Pizza Prices On the Rise

Block cheddar cheese reached $2.08 a pound Thursday on the Chicago Mercantile Exchange, up 78 percent from $1.17 a pound a year ago. At the end of 2006, the price was $1.33. Cheddar is the benchmark for mozzarella and other cheeses. Industry observers attribute the price surge to strong demand coupled with higher milk prices.

Some big pizza chains, which use mountains of cheese, already have responded. Both Pizza Hut and Papa John's International Inc. have raised the price of their cheese-only pizzas to the same amount as one-topping pizzas at company-owned stores. The higher cheese prices have exacerbated pressure companies already face from higher wages and fuel costs, said Chris Sternberg, spokesman for Louisville-based Papa John's.

Papa John's uses about 100 million pounds of cheese each year, and the cheese typically makes up 35 percent to 40 percent of the food cost in making a pizza, he said. And cheese-only pies cost the company more, requiring an extra cup of cheese, he said. "So the customer is getting something of extra value for the price," he said.