Published: February 25, 2008 10:53 am      

PIZZA PRICES: Not rolling in dough

High cost of flour hurts local pizzerias, bakeries

by DAN MINER

minerd@gnnewspaper.com

Local pizza shops and bakeries already have their hands full making ends meet.

That’s why the people who run them are so concerned by the recent sharp hikes in an unlikely cost: Flour.

“Everyone’s griping, everyone’s complaining and everyone knows exactly what’s going on,” said Paul Gigliotti, owner of Mister B’s Restaurant and Tavern on the corner of Ontario Avenue and Hyde Park Boulevard. “Everyone in the business is aware of the increase in flour.”

Mister B’s has done solid business since it set up shop about four years ago. But pizza isn’t as profitable as it used to be.

“One time you could make decent money off pizza,” said Gigliotti, also noting the rising price in dairy products. “But it’s become an expensive item to make.”

Six months ago, Gigliotti paid $9.95 for a 50-pound bag of flour. Now he pays $30.

“We spends thousands of dollars every year,” he said.

The effect comes down to two things: Profits and prices. And when you raise the price, you run the risk of alienating your customers, Gigliotti said.

“The customers don’t realize why we’re doing it,” he said. “Some people don’t even know it takes flour to make pizza.”

It’s a familiar issue for DiCamillo Bakery. The Falls-based company uses the bread it bakes to stock its five Western New York retail stores and sell as a brand across the nation.

“We use thousands of pounds of flour in a week,” said David DiCamillo, the company’s president. “Flour goes in virtually every product we make.”

The bakery has also been forced to raise its prices, but can’t possibly do so enough to cover the increase in costs.

“It’s been unprecedented and it’s been dramatic,” DiCamillo said. “Flour has gone up over 200 percent since July.

“It’s been a very tenuous time. Very difficult.”

Flour prices have put a “significant” dent into DiCamillo Bakery’s profits. The company is right now formulating plans to weather the tough times, DiCamillo said.

The high price of flour is related to ethanol, an alternative to gasoline being heavily promoted by the federal government, said Lawrence Southwick Jr., an emeritus professor of Finance and Managerial Economics at the University at Buffalo.

The demand for corn, the main ingredient in ethanol, has thus risen dramatically recently, Southwick said. Meanwhile, the demand for wheat and soy beans has gone up too because they’re used as a substitute for corn by farmers to feed animals.

“(Wheat farmers) are winning temporarily,” Southwick said. “The ones that are in it are making a lot of money right now.”

But high demand doesn’t tell the whole story. The price of farming has increased with the dramatic rise in fuel prices, Southwick said. Fuel is used to plant, spray and harvest crops.

“If we were doing it by foot it wouldn’t matter as much,” Southwick said. “But we’re a mechanized country and those devices require some source of energy. That’s gasoline.”

The reason for the prices is of little consequence for Dana Gagliardo, owner of Gagster’s Restaurant and Lounge in the City Market. Gagster’s makes pizza and bakes the bread it uses for meals.

“Right now I’m just running around everywhere trying to find flour before the price doubles again,” Gagliardo said. “Things like this make it worse to survive in this town.”

On Thursday, Gagliardo did her best to stock up. She bought 30 bags flour at 50 pounds apiece from Sloan Super Market in Buffalo. Before the price increase, she paid $9 per bag for flour. Now she pays $22.

“We hear next week it might go up to $44 a bag,” she said.

Like Mister B’s and DiCamillo Bakery, Gagster’s is being forced to raise its priced to try and cover costs.

“I’m going to have to slightly increase my menu,” Gagliardo said. “But I can only go up so high. You can’t cost $20 for a pizza.”

According to Southwick, the price of flour will inevitably go down.

“The competition will come in and drive the price down,” he said. “But not as far as it was simply because the fuel is there.”

There are also some legislative solutions, including subsidies the government pays on farmable land to keep it idle, Southwick said. Releasing the landowners from contracts would allow farming to expand.

It would also help to increase the available kinds of alternative energy, such as coal and nuclear power plants.

“We haven’t built a new nuclear plant in this country in the last 20 years,” he said. “Our population has gone up. Our income has gone up. And our demand for energy has gone up, so you’re getting it somewhere.”

Contact reporter Dan Miner

at 282-2311, ext. 2263.