Red alert!

Oct. 28, 2004

As if 2004's record cheese and toppings prices weren't hard enough on pizza operations, the current fresh tomato shortage has their owners seeing red.

Blame it on Florida's hurricane fearsome foursome of Charley, Frances, Ivan and Jeanne. Their August-September tear through the Sunshine State left the burgeoning fresh tomato crop in a drastically altered state. More than 90 percent of the U.S. fresh tomato crop is produced in Florida, where growers are scrambling to replant. Fruit from down south, many say, won't be available for another six to eight weeks.

Until then, expect high prices, perhaps record-setting highs. According to the U.S. Department of Agriculture, tomato prices spiked 167 percent in October as 25-pound boxes that cost $12 in September are fetching $30 now.

"I was paying $13 per box, but now it's $29," said Gary Reinhardt, a Papa Murphy's Take 'N' Bake Pizza franchisee in Louisville, Ky. Unlike the high prices he's gotten used to paying for cheese

What's Important

This fall's wet and wild weather nearly obliterated the fresh tomato crop in Florida.

The subsequent shortage pushed average prices up 167 percent in October. Wholesale costs are as high as $30 per 25-pound box.

Industry watchers expect the shortage will peak by mid-November, when prices will weaken some.

and meat, he said, "You just don't expect to pay that much for tomatoes."

Even biannual tomato contracts negotiated with his suppliers didn't keep the red scare from settling on Nick-N-Willy's World Famous Take-N-Bake.

"I actually had a floor and a ceiling contract, which I thought was pretty good," said Richard Wile, president and COO of the 40-unit chain. "But, really, contracts can go away with natural disasters, and I've got some vendors using that on me. Right now we're just grinning and bearing it."

While Wile declined to say exactly what he's paying for fresh tomatoes, his contracted ceiling is keeping him about 15 percent below market highs, which have reached $30 per box in Los Angeles.

Candace Turbett, a franchisee for Nick-N-Willy's in Scottsdale, Ariz., is doing a bit better: paying nearly $23 per box. She's not pleased, however, with the quality of the tomatoes. "They're too soft, too ripe right now. So we're not keeping many of them on the shelf."

Unseasonably heavy rains in fresh tomato lands like California and Western Mexico are aggravating the situation. According to a report in USA Today, 1,500 acres of fresh California tomatoes have been lost to fall deluges.

In an e-mail to PizzaMarketplace, California Tomato Commission spokesman Ed Beckman confirmed that the state's harvest is behind schedule due to the weather, but he expects the problem will be short-lived.

It'll get better ... maybe

The good news for most pizza operators is that unlike cheese and meat toppings, tomato isn't the most popular topping choice.

And in the same way other foodservice chains are steering away from promoting tomato-laden sandwiches, operators can suggest non-tomato pies.

Even better news is the shortage of fresh tomatoes will not affect the price of tomato purees, sauces or prepared pizza sauces. The growing, harvest and processing of tomatoes used for those products is done in California and was completed by August, said Ron Peters, CEO of sauce remanufacturer Paradise Tomato Kitchens in Louisville. Tomatoes grown for sauces, he said, aren't used in fresh applications, such as toppings and salads.

Due to the short plant-and-harvest cycle of tomatoes, plus the abundance of hot houses in the U.S., many don't expect the tomato shortage to hang around long. CTC's Beckman predicted the shortage will peak in early November, while Wile said his sources are predicting a mid-November turning point.

"At least that's what we hope," Wile said. "But you never know about the weather."

Reggie Brown, executive vice president of the Florida Tomato Growers Association told the Palm Beach Post that the situation isn't as grave as it appears. "Tomatoes are available. However, they are more expensive than they were. ... We will be caught up by the middle of December. By then we'll have all the tomatoes we want."

Topics: Financial Management , Operations Management , Papa Murphy's Take 'N' Bake Pizza , Pizza Sauce

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