Local pizza maker Michael Bozzelli has watched pepperoni prices creep up over the past 30 days. He used to pay his distributor $50 per case; he’s now paying $92. He’s not alone. There’s currently both a supply and and a demand issue with America’s favorite pizza topping.
Pepperoni suffers from the double whammy of being a product that’s both labor intensive, because it requires curing, as well as having low profit margins. Meat factories are prioritizing products that require less processing and less labor as they struggle to keep their workers safe and healthy during the COVID-19 pandemic. This isn’t the first time there’s been price increases tied to the pandemic: Back in May, D.C. restaurant owners reported shelling out big bucks for beef.
And it’s small, independent pizza shops like Bozzelli’s that have been the hardest hit by the purported pepperoni shortage. As Bloomberg reports, large chains like Domino’s and Papa John’s have contracts in place with pre-negotiated prices that protect them from any shifts in the market. They’re also enjoying significant increases in demand. Per Fortune, Domino’s generated $240 million in net income through the first half of 2020, a 30 percent increase over last year. Small businesses, meanwhile, are staring down price increases of up to 50 percent.
So what are little guys like Bozzeli’s supposed to do? Bozzelli is buckling down. “We try to be creative,” he says. “We have a ‘Tiger King’ pizza, a mac and cheese pizza, and a steak and cheese pizza. But do you know what the most popular pizza is? Pepperoni. We’re trying to absorb the cost. Our customers are average Joes and we’re sensitive to that. We’re not promoting meat lover’s pizzas as much, but we haven’t raised the price either.”
In talks with his distributor, Performance Food Group, Bozzelli says he learned that much of the problem lies with big companies like Hormel and Smithfield. He’s always gone with Hormel because he likes the consistency and quality of their pepperoni. “They’re playing catch-up right now,” Bozzelli surmises. “Hormel owns the market. They’re the Google of pepperoni.”
As a result, Bozzelli has had to turn to alternative companies that charge more. Worse yet, Bozzelli says he’s also seeing an increase in the price of mozzarella. Instead of paying $2.75 per pound, he’s coughing up $3. “It’s the perfect storm with COVID, the government mandates, the closures, people teleworking, landlords sending default notices, and now the costs of our core items are skyrocketing. Every pizza has cheese on it. Our margins are razor thin.”
There are currently four locations of Bozzelli’s in the D.C. area, with a fifth on its way on the Georgetown waterfront. The brand has been around since 1978, when Bozzelli’s father and uncle founded it, but Bozzelli didn’t get into the family business until he left a career on Capitol Hill to open his first shop with his sister in 2002.
Andy Brown’s livelihood revolves around pizza. He got started with frozen pizza line Eat Pizza and more recently opened a string of brick-and-mortar restaurants. There are two Andy’s Pizza locations in D.C. proper—Shaw and Navy Yard. Like Bozzelli, he’s seen higher prices for both pepperoni and dairy products like mozzarella.
“Everybody nationwide saw an increase, not just in pepperoni, but all meat prices,” he says. “With the popularity of carryout and delivery, and pizza in general, pepperoni usage went through the roof. Now we’re all fighting over the same share in a price battle.”
Like Bozzelli, Brown has stopped short of raising prices. “We’re grateful for every customer that comes through the door,” he says. “When you see an increase in cheese and pepperoni prices it can make business hard, but we don’t want to pass that onto guests. I don’t want to charge $30 for a pepperoni pizza. We have to keep the price the same and wait for the market to settle.”
So far Brown hasn’t changed purveyors. He sources from a more boutique brand than Hormel. “Those are less susceptible to these kinds of commodity price issues that are coming about in the pandemic,” he says.
Other District pizzerias haven’t encountered an issue yet. Chef Mike Friedman of All-Purpose Pizzeria says he sources the pepperoni for his top-selling Buona pizza from Salumeria Biellese.
“I haven’t seen any shortages from them, but as the demand grows for whatever pepperoni one can get their hands on, I’m guessing it’ll trickle down,” Friedman predicts. He adds that worst case scenario they could revert to making their own pepperoni, since the restaurant already house cures other meats. “We’ve made it in the past and would probably go down that road if necessary.”
So what, if anything, can Washingtonians do? Back your favorite small pizza shop instead of dialing up Domino’s.
“Always support your local pizzeria,” Brown says. “The guys you can count on down the street rain or shine. Supporting them means going all out, like not ordering from Uber Eats. Order directly from their websites. Order an extra pizza for the next day and maybe get the side of wings.”