As costs rise, pizzerias are hiking prices

Pete Mavroudis, owner of Apollo's Family Pizzeria in Bensalem, is feeling the economy's squeeze from all sides.

The rising price of gasoline is making deliveries more expensive. The cost of his biggest ingredient - flour for the crust - is going up even faster than oil prices. And newly cost-conscious customers have cut back their orders 15 percent to 20 percent.

This week, Mavroudis threw away 5,000 menus that offered 16-inch pizza for $8.50 and replaced them with new models that raised the price 50 cents. He also raised the delivery fee from $1 to $1.50.

"Everything is killing the little people," he said in frustration.

Other independent pizzeria owners in the area said that they, too, were feeling the pinch.

"It just hurts the pockets," said Michael Spina, owner of Celebre Pizza in South Philadelphia. He, too, has raised his pizza price 50 cents. "Every week it's something different going up - cheese, Pepsi," he said.

Mostly, the owners said, customers are taking it in stride. "They see everything else is going up," Mavroudis said.

Customers at John's Place, a pizzeria and restaurant on Spring Garden Street in Philadelphia, backed him up yesterday. John's recently raised the price of a slice 15 cents - plain cheese is now $1.75 - and is contemplating how much to raise the price of a whole pie.

Ed Condi, who eats pizza a couple of times a week, said a plain slice would have to go above $2 before he would think twice about buying. An extra 15 cents for a slice or 50 cents for a pie does not bother him. "I don't think that's a big deal," he said. "I'm a gourmet pizza lover."

Cleodine Jackson, who ordered a hearty slice of grilled chicken and mushroom, said she still thought the pizza was a good deal. Jackson, who described herself as "frugal," said a $2 increase for a whole pizza would bother her. At that point, she said, "I can make my own."

The price of wheat has surged in the last month because of constraints on global supply and swelling demand from places such as China. The price of cheese has been rising during the last year, in part because of lower-than-normal production and higher demand.

Mavroudis said the price of flour had risen from $8.50 for a 25-pound bag to $24.95 in three weeks. In three months, Spina has gone from paying $18 for a 50-pound bag to $36. He uses 25 to 30 bags a week.

Cheese has fluctuated more, but now costs about a dollar a pound more than it did last year, Mavroudis said.

Some big pizza chains, such as Pizza Hut and Papa John's International Inc., last year raised the price of their cheese-only pizzas to the same amount as one-topping pizzas at company-owned stores.

Chris Sternberg, spokesman for Louisville, Ky.-based Papa John's, said that the chain last fall locked in the purchase of part of the wheat needed this year. "Through this strategy, which we have continued in 2008, our restaurants are somewhat insulated from the recent run-up in the cost of wheat during the first half of the year," he said.

Domino's Pizza Inc. estimated in October that it had paid an average of 64 percent more for cheese during the third quarter of 2007. Chief executive officer David Brandon said at the time that he had tried to raise prices to offset the higher cheese costs but found it difficult, since consumers were strapped for cash because of soaring gasoline prices and the weak housing market.

Alessandro Spennato, owner of Luciano's Pizza in Ardmore, said the price of a 16-inch pie at his restaurant would be raised $2, to $12.25, in the next two weeks. That's still less, he said, than his closest competitor charges.

Spennato said he had no choice. "It's the cheese and the oil and the flour," he said.

Profits are down, he said, and he has had to cut back on going out himself. Plus, he got rid of his cell phone to save money. "I work 80 hours a week," he said. "There's really no point."

He can see that customers are cutting back, too. One family always ordered two pizzas and four bottles of water. They are still getting the pizzas, but now they are asking for their water in a cup.