Jun 14, 2022 - Food and Drink

Inflated cheese costs are hurting Casey's pizza

Casey's pizza
A Casey's pepperoni pizza. Photo: Linh Ta/Axios

Rising gas prices are causing a nationwide uproar, but here in the Midwest, sharp increases in cheese costs are hitting us where it really hurts — our gas station pizza.

State of play: Inflated cheese costs resulted in a $3.5 million hit to Casey's gross profits last quarter, said CEO Darren Rebelez in a shareholder's meeting this month.

  • The cost of cheese, one of the company's largest commodity expenses, rose by 30% in comparison to last fiscal year. It now costs about $2.26 per pound of mozzarella.
  • Pizza is a big draw for the company — attracting consumers to come get their gas, breakfast and coffee all in one spot. Slice sales went up 21% last quarter, bouncing back from an initial pandemic slump.

Between the lines: What's helping Casey's endure is its pricing power and ability to raise costs without much adversity, Rebelez said.

  • A small Casey's cheese pizza was advertised as $8.99 in 2020 but is now close to $10.99 in some Des Moines stores.
  • Casey's has increased its prices in stores three times since last October.

We tend to have a sense of the cost of chips or pop. But with pizza, it’s a little more gray.

  •  “Nobody really knows what the proper price for a piece of pizza should be,” Rebelez said during the meeting.

What we're watching: If cheese keeps going up, expect your pizza prices to continue rising as well.

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