Business editor

mbradwell@observer-reporter.com

As a new owner of a restaurant that features pizza as one of its main menu attractions, Howard Powell didn't want to alienate customers by raising prices, but with the price of flour escalating, he had to think fast.

Powell purchased Brothers Pizza in Washington from Felix and Maria Magnotta on March 1.

He noted that about two weeks before he bought the business, a 50-pound sack of flour was selling for between $15 and $16. When he made his first purchase a couple of weeks after taking over, flour had jumped to $22.95 a bag.

"Now it's between $28 and $30 per bag," Powell said recently, adding that he had heard from one supplier who told him that he was reducing the price to $24.95.

But Powell was already ahead of the curve. About three weeks ago, he said, he decided to lock in when the price was at $24.95 and instead of purchasing for the next two or three weeks, bought enough flour to last the next three to four months.

"The last thing I wanted to do when I came walking through the door was to raise prices," said Powell, who noted that cheese, another main ingredient for his pizzas, had gone as high as $2.85 per pound, recently fell to $2.54 and appears to be holding steady. He said the previous owners raised the price of pizzas and strombolis last fall.

Like Powell, Sue Cottrill, owner of Four Star Pizza on Jefferson Avenue, Washington, also locked in a price for flour she said will hold until July. She added that her flour costs have risen by nearly 50 percent. At the same time, Four Star also has seen price increases for the fresh cheese it purchases for pizzas.

While Cottrill said Four Star soon will levy a "modest" price increase, she said she actually began purchasing a slightly more expensive cheese.

"If I had to charge more, I wanted my quality to go up," she said. Four Star, which instituted a fuel surcharge for deliveries in 2005, had to increase that charge again when gasoline went past $3 per gallon earlier this spring, she said.

While he may deploy his flour-buying strategy again, Powell, whose menu of other Italian dishes depends on pasta and rice, added that he's now closely watching the price of macaroni and rice products to determine whether he should lock in a price and stock up on those items.

Just one block up from Brothers Pizza, Joe Vucic Jr., owner-operator of Joe's Bakery at 123 N. Main St., has seen similar increases in both high-gluten and regular flour as well as high-fructose corn syrup, soy shortening and plastic bags. On top of that, he said, "some of my suppliers have a fuel charge."

A year ago, Vucic said, he was paying $10.50 for a 50-lb. bag of high-gluten flour that now costs him $29. Regular flour, which was $9.75 a bag this time last year, is now $25. Soy-based shortening, which cost $17 for a 10-lb. cube last year, is now between $40 and $50, he said, adding that the price of eggs also has escalated rapidly over the past year.

The only ingredient that hasn't gone up is sugar, Vucic said, adding that the reason is that manufacturers are working through stockpiles. He said his sugar supplier has locked in a price for the next six months.

Despite the respite from a sugar price increase, Vucic said he's had to raise prices on his baked goods between 20 and 30 percent, depending upon the item.

Like Powell, he's heard from a supplier that the price of flour could be coming down as farmers plant more wheat in hopes of capitalizing on more demand for the grain.

In the meantime, Vucic said he's been trying to corral costs by more closely controlling his output, noting that he always gears up for his busiest days, which are Friday and Saturday. He's also cut back on the linen service he uses and dropped a telephone book display ad. He now levies a fuel surcharge for deliveries made outside of the city.

The one area Vucic said he won't compromise is his ingredients, adding that if he offered lower quality products, customers would stop coming to the bakery.

The plight of bakers and pizza-makers fighting higher across-the-board ingredient and fuel costs isn't just an American phenomenon, Cottrill noted.

While she and her husband sold the remainder of their U.S. Four Star holdings some time ago, she continues to work with the 37 Four Star stores in Ireland, where she said managers are seeing monthly increases in ingredient costs and were recently forced to levy a fuel surcharge for deliveries.

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