Pandemic takes bite of NYC $1 pizza-slice business
NEW YORK — For two decades, 99 Cent Fresh Pizza, a New York City chain, has charged $1 for a slice of cheese pizza, luring anyone who needed to fill up for cheap in a notoriously expensive city, from construction workers to students to late-night partiers.
But the pandemic has thrown its business model, which relies on heavy foot traffic in office districts and tourist hubs, into an existential crisis. With inflation rising at its fastest pace in a generation, prices for just about everything — from pizza boxes to pepperoni, flour and oil — have skyrocketed.
The chain’s owner, Mohammad Abdul, is now agonizing over whether to raise prices for the first time since opening in 2001.
“Maybe I can raise it 5 cents,” he said. “Some customers don’t have the money to buy the pizza. I’m thinking how low can I sell it and help the customer.”
Abdul is one of the last holdouts in New York City’s fiercely competitive dollarslice pizza scene, where a growing number of chains have raised prices or closed locations permanently, in part because some can no longer pay their rent. No other city in the U.S. has a dollar-slice culture quite like New York, which took off in popularity after the 2008 recession.
Pizza businesses nationwide were hugely successful during the pandemic, well positioned to handle takeout and delivery. But inflation, pervading nearly every aspect of the economy, has been especially threatening to dollar-slice operators in New York, which maintained razor-thin profit margins by depending entirely on customer volume and cost efficiency.
Many owners of dollarslice businesses, including those who raised prices, said their revenues are half of what they were in 2019, before the pandemic.
In November, inflation jumped to the highest level in nearly four decades, fueled in part by a 6.8% increase in food prices, according to the most recent Labor Department report.
Restaurant prices in the New York area last month had their largest year-overyear increase since 1987, according to the Bureau of Labor Statistics.
In a potential bellwether for the universe of $1 goods, Dollar Tree also announced last month that it would raise prices of most items to $1.25 by the end of April to offset wage increases and higher distribution costs.
For pizzerias, each ingredient has become more expensive for its own reasons, economists say.
A severe drought in parts of the U.S. and Canada decimated wheat crops, driving up flour prices. Worker shortages at meat-processing plants led to higher prices for pepperoni. Pizzeria owners buying canned tomatoes from Italy or red chile flakes from India face higher shipping costs.
A winter freeze in Texas earlier this year curtailed the production of resin, a raw ingredient in plastic straws and packaging materials like shrink wrap. And in perhaps the biggest shortage of all for pizzerias, reliance on food delivery during the pandemic prompted a surge in demand and increased prices for pizza boxes, paper plates and takeout containers.
The saving grace, business owners say, has been cheese, typically the biggest food cost for any pizzeria. Average block cheese prices are down from last year’s unusually high peaks, which had been propped up by government programs to help dairy producers.
Stuart Kull, a sales consultant at the Italian food distributor Ferraro Foods, said a lack of truck drivers has exacerbated rising food prices to the point where he has had to personally drive ingredients to customers. Kull sells primarily to pizzerias in Manhattan, including dollar-slice chains.