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Restaurants may raise menu prices if food costs soar

By Crystal Price
EL PASO, Texas -- Restaurants in the Borderland are feeling the pinch as food prices climb to record levels.

According to a new report from the Bureau of Labor Statistics, overall food costs rose .4 percent in February. This is the highest food prices have gone up in more than two years.

Kipper Gray, owner of Kipps Cheesesteak in downtown El Paso, said the soaring costs could soon bite into his business' budget.

"Whether it's cheese or meat or vegetables -- everything is going up," Gray said.

Gray said 12 months ago he was paying $39 for a 20-pound case of provolone cheese. But now he has to pay $56 for that same amount.

"We've also seen increases in the price of beef - 15 to 20 percent," Gray said.

Gray said the cost to dress the sandwiches has also gone up, as they pay almost $10 more for a 50-pound sack of vegetables.

"When you see increases like that across the board in basically every single sector that you use, it's a little frightening," Gray said.

Gray said if the prices stay the way they are now, he may have to adjust menu prices.

"It's going to be something small, and we can make up for it in volume," Gray said.

But Gray said he is taking other cost-saving steps first.

For instance, he is now serving bacon in a more cost-effective way.

"We've started cutting the bacon up in little pieces," Gray said. "By switching just the type of the cut , we were able to save some money and avoid raising prices in that particular instance. But there's always only so much you can do."

Gray said he is hoping the prices will go down soon, but if they don't then the costs could be passed along to the to consumer.

"I guess we'll wait to the very last minute," Gray said. "We'll do it if it's absolutely necessary, and that's the last option."

Tom Fullerton, professor of economics at UTEP, said the reason behind the rising cost boils down to harsh weather conditions and a supply disruption.

"It's coming as a result of supply disruptions in the forms of droughts and freezes," Fullerton said. "These are sort of the perfect storm of bad luck in terms of agricultural yields. That always translates into higher prices and that's what we're facing this year."

Fullerton said the foods most hit by the price increases are popular breakfast foods - like bacon, sausage, hash browns, and orange juice.

"For an average $10 breakfast meal at this point, it depends on the restaurant, but the prices have probably gone up anywhere from 50 cents to a dollar," Fullerton said. "It just depends on how much the increase cost of acquiring those materials is passed on from the restaurant to the customer."

Fullerton said consumers can expect to pay more for food for least another six months, before the prices go back down.