High Gas Prices Are Draining Businesses' Profit Margins

Misery loves company, the saying goes. When it comes to record gasoline prices, there's plenty of misery to go around for everyone.

Area business people are coping the best they can adjusting for expenses from gasoline, hovering just around $4 a gallon.

A ripple effect from gas prices tend to zap salaries of workers and boost prices for all other supplies, said restaurateur Tim Sherrell, a partner in Pit Boss Bar-B-Q restaurant on Little Road near the Trinity area.

"It's one of those hidden costs," Sherrell said.

"You can hardly keep up with it anymore," he added about food price increases. Suppliers "have to pass it on to us."

Pit Boss is introducing a value menu to broaden its offerings for cash-conscious customers, Sherrell said. The restaurant, however, still caters heavily to families wanting to share an affordable meal, he said.

People have been eating out less as gasoline expense takes a big bite out of their purchasing power, Sherrell said. Customers who used to eat out three to four times a week now are coming once or twice a week. Some daily lunch regulars might show up only a few times a week now.

Waiters and waitresses want to work longer shifts instead of coming in twice for shorter shifts.

"We're trying to work with them," Sherrell said, to cut down on the number of trips for workers.

Tips from cash-strapped customers also seem to be somewhat smaller these days. "They live off their tips," he said about waiters and waitresses.

Another perspective comes from Dana Schnoor, who stocks candy and soda vending machines.

Years ago, Schnoor used to restock vending machines twice a week. As gasoline expenses increased, he cut back to weekly trips. Now, he restocks machines once every two weeks because of soaring gas prices.

Schnoor recently spent $113 to put 29 gallons of gasoline at $3.91 a gallon into his delivery van. That still didn't fill the 31-gallon gas tank of the large van, a 2005 three-quarter-ton Chevrolet Express. "I bought it when things were going real good," Schnoor said with a chuckle.

"They stop the pump at $100," Schnoor said about the gasoline station he frequents. So he had to pump gas in two transactions to go beyond the $100 mark.

Some vendors have it worse, Schnoor pointed out. They have vehicles which use diesel fuel, which has been selling for about $4.80 a gallon. Diesel vehicles get better mileage, but usually not enough to justify the higher cost.

Schnoor still remembers the oil shocks of the 1970s when gasoline supplies often ran out because of the OPEC embargoes. He had a GMC conversion van in those days which he tried to sell, but he couldn't give it away. Much the same today, bulky vans probably won't fetch a very high price on the used vehicle market.

Schnoor buys in bulk to try to hold prices down.

"Candy prices have gone up the most," Schnoor said. He makes less profit now on a candy bar selling for 70 cents than he did when the same candy bar was selling for 50 cents.

"Candy is very heavy," Schnoor said about boxes which pack anywhere from 24 to 48 candy bars.

Sugar prices also have soared, making it more expensive to produce candy bars.

"I've been absorbing some of the increases because I know everybody is hurting, too," Schnoor said. People have less purchasing power, so they tend to buy fewer snacks and sodas.

High gas prices have forced Trinity-based TLC Wheelchair Transportation to raise its fares for customers.

The owner, Sandra Testo-Michaud, has to explain to customers the privately-operated firm does not receive any government funding. The 8-year-old firm primarily serves seniors or people who use wheelchairs who must shop for groceries or get to doctor appointments.

Less than a year ago TLC was charging $1.25 per mile to clients. Today the cost has gone up to $2 a mile because of gas prices. That still tends to be less expensive than taxis, plus TLC has vans equipped with wheelchair lifts.

"I feel horrible for these senior citizens," Testo-Michaud said about many of her customers. "It's sad" they have to try to make ends meet on fixed incomes.

Still, the company has four, thirsty large vans, such as a Ford 350. "Gas has doubled, but I haven't doubled my prices," Testo-Michaud said.

TLC drivers do their best to hold down costs, such as shutting off the engine instead of idling.