Pizza and beer now cost an arm and a leg

http://www.msnbc.msn.com/id/23415510/

Pizza and beer now cost an arm and a leg
Sure sign economy is headed for trouble: Even cheap eats are hard to find
By Al Olson
MSNBC
Fri., Feb. 29, 2008

If you’re looking for a sure sign the U.S. economy is headed in the wrong direction, all you need to do is look at the skyrocketing price of “recession-proof” foods: pizza, hot dogs, bagels and beer.

For many Americans, the credit crunch and the mortgage mess have left their pocketbooks – and their cupboards – bare. These same consumers, many living paycheck to paycheck, have relied on these cheaper foods to keep their expenditures down. Not anymore.
In the past few months, the news has gone from bad to worse:

Pizza makers have seen their cheese costs soar this year from $1.30 a pound to $1.76 a pound. Even worse, the flour used to make the dough has gone from $3-$7 dollars a bushel to $25 a bushel in less than a year.

Beer makers have been forced to raise their prices because of the skyrocketing price of hops – one of the principle ingredients. The price of hops has gone from about $4 a pound in September to $40 a pound. The price of barley, beer’s other main ingredient, has nearly doubled.

Bagel shops have struggled to hold the line on prices and keep their customers. The exploding wheat prices have made the $1 bagel a fact of life in big cities such as New York. Donuts are averaging $1.50. And many shop owners fear a wheat shortage will drive prices even higher.

Even the lowly hot dog is getting more expensive. Gray’s Papaya, a New York hot dog institution, will be jacking up the price for its $3.50 “Recession Special” – two hot dogs and a 14-ounce drink. Nicholas Gray, owner of the frankfurter chain, has yet to set the price increase, but he indicated it is coming soon.

Overall, retail food prices rose 4 percent last year – the biggest jump in 17 years. The USDA officials predicted another 3 percent to 4 percent increase this year and continuing price hikes, faster than the pace of inflation going into 2010. And the price pinch has hit the lower-income shoppers hardest.

Why is this happening? Call it the perfect storm of inflationary pressures.

Bob Goldin, executive vice president of Technomic Inc., a food industry consulting firm, described the cost increases as a "disaster scenario," with no real end in sight and limited ability for most to pass on the bulk of the costs to consumers.

Surging energy costs have driven up the price of transporting goods from farm to storefront. The national average for a gallon of gas jumped to $3.164, creeping closer to last May's record of $3.227, according to AAA and the Oil Price Information Service. Diesel prices jumped 1.5 cents to a new record national average of $3.642 a gallon.

While most Americans fuel their cars with gasoline, most of the products they buy are transported by trucks, trains and ships that burn diesel. While gas prices are unlikely to rise as high as $4 a gallon, diesel may well pass that psychologically important level this spring, boosting prices of virtually every consumer product, said Tom Kloza, publisher and chief oil analyst at the Oil Price Information Service in Wall, New Jersey.

"It's everything that gets shipped," Kloza said of diesel fuel's impact on the economy. "That is the one that is much scarier."

Another reason for the sharp hike in food prices is the increasing demand for ethanol, which has driven up the price of corn – and at the same time created a shortage of wheat as farmers shift their crop to the more lucrative corn.

“There are several reasons [for higher food prices], but at the core is corn, the largest and most important of agricultural commodities,” said Bill Lapp, president of Advanced Economic Solutions.

Which brings us back to the price of flour — and the pricier pizza. Jimmy Ferrell, owner of the four Fat Jimmy's pizza restaurants in Louisville, Ky., said the price of flour has forced him to pass the cost onto his customers. "You have to raise (prices) a couple times a year just to keep up," he said.

Ferrell thinks the rising flour prices have hurt small operators more than national chains.

"The national chains have a lot more pull and they can negotiate prices. I don't think we have the same buying power that a Papa John's or a Domino's obviously has."

Food industry consultant Goldin doesn’t see a light at the end of the tunnel. "There are no simple solutions," he said. "The trend will be to reduce product costs, and some of that may very well affect quality.”

So, how can budget-conscious consumers stretch their dollar? There is one – albeit artery-clogging — alternative.

Fast food companies, looking for a way to attract budget-conscious customers, are increasingly offering more food for less money. The “dollar-menu” option is growing at chains such as McDonald’s, Burger King and Quiznos.

That's good news for diners like Boston resident Shekia Scott. While lunching with friends at a Burger King, Scott said higher prices for food and gas were hurting her budget. But, she added, "the dollar menu's been a help."

So there you have it. Your best option for cheap eats is a gut-busting McDonald’s double cheeseburger for a buck. Makes you want to cry in your beer … if you can afford it.

The Associated Press and CNBC contributed to this report.

Restaurants to Post Calories

http://www.nytimes.com/2008/01/23/nyregion/23menu.html

January 23, 2008
City Tries Again to Require Restaurants to Post Calories
By DIANE CARDWELL

New Yorkers wondering just how many calories they are consuming in each grande-size white hot chocolate at Starbucks (490) or Double Whopper with cheese at Burger King (990) could soon see those numbers printed alongside the price, according to revised regulations approved on Tuesday by the city’s Board of Health.

Under the rules, which officials rewrote after a federal judge struck down similar provisions in September, any chain that operates at least 15 outlets nationwide would have to display calorie content on their menu boards, menus or food tags — essentially wherever the restaurant lists the information that customers use to make their choices.

“Most people underestimate calorie content by a lot,” said Dr. Thomas R. Frieden, the city’s health commissioner, adding that he considered the rules a potent weapon in the crusade against rising obesity rates. “Even dietitians get a lot of it wrong.”

Dr. Frieden said his department’s research showed that consumers often make faulty assumptions about the calorie counts of items on a menu. But when they have the information, he said, they tend to choose food with fewer calories.

As a result of the regulations, set to go into effect on March 31, Dr. Frieden predicted that some restaurants will eliminate some of their offerings, like appetizers that top 2,000 calories.

Chuck Hunt, a spokesman for the New York State Restaurant Association, which successfully challenged the earlier rules in Federal District Court in Manhattan, said his group was considering suing over the revised regulations.

“It’s cumbersome, and it really isn’t going to work,” he said, adding that many operators of fast-food restaurants were franchisees who would not be able to easily afford to comply with the rules. He said that federal regulations designed to reduce obesity by listing calorie content on food in supermarkets had not kept the epidemic at bay.

In December 2006, the Board of Health approved the first set of menu-labeling requirements for chain restaurants, making New York the first city to do so.

The city, seeking to make the requirement less burdensome on restaurant owners, had limited it to those that had already disclosed calorie counts in some way. Some chains, including Wendy’s, White Castle and Quiznos, stopped providing the information at their restaurants in the city while they weighed how or if to comply.

Denny Lynch, a spokesman for Wendy’s, said that although the chain was in favor of providing the information, the new Board of Health regulations would be difficult to put in place because there were so many variations in their meals. It is almost impossible, he said, to accurately represent calories with a single number.

“For us, the idea makes sense,” Mr. Lynch said. “But now take the idea and put it into practice at the restaurant and it is complicated, very difficult to do.”

Wendy’s, he said, places a poster with the complete nutritional content of the various components of their meals as close to the cash register as possible. He said that was a better solution.

Representatives of White Castle and Quiznos did not return telephone messages seeking comment.

In the lawsuit filed by the Restaurant Association, Judge Richard J. Holwell ruled that the original regulation was pre-empted by the federal Nutrition Labeling and Education Act of 1990 because of the way the city had limited the chains to which it applied. In his decision, he provided a framework for the city to redraft its rules, which health officials say they closely followed.

The new rules will apply to about 10 percent of the city’s 23,000 restaurants, about the same number as would have been affected by the earlier version. The restaurants that will fall under the new regulation serve about one-third of the food eaten away from home each year, according to health officials.

“The real question for us is, is the industry going to become part of the solution or are they going to keep going to court to hide from the customers what they’re serving them?” Dr. Frieden said. “If your business model depends on keeping information from your consumers, that’s a problem.”