Pizza Hut, Papa John's hike prices amid ethanol flap

Nation's Restaurant News,  July 2, 2007  

Tags: Pizza Hut

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CHICAGO -- Ethanol-related commodity cost inflation is forcing menu price hikes and plans for potential increases, especially among cheese-dependent pizza chains.

Cheese, beef and chicken are particular problem areas, with at least some of the inflation linked to biofuel makers' growing demand for com, a key animal feed ingredient.

Pizza Hut and Papa John's International have raised the prices of their cheese-only pizzas at franchisor-owned branches to match one-topping pizzas. Independent pizzerias also have raised prices.

Domino's Pizza so far has held the line on pricing, but may be forced to make increases. "Ultimately, if the price of cheese and other cost items continue to rise without eventually falling, we and all other consumer companies would have to raise our prices," said Lynn Liddle, a Domino's executive vice president.

The benchmark price of block cheddar cheese recently reached $2.08 a pound, a 78-percent increase over year-ago levels. One analyst predicted that prices could reach $2.15 to $2.20 a pound this summer. Corn is selling for about $4 a bushel, twice as much as usual.

The U.S. Agriculture Department last month cited ethanol as a factor in a year-to-year spike of 8 percent to 10 percent in the cost of breakfast foods. The National Restaurant Association asked the U.S. Senate to look into the matter.

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