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For two decades, New York-based chain chain 99 Cent Fresh Pizza has been charging $ 1 for a slice of cheese pizza, attracting anyone who needs cheap fuel in a notoriously expensive city, from construction workers to students to night parties.
But the pandemic has thrown his business model, which relies on heavy pedestrian traffic in office districts and tourist centers, into an existential crisis. With inflation rising at the fast pace of a generation, prices for almost everything – from pizza boxes to hot peppers, flour, and oil – have skyrocketed.
The chain’s owner, Mohammad Abdul, is now considering raising prices for the first time since it opened in 2001.
“Maybe I can add 5 cents,” he said. “Some customers don’t have the money to buy the pizza. I think about how cheaply I can sell it and help the customer. “
Mr. Abdul is one of the last holdouts in New York’s highly competitive dollar pizza scene, with a growing number of chains raising prices or permanently closing locations, in part because some can no longer pay their rent. No other city in America has a dollar-slice culture similar to that of New York, which gained popularity after the 2008 recession.
Pizza companies across the country have been extremely successful during the pandemic and are well positioned to handle takeaway and delivery. But inflation, which pervades almost every aspect of the economy, was particularly threatening to dollar-slice operators in New York, who maintained razor-thin profit margins by relying solely on customer volume and cost efficiency.
Many dollar-slice business owners, including those who raised prices, said their earnings were half what it was in 2019, before the pandemic.
Inflation rose to its highest level in nearly four decades in November, fueled in part by a 6.8 percent rise in food prices, according to the latest Labor Department report.
Last month, restaurant prices in the New York area saw the largest year-over-year increase since 1987, according to the Bureau of Labor Statistics.
A potential guiding star for the universe of $ 1 merchandise, Dollar Tree also announced last month that it would hike the prices of most items to $ 1.25 by the end of April to offset wage increases and higher distribution costs.
In pizzerias, every ingredient has become more expensive for its own reasons, say economists.
A severe drought in parts of the United States and Canada decimated wheat crops and drove up flour prices. The labor shortage in the meat processing plants led to higher prices for hot peppers. Pizzeria owners who buy canned tomatoes from Italy or red chilli flakes from India have to expect higher shipping costs.
A winter frost in Texas earlier this year restricted the production of resin, a raw material for plastic straws and packaging materials such as shrink wrap. And in perhaps the greatest scarcity of pizzerias, reliance on food deliveries during the pandemic resulted in spikes in demand and prices for pizza boxes, paper plates, and takeaway containers.
The salvation, business owners say, was cheese, usually the biggest food price for a pizza place. The average block cheese prices are below the unusually high highs of last year, which were supported by government programs to support milk producers.
However, the US Department of Agriculture is already forecasting rising block cheese prices for next year, also because a drought in California is expected to reduce milk yield.
If cheese prices rise for an extended period of time, it would be “the straw that breaks the camel’s back on the dollar pizza business,” said Eli Halali, co-owner of 2 Bros. Pizza, a chain credited with it drove the dollar slice into mainstream popularity in the 2010s and spawned countless imitators.
With cheese prices stable, which is nearly half the cost of groceries at 2 Bros., the chain is still charging $ 1 for a slice of cheese in six of its nine locations, even though newer stores with a less established customer base have raised prices to 1.50 $. 2 Bros. is “committed to keeping our regular piece at $ 1 for as long as possible,” Halali said.
Stuart Kull, a sales advisor at Italian grocer Ferraro Foods, said the shortage of truck drivers made rising food prices so worse that he had to personally deliver the ingredients to customers. Mr. Kull sells primarily to Manhattan pizzerias, including dollar slice chains.
Some deliveries that used to get to customers at 9 a.m. now arrive at 7 p.m., Kull said. And when trucks don’t show up in the morning, restaurant owners look for emergency supplies for the day and pay much higher prices.
Some dollar slice companies cut costs by buying preformed dough, Kull said.
In the breakneck world of cheap pizza, owners have also accused rivals of illegally paying low wages and topping pizzas with counterfeit cheese products.
The very concept of charging $ 1 a piece is controversial in pizza circles. Critics call it a race to the bottom, arguing that dollar pieces devalued the famous New York pizza scene and led to the closure of pizzerias, which cost $ 2.50 each.
Dollar slice operators say they exposed the mediocrity of these midrange slices and are an essential source of food in an increasingly unaffordable city. The first dollar-slice pizza shops opened near the homeless shelters.
“Any city that has a hard time paying the rent and still making some money is damn good,” says Scott Wiener, who runs a pizza tour company in New York.
While exact totals aren’t available, dozens of restaurants across New York City sell pizza slices for $ 1.
The dollar-slice stores that still exist have largely relied on reduced rents from landlords.
Hakki Akdeniz, the owner of Champion Pizza, said some landlords threatened to sue the rent and forced him to close three locations during the pandemic.
“It hurt me the day I closed,” he said. “I was crying. It’s not about money. It’s been about eight years of hard work building my business.”
His location on Essex Street on the Lower East Side survived because the landlord gave him a discount to stay in the 200-square-foot kitchen. At this location, Mr. Akdeniz sells approximately $ 1,200 to $ 1,500 in pizza daily.
On a Wednesday at lunchtime, the counter at a nearby charter school was teeming with middle school students waving dollar bills for a slice of pizza (for adults, a piece of cheese costs $ 1.50 before 8 p.m.).
A man started asking customers in line to buy him a slice of pizza and Mr. Akdeniz gave him two free slices. The man said he lived in a homeless shelter and was looking for a job. Mr. Akdeniz, who was once homeless himself, suggested that the man put up menus in apartment buildings for his business.
“Lots of people suffer,” said Akdeniz. “I want to open a pizzeria where only homeless people work for me.”
But optimism is fading for owners like Abdul Batin, who runs a chain called 99 Cents Hot Pizza.
He has already closed three of his nine branches during the pandemic and is considering closing three more, which would lay off at least 20 employees in total.
Mr Batin opened his first dollar slice pizza shop in 2009 after immigrating to New York from Bangladesh.
“I can’t survive this. Everyone I talk to thinks about moving out, ”Batin said, referring to the community of pizzeria owners from Bangladesh. “Nobody can do it for a dollar a slice anymore.”
He said his business has been impacted by the large number of repeat customers who still work from home.
Outside of Mr. Batin’s downtown Brooklyn store, there are signs that read “Help Wanted” and “Space To Let”. That fall, he raised the price of a slice of cheese from $ 1 to $ 1.50.
Syldon Nedd, a street vendor who sells used goods, has noticed the higher price but still eats there about three times a week. “The prices have to go up at some point,” said Mr. Nedd when he came in for a piece. “It’s still cheap.”
At another chain called Joey Pepperoni’s Pizza, the owner Teddy Gross is leaving the pizza business for good. He bought three locations in the year before the pandemic when the chain was charging $ 1 for a slice of cheese. After gradually raising prices, he said his profit margin was around 10 percent.
Mr. Gross recently sold or closed all three stores and is considering moving to Florida. At the TriBeCa location, the landlord was hoping to find a new tenant willing to pay $ 15,000 monthly rent (Mr Gross said he paid $ 3,000 a month during the pandemic, compared to his pre-pandemic rent of $ 9,500).
“You can get away with higher rents if you charge $ 3.50 or $ 4 apiece,” he said. “To be honest, $ 1 pizza really should never have existed.”
