Evanston businesses struggle to keep prices down as inflation soars

Harith Razaa, owner of Comfort Desserts Reimagined at 517 Dempster St., prides himself on his bakery’s low prices and complimentary coffee and tea.

However, the cost of Razaa’s ingredients – including eggs, milk and butter – are increasing, and although he dreads hiking prices, maintaining them isn’t sustainable anymore, he said. 

“I’ll go broke,” Razaa joked. Only a couple of months ago, he could find eggs for 65 cents; now, cartons sell for $1.79, he said. 

Businesses throughout Evanston face the same struggle as the local and national inflation rate soars. A report published Jan. 12 by the U.S. Bureau of Labor Statistics shows updated inflation data for the 2021 year. 

Using the Consumer Price Index, which shows the average change in prices of a bundle of common goods and services, the bureau found that prices in the Chicago area increased 6.6% during 2021.

Nationwide, prices increased 7% over the 12-month span, according to the report. That is the highest annual inflation rate since 1982. 

An ‘explosion in demand for stuff’

Northwestern University economics professor Mark Witte said a combination of factors explain why the inflation rate is so high at the moment.

Suppliers continue to face obstacles caused by the pandemic, such as fewer available workers and expensive shipping costs, but the demand for these goods is really high, causing suppliers to increase their prices, Witte said. 

Despite supply chain shortages, U.S. consumers are spending more money than ever on goods, data from the U.S. Bureau of Economic Analysis shows. According to the data, in November 2021, U.S. consumers spent $5,714.1 billion on goods, a 25.6% increase from before the pandemic in November 2019. 

“There’s a real explosion in demand for stuff,” Witte said. Even without COVID-19, the current demand for goods would have put a strain on producers and the transportation system, he said. 

Stimulus checks and credit made available by the Federal Reserve have allowed consumers to spend more money, Witte said.

Widespread worker shortage

On the supply side, businesses are experiencing a shortage of workers, many of whom are quitting to avoid exposure to the coronavirus, Witte explained. “Once upon a time, a job might have just been crappy, but now it’s dangerous,” he said. 

The best way to attract more workers is to pay them more, and in order to pay them more, businesses need to charge more for their goods and services, which further raises the inflation rate, Witte said. 

Pascal Berthoumieux, the owner of Patisserie Coralie, a boutique French coffee shop at 600 Davis St., said the increasing cost of labor has been the biggest challenge the coffee shop has faced since the start of the pandemic. 

Berthoumieux said hospitality industry businesses have struggled to fill positions since spring of 2021, when shops and restaurants started opening up again and employers expected employees to go back to work. But worried about getting sick and content with the federal unemployment support they received, workers preferred staying home, which put employers in a bind, he said.

At Patisserie Coralie, finding workers took much longer than usual, but the coffee shop was able to find employees eventually by offering higher wages, Berthoumieux said.

D&D Finer Foods, a family-run convenience store at 825 Noyes St., also struggled to find new workers, said manager Kosta Douvikas. To get workers to commit, the convenience store offers health insurance, which has been pretty successful in keeping employees from quitting, he said.

Backed up transportation systems

Transportation industries are also coping with fewer workers, causing shipping prices to increase, and transport systems to slow, said Witte, the NU Professor of Economics.

“With transportation, everything is two-sided,” Witte added. If a truck takes longer to get unloaded because of a shortage of workers, then it takes longer to get loaded, he said. 

Slowed transportation also means perishable goods, like eggs and milk, are seeing more spoilage. With fewer perishable goods in circulation, suppliers are increasing the price of these goods, said Witte.

Due to transportation issues, many suppliers aren’t coming as frequently to D&D, Douvikas said. For instance, Coca-Cola shipments used to come every week, but the company doesn’t have enough workers so deliveries are down to twice a month, he said. This means D&D needs to buy twice as much in each shipment, which is difficult because the shop doesn’t have much storage, he added. Coca-Cola was not immediately available to comment.

Mark Jones, owner of Saville Flowers, an Evanston florist at 1714 Sherman Ave., said he has also faced supply chain issues and delays. Some shipments ordered six months ago still have not arrived, Jones said.

The cost of wholesale flowers as well as vases and containers are rising, and the flower shop has had to hike prices, Jones added. 

Shipments to Bat 17, a sports bar and sandwich shop at 1709 Benson Ave., have also been delayed, and getting carry-out containers has been especially difficult, said General Manager Hannah Lindsey. Items are often sitting on trucks for long periods of time without anyone to unload them, she said. 

To combat higher costs and delayed shipments, Bat 17 took some items off the menu until it found ways to order those items more reliably and at a lower cost, Lindsey said. Steak and chicken wings, for instance, became very expensive, so they were taken off the menu until Bat 17 found a better price, she said.

Although Bat 17’s suppliers have stayed pretty consistent with the cost of alcohol, some bourbons have become super expensive and the sports bar no longer carries them, Lindsey said.

Suppliers are charging more and more

D&D must constantly reevaluate prices as each new shipment brings higher costs and new fees, like delivery fees and invoice fees, Douvikas said. 

“My prices are going up every single day,” he said. “Every salesman comes in with ‘Sorry, bad news, prices are going up again.’”

Last week, a shipment of Land O’Lakes butter arrived, and Douvikas said he learned the price of each case, which holds 36 1-pound packs of butter, rose by $42. The price of a pound of butter at D&D increased from $5.99 to $7.69, which used to be the price of organic butter, he said. Now, organic butter costs up to $11 for a 1-pound package, he said.

“I hate it,” Douvikas said. “Everything is so expensive.” Meat, bread, alcohol and toiletries such as toothpaste and deodorants have become a lot more expensive, he said. Although the prices of some items are increasing at a faster rate than others, all items have been affected by inflation, he added. 

Valli Produce, a grocery store at 1910 Dempster St., faces the same challenges. Items including butter, jam, pasta and cereal have been hit especially hard, while other items, including some brands of water, mac and cheese, olive oil and toilet paper, have maintained their prices, said Valli Produce Store Manager George Penn. 

“Everyones raising prices on all ends,” Penn said. “There’s not much we can do.”

Many of the items that haven’t experienced a price increase were purchased before the supplier increased prices, and have been sitting in Valli’s inventory for a while, Penn said. Even if the supplier is charging more for those items now, the grocery store maintains the original price in order to keep prices as low as possible for the customer, he added. 

Despite the increase in prices, the overall sales at Valli have not been affected, Penn said. Consumers still need groceries, and there haven’t been too many complaints about the increased prices, he added. 

“I would like the Evanston community to know that we’re doing our best to keep the prices as low as possible,” Penn said.

Shoppers at D&D haven’t complained much either, Douvikas said. Many of its customers shop there out of convenience – it’s smaller, closer and less crowded than big supermarkets – and on top of that, most shoppers have read the news and realize why prices are going up.

For many community members, higher prices aren’t a big deal, as they can cut down on some optional spending, Witte explained. However, for low-income households who don’t have as much “cushion,” these new prices will make it harder to pay for essential needs, like housing and food, he said. 

Generous tips are a ‘blessing’

Patisserie Coralie has not raised prices yet, and instead is absorbing the increased costs, Berthoumieux said. “We try to alleviate some of that increase by trying to be smarter about how we buy products.” 

Increased tipping has also helped Patisserie Coralie, Berthoumieux said. More and more businesses are offering the option to add a tip, and that is a “blessing” to workers, he said. 

“People have been more generous than ever,” he said. Although he increased his workers’ wages, he said he can’t afford to pay as much as they really want. 

Patisserie Coralie is resisting increasing its prices, but will likely have to do so in the coming months, Berthoumieux said. When this happens, he said he wants to be strategic and only choose items where a higher price is justified and won’t draw complaints from customers.

With the price of labor, goods and transportation increasing, “no wonder the inflation is the highest it’s been for years” Berthoumieux said. “It’s like the perfect storm.”

Despite the inflation, Patisserie Coralie was busier than ever in 2021, Berthoumieux said. He speculated that consumers have a bit more disposable income now – because they are spending money like they used to – and in order to treat themselves, they head to Patisserie Coralie for a cup of coffee and a pastry.

Berthoumieux added that most businesses have likely not experienced the unexpected boom that Patisserie Coralie has this year.

Looking ahead to a ‘new normal’

Over time, delivery systems and supply chains will become more efficient in order to meet consumer demand, Witte said. He explained that more trucks and better delivery routes, for instance, will help make transportation faster and cheaper.

Additionally, the Federal Reserve has made it pretty clear it will raise interest rates, which will make it more expensive to borrow money, Witte said. “That’s going to bring spending down. It’s probably gonna slow down job growth,” he added, “maybe raise unemployment a little bit.”  

Together, these factors will help bring down the inflation rate, Witte said. This doesn’t mean prices will drop, but overall they will increase at a slower rate.

Douvikas said he hopes prices will start to level off and D&D will settle into a “new normal,” but he predicts that it will be a while before that happens. “It’s been a hard time,” he said. “We’re just taking it one day at a time.”