From pet grooming to catering, fuel costs pinch entrepreneurs

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Posted: Thursday, May 23, 2013 12:00 am

Here is what Lorie Walden, owner of PetStyle Mobile Dog Grooming, plans to do about near record high gas prices: almost nothing.

“I'm a mobile business, so I figure the cost of gas into my overhead,” said Walden, who is based in Council Bluffs, but serves mainly Omaha pet owners. The spike in gas prices caught her by surprise and is affecting the bottom line. “Basically, I'm not making as much profit.”

But she has a fuel-saving strategy that has her serving customers in a designated area on a given day. Wednesday, for example, Walden was visiting clients — including Wilson, a schnauzer who is one of her regulars — in Omaha's Huntington Park near Blondo and North 156th Streets.

“I route my area, so I'm not blowing tanks of gas.”

That's one strategy local businesses are using to deal with soaring gas prices, which have risen nearly 50 cents a gallon in the past two weeks. Others also said they're accepting lower profits or hoping budget estimates even out over the year. But, in some cases, business owners or managers say customers could start to see fuel surcharges or higher delivery rates.

Statewide, the average price of a gallon of regular gasoline Wednesday was $4.06, 40 cents higher than the national average and a few pennies short of the state's record high of $4.10 per gallon reached on July 15, 2008, according to AAA's Daily Fuel Gauge Report. Wednesday, the national average stood at $3.66.

But refineries in Joliet, Ill., and the Kansas City area should be back online soon and that, in combination with additional fuel coming from the Gulf Coast region, is helping drive wholesale prices down, said Rose White, a AAA spokeswoman. “They actually took a significant drop in the last few days and that should soon be reflected at the pump.”

Meantime, many business owners say they are absorbing the costs.

Sam Amato, owner of Amato's Cafe & Catering, plans to wait out the unusual upward blip that has Midwest consumers in recent weeks paying some of the nation's highest prices at the pump. He has no plans to risk raising customers' ire by boosting prices.

“If you go back to the chalkboard, you'd be changing your menu prices every two weeks. ... If you start changing prices, they won't come back,” said Amato, whose restaurant at 6405 Center Street is a favorite breakfast stop for homemade ricotta pancakes.

All you can do, said Amato, is anticipate fuel prices at the beginning of the year and “hope you don't fall behind.”

New and existing businesses sometimes forget to factor in increased fuel costs when they draw up their price list, said Gordon Yager, chairman of the Omaha chapter of SCORE, a nonprofit that provides free business mentoring. That said, predicting future fuel costs is “more art than science,” Yager said. “It's guesswork basically.”

His advice? “Factor in the worst-case scenario as far as fuel costs, but make sure you're not out of step with your competitors. And don't undercut yourself so low that you put yourself out of business.”

Forecasting the price of fuel is particularly important when contract obligations and other factors prevent rate increases.

Mike Palmer, owner and president of Shredding Solutions, a Lincoln-based document shredding company, said he can't suddenly increase prices because of competition or contracts with set prices.

“The only thing we can do at the beginning of the year is try to anticipate what fuel prices are going to do,” said Palmer, who operates four diesel-powered shredding trucks. While the price of diesel hasn't risen as dramatically as gas, cost is still an issue. Each truck requires almost daily 75-gallon fill-ups.

“We're based out of Lincoln, but I run three or four trucks to Omaha every week,” Palmer said. Not only does the fuel power the vehicle, but also the shredding machines inside the truck. “It's on-site shredding, so the shredders run off the diesel engine,” Palmer said.

Other companies say that if prices at the pump continue to balloon, they will be forced to charge extra.

“If gas continues to go higher, I'm sure we would put a fuel surcharge on our customers' bills and put a cap on how far we deliver mulch,” said Tony Nebbia, manager of Grass Kickin' Lawns at 7116 Irvington Road.

Barbara Rickard-Scofield, the owner of All About Balloons at 45th and Center Streets, said she may have to raise her delivery fees this week if fuel prices don't drop.

“I've tried to keep the delivery fee at $7, $7.50, but I'm probably going to have to go up to $10,” said Rickard-Scofield, who has been delivering balloon bouquets in the Omaha area and beyond for 30 years.

She is fairly confident that her customers won't balk.

“Clients understand,” Rickard-Scofield said. “People have been pretty good about it because gas is costing them so much more. Everyone is feeling the increase.”

In a double-whammy, petroleum prices also have inflated the cost of the store's balloon bouquets, priced at $32 and up.

“Most people don't know this, but helium is a petroleum by-product,” she said. “The cost of helium has risen 300 percent in the last year and a half.”

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