"You have to find creative ways to artificially drive revenue," he says.
WORKING WITH VENDORS
The surge in gas prices in 2008 was a shock for Capriotti's, a chain of sandwich shops based in Las Vegas. CEO Ashley Morris says the company didn't pay much attention to a clause in his company's contracts with distributors that said Capriotti's would pay more for deliveries if the price of gas went up. So when gas soared that spring and summer, the company was paying far more than it expected for food, paper products and other supplies.
"It hit our business fairly hard," Morris says.
Now, the surcharge rises and falls based on the price of diesel gas. This time around, he says, Capriotti's won't suffer. "We heavily negotiated a sliding scale."
Companies that make deliveries are also hurting. Ricky Eisen's catering business in New York has two trucks and a van. She used to pay $40 to $60 a day for gas for each truck. Now it costs her $72 to $76. And she pays more to vendors for deliveries.
"I'm getting squeezed at both ends," says Eisen, owner of Between the Bread. "It's enough to cut a dent in the profit."
Eisen held out for a long time — until March 2011 — before she began tacking on fuel surcharges for her deliveries. She has charged 5 percent extra. Now, she says, "I'm thinking as fuel prices rise, I'm going to have to increase the percentage. Right now, I want to keep it where it is."
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