Record fuel prices are pumping up other costs

By SCOTT NILES Courier staff writer

July 11, 2008 10:15 am

— OTTUMWA — Oil costs aren’t just pumping up prices at the gas station.
The increase in gasoline has also prompted a surge in other costs, including delivery and product fees.
“We have had to raise delivery costs some over the last couple of years, but you can’t raise it enough to offset the increase in the gas prices over a short term,” said Fairfield Flower Shop Inc. Owner Ed Oliver. “The last time we raised our prices was last winter.”
Delivery costs then were $3 in town and $4 out of town. Those prices have each jumped up $1. Now the minimum amount to deliver out of town is between $5-$8.
“If the prices keep going up, we will probably have to raise it again,” Oliver said. “The problem is we don’t want to chase away the customers with the delivery charges. We do have occasional complaints about the upped charges.
“It’s getting expensive to fill up the gas tank even for deliveries and I think most people understand that. Most people realize that they can’t pick it up and get it back any cheaper.”
Oliver said he has owned his floral shop for 22 years. When he first began, he did not charge for delivery. Later, following a minimum wage increase, Oliver established small delivery fees.
“Then it became the gas prices compounded with that,” he said.
“I’d just assume not have to, but there is no way to get around it. Something has to go up, whether it is the prices of the bouquet or the price of delivery. Otherwise we couldn’t make a decent profit.”
“We held it as long as we could but our increase went into effect June 1, 2008. We ended up increasing the delivery charge up to $5 for in town and $10 out of town,” said North Hy-Vee Perishables Manager Jamie Aulwes.
“The last time we had a price increase was in 2000. The cost went up to $3. Since that price increase, gas has gone up by 277 percent. We have only raised our delivery charges by 67 percent. I think that is pretty decent,” he said.
Though the delivery charges have increased, Aulwes said it really has not impacted business in the store’s floral department or any department.
“We have noticed that people only have so much disposable income,” he said. “But when it comes down to a special delivery, they will pay for it.”
Aulwes said he has not heard of any complaints over the increased fees.
“We have to account for the cost of our products that come to us, pork and beans all the way up to produce. Gas prices have increased all costs of products as well as delivery. But, I think we do a pretty good job at absorbing some of those price increases,” he said.
“We actually lowered our menu prices because we know consumers are trying to watch their budget. It seems like everyone is trying to gouge the consumer,” said Ottumwa Domino’s Pizza Owner Stuart Bjerke. “We only raised the delivery charge by a quarter since last fall.”
He said it was a necessity to do so to help reimburse the delivery drivers for the gas they put in their cars.
“All of them drive their own cars, so it’s a benefit for them,” Bjerke said.
“I’m pretty sure it’s because we didn’t raise menu prices at all and we only raised delivery by a quarter. I’m sure that factors into it,” Bjerke said. “I’m sure if we would raise menu prices or the delivery costs more, then it would affect the drivers, too.”
He believes a few people would think the increase counts in the price and a few wouldn’t want to spend that much money with the tip.
“I don’t want to really raise our delivery costs again if I can get by without doing it,” he said.
“But, gas prices have just eaten quite a bit of our profits now. Right now we are trying to take the brunt of it,” Bjerke said. “But if gas prices keep going up, we are definitely going to have to look at raising prices.”
He said as gas prices go up, their raw material costs go up.
“We pay 35 percent more than we did four years ago,” he said. “It started about last year just before summer hit and has been gradually increasing since.”
Bjerke said his decision on whether to raise menu and/or delivery prices again would depend on how bad of a hit he is willing to take on the profit end.
“When it starts to significantly impact profits, then maybe, not that it hasn’t, but I just don’t think everyone can keep gouging the consumers,” he said.
Scott Niles can be reached at (641) 683-5360 or via e-mail at sjniles@mchsi.com.

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