Pizza economics: How global trends shape price of slice
The Atlanta Journal-Constitution
Published on: 03/29/08
Let the economists wax eloquently about bad economic times. For a real-life lesson in economics and inflation, try a pizza. "Everything across the board is going sky-high," said John Rosa, who co-owns Rosa's Pizza in downtown Atlanta with his brother Tony. "This is the worst in 17 years as far as price increases." Small pizzerias like Rosa's are especially hard-hit. Major pizza chains often buy commodities months in advance, locking in lower prices. There are lots of culprits. Sink your teeth into these stats:
FLOUR: The Rosas paid $11 for a 50-pound bag of flour six weeks ago. Today, it's $32. "It's probably going to hit $50 by the summer," John Rosa said. A 50-pound bag makes between 53 and 59 pizzas.
Reason: As the country looks for alternative-fuel sources such as corn-based ethanol, many farmers have opted to grow corn instead of wheat. So wheat's in short supply. Also, China and India are buying more American wheat for their growing middle class, taking advantage of the weak U.S. dollar.
PRODUCE: Mushrooms, tomatoes, onions and other toppings have gone up about 10 percent across the board.
Reason: Producing the toppings � especially fresh vegetables � costs more.
NAPKINS: The Rosas paid $50 for a 6,000-count box of napkins two months ago. Today, it's $56.
Reason: Again, higher production costs.
BOXES: Two months ago, the Rosas were paying $21.50 for 200 10-inch pizza boxes. Now they cost $26.50.
Reason: Higher energy costs.
CHEESE: The Rosas typically use 400 to 500 pounds of mozzarella cheese a week � and they're paying substantially more for it.
Reason: Like everyone else, dairy farmers are having to shell out more money to feed their herds. Corn, a big staple in a cow's diet, now costs more.
DELIVERY FEE: In the past month, Rosa's has seen suppliers tack on surcharges of $5 to $8 an order.
Reason: Higher diesel fuel has forced food suppliers to increase delivery charges. Nationally, diesel fuel has risen to about $4 a gallon � up from an average of $2.58 a year ago.