Smaller food cos. prepare for a high-priced holiday season | Business

NEW YORK — This year, holiday celebrants in Hilo, Hawaii, might notice something different about Short ‘N Sweet Bakery’s traditional Yule Log cake.

Maria Short usually makes her popular $35 bûche de Noël with two logs combined to look like a branch. This year, thanks to skyrocketing prices for eggs, butter and other items, she will shrink down to a single Christmas log.

“It’s the same price, but smaller,” he said. “That reduces size and manpower.”

Higher prices are hitting everyone this holiday season, but food vendors are seeing some of the biggest increases.

Small businesses with food-focused holidays like Thanksgiving and Christmas are bracing for a tough season.

At the wholesale level, egg prices are more than triple what they were a year ago, milk prices are up 34% and butter 70%, according to data from the US Department of Agriculture. Companies are also they are paying more for everything from packages to labor.

Many homeowners are raising prices to offset the higher costs. But raising prices too high also risks driving the crucial buyer away from the holidays.

So companies are adapting: adjusting the way they make products, changing gift basket components, and adding freebies instead of offering discounts, among other steps.

Maria Short says that even for Hawaii, where the cost of living is among the highest of any US state, the price increases are “drastic.”

For example, he says, Short N Sweet Bakery is paying $123 for a carton of eggs that cost $42 in October of last year. A box of butter that was $91 in October; it’s $138 this year.

Among the ways Short is cutting costs, it will use a generic box decorated with stickers instead of a custom box for its desserts. and he asked for a cookie printer instead of having bakers make icing by hand, to save on labor costs.

Sarah Pounders, co-owner of Made in TN, a Nashville-based retailer of locally made food and gifts, says local vendors who make the items she sells face higher prices. The cost of the butter needed to make cookies is five times the price of a year ago, and the cardboard packaging is double.

Made in TN has raised some prices and is selling other items for less profit. Customers are already paying more for things like gas, clothing and cars, as well as services like eating out and travel, so they aren’t spending as fast as in years past. They are noticing the price increases, he said.

“If bread goes up 50 cents, you’ll keep buying bread,” Pounders said. “But if it’s an impulse buy or a luxury specialty item, if chocolate covered cookies are $1, you might think twice.”

Price increases are not an option for your popular gift basket business.

Corporations often have a $50 cap and hotel events like weddings can have a $20 sweet spot. So Pounders has made adjustments. In some cases, it has replaced a $20 bag of coffee, which costs $3, with less expensive hot chocolate. Or put one less candy bar in the basket.

You’re also buying more items that might sell year-round and less seasonal inventory like peppermint bark and hot chocolate bars.

“Every year is a guess, and the economy makes it even more volatile,” he said.

Eric Ludy, co-founder of Cheese Brothers, a Wisconsin online provider of cheese and gift baskets, faces a tough task this holiday season as he tries to offset higher packaging, labor and cheese costs. Half of his business comes in the weeks between Black Friday and Christmas.

Cheese Brothers has nominally increased the prices of its cheese: A block of cheddar will cost customers $7.50 instead of $7, for example. Rudy says that she, too, will be relying less on discounts this year and more on gifts and other gifts.

One small bet Rudy is making is to increase the spending limit for free shipping from $59 to $70.

“People buy enough to get free shipping, it’s a great motivator,” he said. He hopes that increasing the shipping price could drive the average order up to $70. But it could also prevent people from clicking the “Buy” button.

“We could start to see people pull back and not buy as much,” he said. “It’s a delicate balance.”

Americans eat an estimated 40 million turkeys during the holidays, according to industry group The National Turkey Federation. But turkey purveyors face a double whammy this Thanksgiving: higher prices plus a bird flu epidemic that is shaping up to be one of the worst on record.

Kevin Smith, owner of Beast and Cleaver, a butcher shop in Seattle, Washington, sources his turkeys from small, local farms. He says he’s paying $6 a pound for turkey this year, up from $3.80 to $4.20 last year. Plus, he only plans to sell 150 turkeys this year, up from 250 last year, due to shortages caused by bird flu.

Still, Smith doesn’t plan to charge more for the turkey than he did last year: $9 a pound. He says he has a “solid customer base” willing to pay for more local, sustainable turkeys, but there’s a limit.

“We don’t want people to have to pay $12 a pound for turkey,” he said.

It is raising the price of other items, such as ground sausages and pâtés, to offset higher poultry costs. And while the rush of panic buying during the pandemic has subsided, you’re still hoping for a good holiday season.

“We are still very busy,” he said. “It’s just a more stable job.”

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