% yours," Trump said.

Cutting taxes on tips has support from industry trade groups, the state’s largest labor union, and politicians on both sides of the aisle. Economists and policy experts, however, are less enthused, calling the idea unfair, costly and inconsequential to most lower-income Americans.  

"No taxes on tips may have been a good political move to propose during the campaign, but it is certainly bad tax policy,” said Kyle Pomerleau from the American Enterprise Institute, a center-right think tank.  

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A small percentage of low-income Americans would benefit. Roughly 4 million people, or 2.5% of U.S. workers, were tipped in 2023, according to Yale University’s Budget Lab, a nonpartisan policy research center that analyzes federal policy proposals regarding the U.S. economy. More than one-third didn’t make enough money to pay federal income taxes to begin with.

The average tax cut for families who benefit would be roughly $1,700, according to the Budget Lab, while the bottom fifth of earners would save $200.  

Meanwhile, the move could increase the federal budget deficit, with various estimates saying the plan would reduce revenue by more than $100 billion over the next decade. Lost revenue would vary, based on whether the proposal would exempt payroll taxes along with federal income taxes. Limiting the tax cut to certain industries or jobs also would reduce costs.

“Even though it’s not an enormous policy, $100-plus billion estimated over the course of 10 years is a good chunk of money,” said Alex Muresianu, a senior policy analyst at the Tax Foundation, a center-right tax policy think tank. “It’s a big policy for a small subset of the workforce.” 

Pomerleau said the policy would be unfair to other non-tipped workers: If you have a cook and a waiter who make the same amount of money at the same workplace, why should the tipped waiter end up with the higher after-tax income? 

There are also concerns the shift would push some employers and workers to restructure their pay to lean more heavily on tips, exacerbating the post-pandemic tipping fatigue that has swept the nation. Nearly three-fourths of Americans say tipping is expected in more places today than it was five years ago, according to a 2023 Pew report. 

"We could see mandatory or required tips that are added on, especially in places like restaurants. Potentially we’ll see more of that as they try to shift more of the purchase price to look like a tip,” said Joseph Rosenberg, a senior fellow at the left-leaning Urban-Brookings Tax Policy Center. 

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The Culinary Union, which represents about 60,000 hospitality workers in Nevada, supports the bill but also called for an end to the $2.13 federal minimum wage for tipped employees.

"Taking on both issues is critical to ensuring one job is enough for workers to support their families," union secretary-treasurer Ted Pappageorge said in a January statement.

The bill would benefit only “traditionally tipped” employees and exempt tips from federal income tax only, leaving the payroll tax that funds Medicare and Social Security untouched.  

Though such guardrails would reduce the budget cost, “I don't think there is a version of this policy that would, on net, be an improvement to the tax code,” the Tax Foundation's Muresianu said. “But I think there are versions of the policy that would cause fewer problems, or be less bad.”