If you enjoy dining out, plan to fork over more dough

Rising food costs lead to more expensive eating

Adam O'DanielMarch 15, 2008 

Silvia Swanson takes a bagel out of the toaster at Durango Bagel in Rock Hill on Friday. Eateries such as Durango are getting hit hard by the rising costs of flour and other foods. To keep their ledgers in the red, they have to pass the cost onto the customers.

ANDY BURRISS ABURRISS@ HERALDONLINE.COM

Eating at your corner bakery is getting pricier.

As the nation's economy teeters on the edge of a recession, rising food costs, especially flour, are forcing local and national bakers to find ways to keep their ledgers out of the red. For many, that means higher prices for customers.

"When you're dealing with consumers, it's scary to have a price increase," said Wayne Wingate, owner of Rock Hill's Durango Bagel. Wingate recently raised the prices on many of his baked-fresh bagels and sandwiches by about 10 percent. The increase was needed to recoup some of the cash he's had to spend on flour, which has more than doubled in price since last fall.

"It's tough," he said.

When Wingate opened his bakery in its new location off Herlong Avenue last October, a 50-pound bag of flour, the main ingredient in bagels, cost about $10. Today, the same bag costs more than $23.

The reason for the increase is the high cost of wheat, the crop flour is made from. As many U.S. farmers have shifted their focus to corn and other grains, the supply of domestic wheat has declined.

Pair that with what many economists call "stagflation," a stagnant economy causing inflation, and you have, as Wingate says, a "perfect storm," nearly doubling wheat prices.

The U.S. Department of Agriculture reports that a bushel of wheat costs about $8.55 today, compared to $4.75 last March. Additionally, the nation's wheat stock has plummeted to its lowest level since 1947, according to the USDA.

Panera Bread, the national chain with a cafe in Rock Hill's Manchester Village, projects it will spend $26.5 million more on wheat for its dough-making facilities this year, according to the company's latest earnings report.

To recoup the cash, franchisees will see a dough price increase ranging from 10 percent to 15 percent. Customers will likely see 5 percent price hikes on the menu, the report states.

The rising cost of doing business isn't limited to wheat. Prices for poultry and dairy products and coffee beans also are on the rise. That can be blamed on a number of factors, such as a slow economy, record fuel prices and lower production. All are bad news for the corner bakery.

"A big mess is what it is," Wingate said. "You hope the prices will stabilize and go down. But just like gas, I don't think it'll ever go all the way back down."

Tom Sponseller, president of the S.C. Hospitality Association, said restaurants of all varieties across the state are feeling the price pinch and trying to cope.

"With fuel and everything else, they've all taken a beating over the past year," he said.

Business owners are left with the dilemma of how to stay afloat without sinking their menu with higher prices.

Wingate said his cost of goods to do business has increased about 40 percent in the past year. But despite one supplier suggesting a 15 percent hike, his menu prices have only risen a few cents. Instead, he is streamlining the menu, cutting less popular items and trying to boost sales of less expensive items. He also is developing a catering menu to increase sales volume.

Outside the pantry, Wingate has found ways to cut his utility bills by 20 percent with more energy-efficient equipment. He has been prudent with his payroll, not overhiring or overscheduling workers.

Panera Bread recently decided to eliminate its Crispani pizza line because of the expensive dough involved.

"We face several significant challenges," CEO Ron Schaich said, "unprecedented inflation in the wheat markets, executing appropriate pricing adjustments and an uncertain consumer environment."

If that isn't enough, restaurants for the first time in years are seeing a leveling off in the number of American families eating out.

"Folks are paying more at the grocery store and more at the gas pump. It leaves less to spend in other areas," Wingate said.

So how does a small restaurant owner keep his sanity in such an uncertain market?

"If you were sane," Wingate said, "you wouldn't be in this business to begin with."

Adam O'Daniel • 329-4069

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