Ante up: Gas prices affect business
Published 12:01 am Sunday, May 1, 2011
NATCHEZ — The days of running a quick errand across town or delivering one pizza at a time are over for the time being.
Drivers are digging deeper into their pockets as gas prices push $3.80 for unleaded and $4 for diesel at some stations, and delivery business owners say they are absorbing as much of the cost as possible, while others are passing the pinch on to customers.
Darrell Boles, owner of Sonny’s Pizza in Ferriday, said he recently had to break down and add $1 to his $2 delivery charge.
“You can’t keep drivers running all over for $2,” Boles said. “There’s no way we can deliver without (the $3 charge).
“Once you take a couple deliveries, you won’t come out (with profit),” Boles said. “We are trying to line up two or three deliveries going one way and combine them.”
Boles said he hopes the pain at the pump doesn’t last much longer.
“Food cost is up 25 percent since August, and that’s my profit,” Boles said. “So we have to go up a little on prices, but there is a stopping point. We can’t keep going up.”
Deliveries from food suppliers to Sonny’s Pizza locations are milking Boles as well.
“Right now there is a $15 to $20 surplus on deliveries,” Boles said. “These gas prices affect everything — drivers and food costs.”
Boles said gas prices even affect the cost of cheese, which jumped from $56 a case to $86.
“That’s 20 cases a week at $30 extra a case,” Boles said. “That’s big money. You can’t stay in business if you can’t absorb the price that keeps going up and up.”
J.E. Hicks Distributing owner John Hicks compared his food distribution company’s current gas expenditures to what he was paying one year ago.
“We are spending $3,000 a month more than we were this time last year, and that’s just for fuel costs,” Hicks said. “That’s not counting the fuel surcharges from our suppliers on merchandise being delivered.”
Like Sonny’s Pizza, Hicks said they must pass on a surcharge to customers.
“We have to pass the minimal surcharge of $5 per delivery, unless the delivery is under $300; then it’s an $8 charge. But overall, we are having to absorb the $3,000.”
Hicks said diesel is 99 cents a gallon higher this month than April 2010, and regular gasoline is 81 cents a gallon higher than April 2010.
Hicks approaches a solution to the issue like other delivery business owners.
“We try to combine some routes to minimize (deliveries),” Hicks said. “Sales people were calling on customers in-person twice a week, now they are going once, or just calling them on the phone, trying to limit their fuel costs.”
Hicks said he thinks the situation might get worse before it improves. He said his company is falling in line with other businesses like his.
“We just follow the markets and industry trends,” Hicks said. “We didn’t impose a fuel surcharge until other vendors in other markets did, then we followed suit. We did not want to be the first to impose charge. We wanted to see what every else is doing.”
Gas prices are also affecting Hicks personally, he said, taking time he could be spending at home or the office. He is currently trying to open a new territory in St. Francisville. Hicks said before gas prices inflated, he would drive back and forth when trying to open new territory, but not any more.
“I’ve rented a space at a RV park, and I’m staying down here, trying to build this territory,” Hicks said. “I’m staying a few days a week, and then coming back to the office.”
Hicks said he hopes the public realizes that fuel prices affect the cost of virtually everything people consume.
“All your groceries, everything, is influenced by fuel costs,” Hicks said. “It takes fuel to produce certain products, it takes fuel to ship it, it takes fuel to package it.”
Brenda Zerby, owner of Moreton’s Flowerland in Natchez, said when it comes to deliveries, her business is eating the extra costs at the pump.
“Right now we’re trying to just maintain everything as normally as we can,” Zerby said. “We are feeling the crunch and absorbing the brunt. I don’t want to pass the costs along to customers if I don’t have to. Hopefully the gas prices will level off before that happens.”
Zerby said she and her staff are more cognizant of when deliveries leave, combining as many orders as they can to save trips.
“We are fortunate that we’re not like other parts of country, where the gas prices are really outrageous,” Zerby said. “We have to hope we will see a leveling off. Until that time, we are keeping things as normal as we can.”