Denny’s (DENN) has placed a surcharge on the eggs it sells to its restaurant patrons as a growing shortage of the food staple drives prices to an all-time high.
South Carolina-based Denny’s, which operates more than 1,500 restaurants worldwide, said the surcharge will vary depending on an outlet’s location. However, Denny’s said that it has no choice but to apply the surcharge on eggs as an outbreak of bird flu constrains the available supply and raises costs.
Avian influenza, also known as bird flu, has resulted in the deaths of millions of egg-laying hens in the U.S., which has led to a shortage of eggs on grocery store shelves and for restaurants across America. With supplies depleted, wholesale egg prices have hit record highs. The U.S. Department of Agriculture says wholesale prices for white eggs rose to $8.07 per dozen in the past week, an increase of 5%.
Bird Flu Worsens
In the past week, inventories of white eggs have declined 2% overall and were down 12.5% for nutritionally enhanced eggs. Denny’s is not the only restaurant chain to pass on the price increase to its customers. Privately held Waffle House has applied a surcharge of $0.50 per egg to its menu.
Additionally, grocery store chains such as Walmart (WMT) have placed limits on the number of eggs that can be purchased by consumers at one time. Unfortunately, the situation with bird flu in the U.S. is getting worse. More bird flu cases are being reported by the day, including a commercial egg operation in Ohio that reported more than three million birds were infected with the disease in the past week.
DENN stock has declined 13% over the last 12 months.
Is DENN Stock a Buy?
Denny’s stock has a consensus Strong Buy rating among six Wall Street analysts. That rating is based on five Buy and one Hold recommendations issued in the last three months. There are no Sell ratings on the stock. The average DENN price target of $7.42 implies upside potential of 40.53% from current levels.
