Soaring prices worry some area business operators

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By Alfredo Santana

Contributing Writer

VERNON — On a recent sunny afternoon, Kenia Ordonez kept busy updating new prices on imported sodas and other dishes at Alessandro’s Pizza Italian restaurant to stay on top of rising restaurant supply costs due to 8.6% inflation unseen in Los Angeles in 40 years.

In the kitchen, she toils preparing pasta and fresh vegetables to meet a string of delivery orders she said has flipped the traditional model of preparing food to eat indoors.

With workdays running from 3 to 10 p.m. and often stretching to midnight, Ordonez said she earns the minimum wage, pegged in Vernon at $14 an hour for businesses with 25 or less employees, money barely enough to make rent and support herself in nearby Maywood.

Further complicating matters, Ordonez’ weekly schedule fluctuates from 20 to 40 hours, an uncertainty she attributed to uneven demand on weekdays that upended many eateries during the COVID-19 pandemic.

Despite the looming closure of the Farmer John’s slaughterhouse located across the street from the pizzeria at 3608 S. Soto St., the business operates 24 hours a day seven days a week, and management has posted a help wanted sign for applicants willing to work the graveyard shift and cater to meat-packing employees.

The giant plant is a source of diners and hungry employees often walk in well into the wee hours of the morning.

The combination of price increases ranging from 25% to 40%, in addition to a projected loss of customers from the meat packaging site slated to close in 2023 has Ordonez reeling with thoughts that the pizzeria may not be able to survive and she may be laid off.

“We have little foot traffic.” Ordonez said. “Most are overnight customers and those that arrive online. If [Farmer John] closes for good, we will lose all our nightly customers. The place will be empty.”

Last week, the Labor Department’s Consumer Price Index reported price spikes of 9.1% nationwide compared to 2021. High inflation drivers are gasoline at 59.9%, food with 10.4%, shelter at 5.6% and utilities at 38.4%.

The overall inflation index is the largest annual increase since the period ending in November 1981.

According to Labor Department Regional Commissioner Chris Rosenludn, prices in the Los Angeles and Orange County region rose at a 1.1% clip in June compared to May, and were largely influenced by increases in gasoline and new and used motor vehicles.

In the two counties, food costs went up 9.3% and energy, including utilities, climbed at a 38.4% pace from a year ago.

Many small business owners in Southeast Los Angeles fear an economic slowdown may hurt their operations sooner than expected, due to tightened spending from buyers on non-essential goods, and a refocus on groceries like milk, grains, vegetables and bread.

South Gate Chamber of Commerce Executive Director Ana Elizarraras, said that she has spoken with grocery store and other retail managers who reported spending pullback following price increases on products like meats, tortillas and eggs, in contrast with a surge during the pandemic.

“One member told me that a customer used to spend $45 per visit to the shop purchasing all kind of items,” Elizarraras said. “Now she limits the expenses and picks only what her family needs in a week.”

Recently, the inflationary pressures have pushed more business owners to inquire about a program that grants $7,500 for stores and companies to meet unpaid expenses linked to COVID-19, like rent, personal protective equipment and workers’ salaries.

Chamber staff has fielded up to 22 requests a day, Elizarraras said. Currently, the chamber has 73 enrolled members and supports 3,500 businesses with resources and services.

The purchasing power has dropped so dramatically among blue-collar workers that wild inflation has squashed wage gains of between 3 and 5% many enjoyed since 2021, making housing bills more difficult to meet.

So far, added savings from the federal stimulus checks issued during COVID-19 lockdowns plus cash stashed while working and sheltering in place have enabled customers to pay soaring prices.

Excluding savings and investments, the Wall Street Journal reported JP Morgan found that among 7.5 million of its own customers with checking accounts, lower income accounts had an average of $1,400 in the first quarter of 2022, or $500 more than before the pandemic.

Among Chase’s highest income accounts, balances rose to nearly $7,000 from $5,000.

But the economic signs in South Gate are pointing to tougher times ahead.

Area business owners are slowing or freezing new hirings, while interest rate increases from the Federal Reserve to tame inflation make it more expensive to apply for and get bank loans, or to carry debt on credit cards.

“We are going to face another set of challenges,” Elizarraras said. “Some business owners already believe we are in a recession.”

Eldy, an assistant manager at The Green Olive, a Mediterranean cuisine restaurant next to Alessandro’s Pizza, said that despite rising supply costs reflected in all raw products, online and in-person orders for dishes have remained steady.

She said it is hard to know what impact the Farmer John’s closure would have on the business and employees, because they do not keep track of where sit-in and pickup customers stem from.

Located inside Joshua’s Plaza, a small commercial center with five more restaurants and a truck driving school, the Green Olive offers popular dishes such as the chicken kabob plate at $15, falafel and other wraps from $10 to $12, with salads going for between $7 and $11.

“We are working with quality food. If customers want quality food, then they know they have to pay for it,” Eldy said.

Meanwhile, Ordonez and her four co-workers at the pizzeria worry that the rising consumer price index may stall the upward trend on digital orders.

She pointed that 15 to 20 online take-out sales from pasta to pizzas and burgers from $15 to $40 arrive every day, and are picked up and delivered by DoorDash, UberEats and Grubhub drivers to residents from Commerce, Boyle Heights, Maywood and to employees at Vernon industrial sites.

“I know prices are up, but online orders keep coming in,” Ordonez said. “They are proof that there are many customers willing to pay for what they like and want to eat.”

 

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