Cheese prices rose 20% over last year and they're pushing against restaurants' budgets.
Pizza chains are raising prices to handle the growing costs.
Dairy plants were hit by the Omicron variant, leading to decreased production.
Hot, gooey cheese is critical to the ideal slice of pizza, but it's getting pricier for chains to provide.
Papa John's cited rising food costs up 18% in the quarter, led by cheese, in a second-quarter earnings call. Commodity costs, especially cheese and wheat, will likely remain high in the next quarter, CFO Ann Gugino said in the same call. The chain has increased prices between 7% and 8% since the beginning of 2022, with plans to continue driving up prices as needed.
CEO Rob Lynch called inflation in the quarter "more than I've ever seen in my career." Cheese prices remain volatile, in part thanks to high milk prices, according to Cheese Market News.
No beloved pizza chains seem safe. Midwestern chain Casey's General Store raised prices three times between October 2021 and May 2022 because of inflation on supplies, especially the cost of cheese, the Des Moines Register reported. Domino's said in a second-quarter earnings call that as of July it had raised prices 6% since the beginning of the year. Earlier this year, CEO Ritch Allison cited rising prices for cheese and wheat as reasons for potential increases. Little Caesar's raised the price of its famous $5 Hot-N-Ready pizza by 11%, its first increase in 25 years.
Even New York City's dollar slices are feeling the crunch. Some customers are reporting their regular slices to have less cheese and marinara sauce than they used to, The New York Post reported. Other local spots opted to raise prices, killing off a New York City staple.
Cheese prices paid by pizza restaurants and other businesses are up over 20% over the same time last year, according to CPI data. This is partially a result of the Omicron variant of Covid-19 hitting dairy plants early in 2022, slowing production.
The squeeze on cheese producers — passed on to pizza chains and later customers — is a symptom of rising prices across the economy. Inflation is at a record 41- year high. Overall food prices are up 10.4% year-over-year, according to federal data. Other chains are raising prices as other ingredients become more expensive, too.
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