The Texas Squeeze: A series examining the high cost of high growth in North Texas.
Food, like just about everything right now, is expensive and increasingly so. And it’s not just a matter of paying a little more for cold brew or a gallon of milk. It’s a matter of historic food price increases, the likes of which haven’t been seen since 1981, according to the March Consumer Price Index report.
The report said that food prices, both at grocery stores and restaurants, increased 8.8% since last March — the largest 12-month increase since the 1980s. In addition, the U.S. Department of Agriculture said in a recent report that restaurant prices are predicted to exceed historical averages and increase an additional 5.5% to 6.5% while grocery prices are expected to rise 3% to 4% in 2022.
The reasons for these price increases are wide-ranging and certainly not specific to Texas, but Texans are feeling a noticeable strain on their finances as they feed themselves. Here’s what we know about the state of food costs and food availability in North Texas.
Some items are hard to get, but it’s not a shortage problem
Seeing empty shelves at the grocery store can be unnerving, but most unavailable products are just tied up in messy distribution delays, not experiencing shortages. Richard Torres, the vice president of Texas-based food wholesaler Chefs’ Produce Co., said lately these delays are due to freight issues that stem from too few truck drivers and higher gas prices.
“There were some shortages a while ago, but for the most part now everything is available,” he said. “It’s just taking longer to get things. It’s hard to even find a truck to pick some things up sometimes. We used to have a one-week turnaround, but now that has turned into three weeks. So now we’re starting to have to plan a month out instead of two weeks out on certain specialty items.”
The recent increased commercial inspections at the Texas-Mexico border only further contributed to distribution and delivery delays. Gov. Greg Abbott has since rescinded his orders for increased inspections, but they caused significant supply chain issues that are still being untangled. A new report from Texas economist Ray Perryman estimates that Abbott’s order cost Texas more than $4.2 billion in goods and services and that it will take weeks to undo backups at bridges in Brownsville, El Paso and Laredo.
As for eggs and chicken, however, there is a minor shortage issue that is hiking prices and impacting availability. Some grocery stores around D-FW have put up signs to notify customers that egg prices are soaring due to a national egg shortage. The USDA said an ongoing outbreak of avian influenza across the U.S. is to blame.
Food prices will continue to rise
Freight issues are also contributing to rising food prices in addition to availability. Torres said freight and its impact on the price of goods is the most significant challenge his company is facing.
“Our freight costs pretty much doubled this past year, and now with the way gas is, I’m sure they’re going to go up even higher,” he said. “Say we pay $20 for a case of strawberries, and then you’ve got to put freight on top of that, which used to be $2 to $3 but is now anywhere from $6 to $8. Now that case of strawberries is going to cost us $28, so then we have to turn around and sell it for $36 instead of in the low 30s.”
Avocados and limes from Mexico are the produce items experiencing the steepest price hikes right now, he said, due to general inflation and labor shortages. This time last year, Torres paid $18 for a case of limes. Now he’s paying more than $90 a case. Avocados cost him $40 a case this time last year, and now he’s paying $85 a case. In the next few weeks, he said he expects to see avocado and lime prices climb even higher leading up to Cinco de Mayo.
But there is some good news. Consumers are entering the months when produce prices start to drop due to wider availability during Texas’ peak growing season. While there are plenty of produce items that don’t grow in Texas and must be shipped in from elsewhere, the state produces quite a bit of fresh food, and local production and delivery help lower costs at grocery stores and restaurants.
“We’re getting into the cheaper months for produce costs from now until August,” Torres said. “Typically this is when prices go down, so hopefully we’ll see that trend and more local things start to pop up.”
As for animal products, the USDA says poultry prices have been historically high and are expected to increase 6% to 7%. Egg prices are expected to increase 2.5% to 3.5%, and dairy product prices could increase 4% to 5% in 2022.
Restaurants are adjusting their menus
Restaurant menus around North Texas are shifting to reflect food price increases and work around hard-to-get items. Meals are more expensive and menus are more limited, and that will likely continue for the foreseeable future.
At Zavala’s Barbecue in Grand Prairie, owner Joe Zavala recently had to raise the prices of his breakfast tacos to keep up with the rising price of eggs. He’s also had to increase the price of brisket from $28 to $30 per pound because of the astronomical cost of brisket cuts.
Other restaurants are raising prices of items like chicken wings and lobster — or just taking them off their menus altogether — due to soaring costs and the difficulty in getting those products. Some restaurants are also opting to add flat service fees to customer’s tickets, instead of raising the prices of individual items. These menu adjustments and price changes are more noticeable at smaller one-off restaurants than at larger chains, which typically have price-locked contracts with vendors.
Trey Dyer, president of Mesero, said the Tex-Mex restaurant raised the prices of some menu items in the past few weeks, which is the first time it has done so since 2018.
“It was time,” he said. “Mesero will always do our best to move with the market fluctuations without having to impact the customer experience. It’s our policy to go into very long-term buys to ensure that we can produce the level of quality we want, which in turn is a large financial commitment on behalf of the company.”
Long-term vendor contracts, while costly, mean avoiding some of the volatility of ever-changing food prices and having to regularly adjust their menu accordingly, he said.
But with ongoing crises that impact global food supply — like significant port congestion in Shanghai due to the COVID-19 lockdowns, and the war in Ukraine that is threatening much of the world’s wheat production — he’s bracing himself for even further price hikes to come.
