New York pizza hit by rising cost of ingredients

Lou Barbati, a large and intimidating Sicilian American of very few words, watches closely as a giant tray of tomato sauce, bubbling cheese and golden dough is slid deftly from the top shelf of a giant oven in front of him.

Barbati is the proprietor of L&B Spumoni Gardens, a Brooklyn institution, where crowds flock on warm summer nights to feast outdoors on thick square slabs of Lou’s famous Sicilian pies and to quench scalded mouths on spumoni, a type of old-fashioned Italian ice cream.

But Barbati’s customers are not as happy as they used to be: the famous pizzeria has been forced to increase the price of a pie by US$1 and a slice by US$0.25, or 20 percent, to US$2.25 as the price of ingredients has gone through the roof.

“When this place opened in 1939, a slice of pie was 10 cents,” Barbati says, with an edge of gruff indignation. “So it has gone up over the years. But we had to raise it a lot recently.”

The price of a slice of pizza has become a reliable economic indicator in New York. A slice of pie is the hot meal that everyone in the city can afford, from the bums on the streets to the bankers on Wall Street. But perhaps not for much longer.

Barbati’s daughter Toni, 44, who does the books for Spumoni Gardens, is finding it hard to keep pace with the rapid price inflation she faces when dealing with suppliers.

“You would not believe how expensive a sack of flour is today. Last month we were paying US$59 for a 100 pound [45kg] bag, whereas last year it was US$22.50. It has more than doubled. The price came down a little last week at the prospect of massive wheat production in India but still, prices have gone up by almost 100 percent,” she said.

“This past week we paid US$42.50 a bag, so it has come back from the highest point but is still way more than we are used to, and we expect it to go up again. I’ve never known prices go up like this,” she said.

And it’s not just the price of flour that’s forcing up the price of a New York slice.

“The moozzarell [sic] was US$2.79 a pound this time last year and now it’s US$3.83 — that’s up by about a third,” she said. (Toni Barbati pronounces the cheese Europeans know as mozzarella in the trademark parlance of Brooklyn Italian-Americans.)

The price of tomatoes is up too, meaning every ingredient in a slice of New York’s famous pizza has shot up. Think the credit crunch is bad? On the streets of New York the effects of the pizza crunch can be seen on every corner.

“Some places are charging like US$4 or US$4.25 now for a slice in Manhattan,” Toni Barbati says. “This time last year you would get a slice for US$1.75 or even US$1.50, but not any more.”

Astrit Kalbaj, owner of Ronald’s Pizza Cafe, on Manhattan’s Lower East Side, agrees: “I would say that ingredients are up overall about 70 percent. Flour has more than doubled; everything else is up 30 or 50 percent. Everybody is putting prices up of slices and pies.”

The price of flour and other staples is rising in the US to unaffordable levels for many, deepening the economic slump already devastating many areas of the country. Sam’s Club, the discount warehouse chain owned by Wal-Mart, last week started rationing sacks of rice to four per customer, such is the concern that consumers will soon start panic buying and hoarding in an effort to beat food price inflation. Costco, a similar discount club retailer, is also reportedly limiting the number of bags of rice each customer can take home.

Wheat, though, one of the principle raw materials relied upon by the pizza making industry, is a different story. In the past two months the price of wheat on the commodities markets has plunged close to 45 percent, yet the price of flour in the US hasn’t come down by anywhere near as much while the price of a slice of pizza continues to rise.

“There is always a lag between prices in the commodities markets and the price paid in the grocery store, or the pizzeria,” says Alan Brugler, a commodities industry analyst and consultant based in Omaha, Nebraska. “The big increase in the price of wheat has done what it was supposed to do: It has attracted more production, so the outlook for the future is better and prices are coming down.”

But he warns that the price of a slice of pizza is unlikely to come down any time soon.

“What tends to happen is retailers train their customers over time to accept slowly rising prices at the expense of margin,” he says. “When costs first go up they don’t raise prices and sacrifice margin in the hope that costs will come down quickly. So then when prices do come down the retailer enjoys higher margins to make up for his sacrifice.”

Also, the price of wheat accounts for just a fraction of the cost of flour. The high oil price — at almost US$120 a barrel — means diesel fuel for transporting millions of tonnes of flour all over the US is at an all-time high, adding greater inflationary pressure to the humble slice.

Tour operator Tony Muia is a Brooklyn-based tour operator who runs the “Slice Of Brooklyn Pizza Tour,” a bus trip to some of New York’s most fabled pizza joints and movie locations.

He says: “I remember when I was a kid in school I would get two slices and a soda for US$2. That was my lunch everyday in 1979. For years the price didn’t go up; we were stable. Now the industry is being gouged.”

Back in Bensonhurst, just around the corner from the street where John Travolta strutted in a white suit in Saturday Night Fever, Barbati watches as another tray of mouth-watering Sicilian pizza is hacked into squares.

“I try not to think about the money,” he says. “I leave that to the kids. For me it is all about a good pie and a good time.”