The CME block market went over $2.00 yesterday. On January 3, 2011 the market was at $1.3425. On March 3, 2011 exactly two months later, the market closed at $2.0075. This is an increase of 50% in just 2 months. How will this affect you?
For the average shop using 800 pounds of cheese/week this will equate to a $500 increase in the cost of cheese. $500/week increase! This average shop will probably see nearly a 15% increase in their cost of food.
On top of this increase we are seeing increases in flour, produce, and meats. Don’t forget increased driver compensation and fuel surcharges on your food deliveries.
Can we raise our prices when the big guys are selling $5, $8, and $10 pizzas?
I guess we can hope that the big guys have to raise their prices as well. Should be some great deals on used pizza equipment in the coming months.
Whats next, a $2.50 block market? What the h*@#, I'm sure we all have an extra $400/week to give to the cheese companies.(On top of the $500 we are already giving them)
Based on the fact that nearly none of the cheese produced is actuall traded on the CME, I think it is fair to assume that the cheese companies are not getting this $$. The large buyers (national chains, large distributors etc) have price contracts that run for extended periods of time insulating them from this nonsense. That does not prevent them from charging us higher prices and blaming the CME though. My guess is that it is the Sysco’s of the world that are pocketing this gain.
I paid $1.89 a pound from sysco this past week… they have some control over the price. I text my rep every week to ask him the cheese price because I am checking it against the price of another supplier… VERY IMPORTANT he knows this. Most weeks he has a better price because he wants the business… he is shipping me anyway so might as well make volume look good even if its at his cost. Every now and again the other guy is a few cents less or even the same and I give him the business for a week to keep sysco honest and on their toes.
I am kind of curious to know what others are paying keeping in mind cost can vary from state to state because of shipping… im in NY and my cheese comes from Wisconsin. Im sure I would pay more for a California cheese because of freight.
All of the cheese that the cheese companies(leprino, saputo, grande, etc.) sell is priced based on the block market. The syscos and romas of the world typically pay block + x for each truckload of cheese. The cheese manufacturers our going to claim that they aren’t any more profitable because the milk is more expensive. The dairy farmers claim they aren’t any more profitable because feed is more expensive. The bottom line is we are getting screwed big time!
Perfect… I think you are mistaken. I know that many companies do contracts for cheese with fixed prices over longer periods of time. They are not bumping up and down with the rest of us.
We are currently paying about 30 cents UNDER CME block as a result of one of those contracts.
Richard’s right. I have spoken to a buyer at my distributor who explained the contracts they have for several commodities to insulate THEMSELVES against the volatility of those markets: soybean oil, mozzarella cheese, chicken wings and parts, etc. They may sneak a few increases in on me here and there, but their contracts keep me from getting smacked up and down as bad as the CME goes. Usually, it is national fuel costs that gigs my cheese pricing.
I think he meant 5000 lbs combining the 3 units. Not 5000 lbs for each unit. Jeenkies . . . that would be worth setting your own contract with a distributor . . . really . . . 7.5 tons a week would get Saputo’s attention, or Grande, or any of them.
We’re not quite at the 25k to 30k average, but it would be nice to get there. The last several weeks we have averaged about $21,500 per unit. I am surprised at our sales because the unemployment in our area is in the 15% to 20% range. The big guys are running all the crazy specials, everyone has a $5 pizza and yet we have been breaking sales records every month. I guess its the cheese people keep coming back for?
The food cost will usually correlate with fuel prices because of the trucks involved in transporting the goods. It also has to do with the value of the dollar decreasing as our economy seems to be sinking again.
No doubt fuel cost is a factor, but it is a small one. The impact of a $2.00 per gallon increase in fuel on a truck moving goods 1000 miles is a penny per pound. Commodity speculation and weather is what is driving this mess.
