Doordash Stock- Global cooking oil shortage causing headaches for Peoria restaurants
Vicki Love-Freeman, owner of the East Port Galley Restaurant and Pub, was reviewing an invoice for cooking oil when she decided to compare it with an invoice from last June.
Her reaction, while not printable, was certainly a natural one. The cost of the 35-pound containers of cooking oil she purchases for the restaurant have risen from $26.25 a piece to $46.42 in the past year. She worries that the spike in cooking oil prices could potentially have an equally big impact on her business.
“We have a lot of fried food,” Love-Freeman added. “I probably buy eight to 10 (containers of cooking oil) a week.”
She is not the only restaurateur who has noticed the dramatic rise in cooking oil prices over the past year. Christina Abatie, owner of Two P’s Pizza and Pub in Pekin, said that last year’s price increases were initially subtle, so she didn’t pay a great deal of attention to it until recently. She discovered that the price of a 35-gallon container had more than doubled.
“There are always fluctuations in prices, but we were consistently paying around $17 to $18,” Abatie said. “A month ago, the price had gone to $40. The price has been increasing each week.”
Brad Gebhards, the manager of Schooner’s Peoria Heights, said the price of the cooking oil used to operate the restaurant’s four 100-pound-capacity deep fryers has also approximately doubled in the past year. He is currently paying $40.96 for a 50-pound container.
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The cost increases that restaurant owners are experiencing are a local economic consequence of a global shortage. According to a March 24 article by Reuters, stocks of palm oil are low because of an enduring labor shortage in Malaysia, which, with Indonesia, accounts for 84% of global production.
At the same time, the production of soybean oil in China, the world’s largest soybean oil producer, has slowed down due to stalled soy meal demand growth. The article noted that Malaysian palm oil futures peaked at $969 a ton in mid-March and are trading at an average of about $883 per ton this year. Last year’s average was about $654 per ton. Palm oil is the world’s most widely-used edible oil.
That spike in the cost of supplies taxes a restaurant’s overhead. Gebhards, Love-Freeman and Abatie all agreed that if edible oil prices continue to rise or remain at their current high levels, higher prices could come to menu items.
“We’re trying really hard not to do that,” said Gebhards. “But at some point, you have to raise prices when everything goes up. It’s tough all around. The oil gets more expensive, so the French fries and onion rings get more expensive.”
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High cooking oil prices, along with rising costs of meat and chicken, have already prompted Love-Freeman and Abatie to remove certain items from their menu. Love-Freeman said The Galley no longer offers rib eye steaks because the cost of beef has risen. Other menu items could soon become impractical.
“There are things we’ll obviously have to pull because there comes a point where people won’t pay the high price,” she said.
Abatie said that high costs of cooking oil, coupled with a rising price for chicken wings, have forced Two P’s to discontinue the sale of wings. While she may have to raise prices, she has no plans to stop serving tenderloins, tenderloin pizzas or fresh-cut French fries.
“We can’t afford to stop selling those items,” she said. “In fact, if we did, some of our customers may revolt.”
While global markets are impacting the price of tenderloins in the Midwest, there appears to be some light at the end of the tunnel. The Reuters article cited Dorab Mistry, director of the Indian consumer goods company Godrej International, who estimated that the world palm oil supply will grow by about 3 million tons this year after a decline of 2.5 million tons in 2020. Increased supplies should lead to decreased prices, and Mistry said that palm oil futures are expected to bottom out at just under $654 a ton this fall.