Cost of Goods Increases

Following on from a few other posts which led on to discussing price increases I thought I’d let you know some of the recent increases we have had to wear of late.

25kg Flour - went from $16.20 to $17.10 to $22.10
Diced chicken pieces - up 20% two weeks ago
Pepperoni - up 5% 2 months ago - up another 2.5% last week
Bacon - up 5% 2 months ago - up another 2.5% last week
Ham - up 14%
Canned pineapple pieces - up 10%
Spare ribs (uncooked) - up 10%

Then we have had the costs increases on plastic and foil products (containers etc) and not to mention our annual rent increases of 5% and utilities increases.

Outside of the canned pineapple all the others (food products) have been due to the worst drought in history which has covered the whole of Australia.

In recent years Western Australia has covered the shortfall of wheat production from drought affected areas in the eastern states but 2006/07 has seen the drought hit here and yield was down 30% causing a massive blow out in the cost of flour. Livestock which is fed grain products subsequently had price increases accordingly.

We are now in the process of re-pricing our menu to take into account these extra charges. It will be difficult for a while as we are on the upper level pricing as it is and any increase will be sure to drive some customers away, but I can’t go broke keeping these people with money in their pockets.

To minimise our increases we have been reducing the toppings on our pizzas and have had only 1 person comment and they are willing to pay more for the topping levels of past. I have even thought about reducing our best selling size pizza (large - 13 inch) down to a 12 inch size but the cost of replacing the screens would cost us almost $2,000 (we need 72 and they cost $26 each).

We haven’t changed our prices in the 14 months we have been in the shop and I think it was about 12 months or more prior to this that the previous owner put his prices up.

We were due to increase ours in early January but with other problems we had I ended 12 working hours (+) every day from mid November and didn’t get any time to set this in motion.

Dave

The light at the end of the tunnel always seems to be a freight train coming at full speed.

Your SCREENS are $26?

It looks to me like Austrailia is going through the same crazy mess Canada is. My biggest hit was in wages 40% increase in the 2 years I have been open.

Better believe it.

Just about everything commercial we buy is heaps dearer then in the US.

Remember we only have 20 million population compared to 301,000 in the US (projected population for 03/08/2007 US census). Our costs recovery and volume sales are far less hence the higher cost for items.

Our screens are a fine mesh base with a 3/4 inch rim. There is no mass market hence the $26 price tag.

Dave