Against the Grain

0

Bagel makers around Los Angeles these days feel like their money is disappearing into a hole.

They’re eating higher costs of flour for now, but soon they’ll have to raise prices.

Wheat prices have been climbing in the United States since the second half of last year. The cost has doubled since May, this month heading above $11.50 a bushel. And there are no signs of slowing, experts said.

Expensive wheat means expensive flour, which in turn means more expensive bagels.

“We are absorbing the cost increases for flour, which are almost three times what we were paying one and a half years ago,” said Sonny Brody, the owner of the locally based Bagel Factory, which has three locations around Los Angeles and Torrance. “We are going to have to pass it along to our customers eventually.”

His bagels currently sell for $7.86 a dozen or 85 cents each, but that might need to be substantially increased if wheat prices continue to rise, he said.

For now, Brody has stopped drawing a salary from the company he founded almost 40 years ago.

Jason Tarnol, owner of the Bagel Broker in West Hollywood, was paying about $12 per bag of flour in September: Now he is paying $18. He goes through 45 bags of flour daily, so his flour expense has risen $270 a day. Meanwhile, customers still pay less than a dollar for his circular product.

“I’m dealing with it and I’m eating the cost right now,” Tarnol said. “But I might have to raise the price because I will have no other choice.”

At the Brooklyn Bagel Bakery on Beverly Boulevard, partner Richard Friedman expects the company will have to raise prices for its retail and wholesale customers in March, when its current flour contract runs out.

Friedman has been in the bagel business for 25 years and he has never seen wheat prices rise so dramatically and so quickly.

“I don’t remember there ever being this big a jump,” he said. “Usually it is up and down. There isn’t any up or downs now; it is straight escalation.”

Last year he saw costs increase because of fuel, but the cost of ingredients is even worse, he said. “It’s killing us.”

Small retailers are the first to feel the effects of the wheat price increase, which is a worldwide issue resulting from shortages due to drought, demographic changes, and farmers replacing wheat crops for ethanol-based corns to receive government subsidies, said Robb Mackie, president of the American Bakers Association, an organization in Washington, D.C., that represents the grain-based foods industry in front of Congress, state legislatures, and regulatory authorities.

Large companies like Kellogg’s and Sarah Lee Corp. have jacked up prices on their baked goods, and consumer impact is about to get larger, Mackie said.

Brody of the Bagel Factory is trying to keep customers loyal with consistent prices and hopes he can hold out for a year.

“I went into the bagel business because I thought it was a good way to make a living,” he said. “But this is unbelievable.”

No posts to display