Big Town Hero owner Galen Eggert had not raised his prices since he bought the Southwest Sixth Avenue establishment in May of 2005, but rising food costs forced Eggert to hike prices for the first time this past January.
“We are looking at another price hike next January,” he said.
Eggert is just one of several local business owners who have been forced to raise menu prices to combat increasing food costs.
Alex Cheng owns the Chit Chat Café, located a couple doors down from Big Town Hero on Southwest Sixth Avenue. Cheng said his business has also been affected.
“Maybe 10 percent to 15 percent of profit is lost,” Cheng said. In spite of this, Cheng said he has not yet had to raise his prices. “So far, no. We are going to raise our prices in September, not much, maybe 25 cents.”
Ester Aguilar, a PSU student who frequents the Chit Chat Cafe, said she does not necessarily know why, but she thinks that people are definitely becoming more aware of prices going up.
“I really appreciate the locations here,” Aguilar said. “I think that prices are at like, the middle ground…understanding that the prices do need to go up, but also understanding that as college students you don’t have a lot of money.”
Tom Gillpatrick, executive director of the Food Industry Leadership Center at PSU, sees energy demands and an increased global demand for processed foods, among other things, as key factors for local price increases.
“Key drivers for increasing food prices: certainly energy costs are a big part of it,” Gillpatrick said. “Energy cost in the production of the food, energy cost in the transportation of the food.”
According to a July 2 report from the World Bank, the price of grains has more than doubled since 2006. Further, the report said that 60 percent of the increase happened after January 2008.
The report also details the correlation between the rising cost of oil and the cost of food.
“We used to have daily customers that we only see once a week now,” Eggert said. “They used to have disposable income that now goes into their gas tank.”
Though oil is only one contributor to the current food price situation, according to the World Bank report, also cited is the rise in price for fertilizer, increases in bio-fuel production, depreciation of the U.S. dollar and poor weather conditions.
Gillpatrick said that increased demand from developing countries, especially India and China where the incomes are rising, is also increasing the price for grains such as corn.
“Another major factor, internationally–and we are in an international economy now–is that developing countries are moving towards a Western diet,” Gillpatrick said. As developing countries become more westernized, demand for chicken and beef is rising–two products that require large amounts of corn to produce. Gillpatrick also noted that KFC now sells more chicken in China than it does in the United States.
Nancy O’Connor, manager of the Goose Hollow Inn on Southwest Jefferson, said she has seen the price increases and is well aware that they are affecting her bottom line. “We haven’t really figured out a percentage or a formula. I know we recently had to raise prices a little bit, and we will have to raise them again,” O’Connor said.
O’Connor said she has noticed some methods other companies are using to help offset costs as well. “One of our suppliers have quit taking credit cards, because credit card fees are up so high,” O’Connor said. “When you charge something there are huge credit card fees that you pay. We just pay with a check.”
As for Eggert, he said he does not see raising prices as the only solution to the problem.
“What we do is try to compensate and try to give fast and friendly service so customers don’t have a reason to go anywhere else,” Eggert said. “It’s harder to make a dime now, so we try to make two nickels instead.”