Dough Woes

By Jon Campisi
Times Staff Writer

For the first time in more than three decades, Mitchell Lipkin is worried about the future of his business.
The 59-year-old baker, who runs Lipkin and Son’s Bakery at 8013 Castor Ave. in Rhawnhurst, is one of many business owners across the region, and the country for that matter, who have been hurting because of increases in the price of flour.
Flour, one of the main ingredients in baked goods. Flour, which can make or break your product.
And now flour, which has left operators of many bake shops and pizzerias wondering how to compensate for the increase in costs.
"I can’t raise (my) prices fast enough," Lipkin said of the need to offset the seemingly perpetual price increase, when asked if customers are paying more for his products since he has taken a financial hit.
Lipkin said he first noticed a significant change in pricing about a year ago. At the time he was paying about $9.50 for a 50-pound bag of flour. Now he’s paying $26 to $28 for the same quantity.
As the owner of a neighborhood bakery, Lipkin aims to keep his prices down — especially since many customers who frequent his shop live on fixed incomes — but lately that has been almost "impossible," he said.
"It’s very hard to keep your head above water," he said. "It’s horrendous, and all the bakers I talk to are in the same boat. They don’t know what to do. They’ve never experienced anything like this . . . it’s an impossible situation."
Another concern of Lipkin’s is that the hike in prices for baked goods will be compounded by the increase in fuel prices, thereby making shoppers a bit apprehensive when it comes to commuting to their favorite bakery or pizza shop.
Lipkin, who has lived in the Northeast for 35 years, understands there are risks involved in operating a business. And he realizes that small mom-and-pop shops will continue to lose a percentage of their business to supermarkets and chain stores. But that doesn’t mean the small shops cannot continue to thrive, especially with a loyal customer base.
"I can’t close, I’m a baker," he said. "I’m going to hang in there. I’m fifty-nine years old, I’m not going to get any better. This is the best I’ll be."
Another family-run business feeling the pinch of price increases is Schenk’s Family Bakery, at 7951 Verree Road in Fox Chase. The bakery, which has been at that location for 15 years, and in Olney before that, is run by Steven Schenk and his wife Christine.
"Flour prices are incredible. They’re adjusting weekly," Steven Schenk said, noting those prices used to adjust yearly with the wheat-crop rotation.
So, just what are the reasons behind the flour-price spikes? In John Dignam’s mind, the increases can be traced to a number of factors.
"It’s a combination of things," said Dignam, a salesman with BakeMark, a California-based company that is an international manufacturer and distributor of products and ingredients for the baking industry.
Dignam said those factors include a shortage of flour, a poor wheat crop around the country, and an increase in the sale of wheat overseas. Also, the current wheat crop, which has been planted, won’t be harvested until July or August.
While Dignam hopes the situation will improve in time, he can’t offer much consolation at the moment.
"We’re still not out of the woods. It’s just a very bad situation," he said.
Flour prices have shot up threefold since January, he added. A 50-pound bag of flour that sold then for about $15 to bakers now commands a price of roughly $55 to $60, according to Dignam.
"The burden has fallen on the bakers," he said.
And bakers like Schenk are feeling the pain. He’s not happy that the reality of the situation requires him to raise prices at his bakery, but he’s just as unhappy that he still can’t keep up with the escalating costs.
"It’s going to be a tough situation here," he said. "It’s very frustrating. You hear from the customers, they’re frustrated."
Schenk noted that the wheat and soy crops in the United States have also given way to more corn crops, since corn is being used to make ethanol as part of the nation’s push for production of alternative fuels.
Schenk’s hope is to get through the next six months, until the new wheat crops are ready for harvesting in the fall.
The only other comparable price increases in recent history took place during a sugar embargo in the 1970s, Schenk recalled. At that time, his father Carl was running the bakery at its previous location. The price of sugar rose from $10 a bag to about $70 a bag, he said, with the increase being attributed to a hefty tax placed on sugar cane imported from Cuba.
If the dramatic rise in the price of flour isn’t enough of a headache, increases in the price of natural gas, which is used to heat the ovens, do a lot to magnify the pain, he added.
"You’re really getting hit hard from a lot of different areas," Schenk said.
He and Lipkin acknowledged that the prices of items like flour most likely will never drop to previous levels — it’s simply a matter of inflation — although each baker hopes to see those prices stabilize in the near future.
If, however, prices continue to rise, "it would be the death knell of the small mom-and-pop bakeries," Lipkin said. "No matter which way we turn, we hit a wall, and it’s not by our doing."
But it’s not just the little guys who are taking a hit. Larger operations, such as Original Soft Pretzel Factory, which has headquarters at 7366 Frankford Ave. and 158 franchises from New York to Miami, are also coping with rising prices for flour, a staple of their products.
"We pride ourselves on the value, but we just about have to move the prices up," said the company’s president, Dan DiZio.
Since opening in 1998, the pretzel factory has sold four pretzels for a dollar. This past weekend, the pretzel company did make its move, now selling three pretzels for a dollar.
DiZio said the company’s hands are essentially tied.
"We’re not making any money at this point with the way it is," he said.
DiZio still considers the company’s offerings a bargain, but he also has fielded calls and received e-mails from pretzel customers who got used to paying what they had for years.
"I could give all the reasons why (prices) went up," DiZio said, citing escalating flour and fuel costs among the factors.
He explains that to frustrated patrons, but, just as people are dismayed by prices at the gas pump, they are less interested in hearing excuses and more demanding to know what’s going to be done about it.
DiZio, like others facing the same predicament, doesn’t have an answer. All he knows is that the round of price jumps has increased his monthly flour costs by about $30,000. That translates to $1,000 more per day since costs began rising last summer, he said.
While flour and fuel are two things that have risen in price, other items are costing more these days as well, DiZio said, including brown bags, boxes and even soda bottles, which are petroleum-based.
"People are frustrated right now," DiZio said. "Everything is going up. (And) it’s not the normal three-percent inflationary number."
Lipkin said some bagel shops have begun to close their doors, since they use the most expensive type of flour in their products — high-gluten flour rather than regular rye flour. Even rye flour, which was relatively cheap just a year and a half ago, is up to about $33 for a 50-pound bag, he said.
Aside from his worries about the dismay expressed by everyday customers, Lipkin dreads losing business from such organizations as churches and synagogues that have limited budgets for baked goods.
Right now, in Lipkin’s view, one thing’s for sure: "It’s an all-around perfect storm for people using grains." ••
Reporter Jon Campisi can be reached at 215-354-3038 or jcampisi@phillynews.com