Saturday, 22 March 2008

Pizza Only for the Upper Crust - Soaring Cost of Wheat is leading to Price Increases of Everyone's Favourite Fast Food

Coming soon: the $3 slice of plain cheese pizza.

That benchmark price, an economic indicator in college towns and Main Street, hit the streets of New York City earlier this month.

Now, a result of record wheat futures and the skyrocketing cost of flour, pizza inflation is creeping up the Hudson River.

"Everybody's complaining. I don't know if we'll still be in business next year, the way it's going," Steve Ivezic, the Albania-born owner of I Love New York Pizza on Central Avenue in Colonie, said as he prepared lunch-hour pizzas on Friday. His relatives who operate 10 other pizzerias locally that share the name are also singing the 12-cut blues.

Ivezic, 42, left Montenegro in 1984, settled in Queens and ran a pizzeria there until his rent for a 1,000-square-foot cubbyhole hit $8,000.

"I ended up here because rent got so high I couldn't make any money down there anymore," said Ivezic, who's run the Central Avenue pizzeria for the past nine years. His younger brother, Nick, and manager Kevin Blais built it into a profitable enterprise.

For seven years, they didn't increase the price for a plain cheese slice, but recently raised it a quarter to $1.75. Next month it will go up to $2.

Ivezic's price for a "premium" slice, with three toppings, is now $3.

The culprit is the volatile price of a 50-pound bag of flour, the main ingredient in pizza dough. It's doubled in the past month and now goes for $32-$35 a bag.

There's no end in sight, after the price of wheat tripled in the past 10 months due to several factors. Federal incentives for farmers to grow corn for ethanol shrank the American wheat crop. Fuel prices drove up the cost of transporting the grain. And the tumbling U.S. dollar caused China and other Asian countries to snap up relatively cheap American wheat.

There are more than 230 pizza joints listed in the local Yellow Pages, and they're all facing a pricing perfect storm. Shredded mozzarella cheese is now $3 a pound (doubled in five months), a 4-gallon jug of cooking oil is $45 (tripled in a year) and the spiraling cost of gas takes a toll on deliveries.

Jim Desmo, a manager and buyer for Joe's Pizza Place and Restaurant in Rotterdam, bought three pallets of flour (150 bags) at $35 per 50-pound bag to stockpile it in advance of the next price hike. Desmo fears that flour will be $45-$50 a bag soon. He goes through more than a ton every two weeks. In the past year, he's upped the price $2 for a large (dozen slices) cheese pizza to $10.95. Another buck hike is anticipated.

Facing fierce competition, most local pizza makers said they're sticking with All-Trumps premium baker's flour instead of buying a cheaper alternative.

"Years ago, pizza was a good money-maker, but it's getting tougher and tougher to make any profit on it now," Desmo said.

Still, Sal Speciale, a construction worker, and Andy Angus, a moving company sales rep, said they'll remain loyal customers of the I Love New York Pizza parlor on Central Avenue. The two-slice-and-soda lunch special ($3.79) still has drawing power.

"It's better than going to McDonald's," Angus said as he mused about how fuel prices have driven up costs in the moving industry.

"Tell our government to stop wasting our farmers on ethanol, because it's a joke," Speciale said. "Put money into wind or solar energy. That makes more sense."

1 comment:

Marc said...

I've been hearing more and more about possible steep price increases for pizza because of the high cost of wheat. Who would have thought that pizza might become out of reach for many people? I haven't seen too many price increases at my favorite Boston-area pizza places yet, but I fear that it is coming...