These business owners survived Covid. Now gas prices are surging

By Alicia Wallace, CNN Business

Earth & Sky Floral Designs, located on the Laguna Pueblo reservation in New Mexico, is the only florist for miles. Owner Shayai Lucero says she often racks up the mileage on her Jeep and minivan making deliveries, the bulk of which are near her home but sometimes include a 150-mile round trip.

Now, with record-high gas prices, Lucero says those longer trips may not be feasible any more.

“I’m feeling it at the pump,” she said, noting that prices at nearby gas stations recently jumped 60 cents per gallon in just two days.

Surging gas prices are forcing Lucero and other small business owners across the US to once again pivot and reshape their operations — actions they’ve taken time and again in the past two years as they navigate a global pandemic, a period of historic inflation, and now global uncertainty.

Cutting out delivery altogether isn’t an option, she says, especially at a time when tribal communities such as hers have been hit hard by the pandemic and the majority of her sales have been for sympathy purposes. So instead she’ll likely shrink her delivery area.

“My services are needed, and I have to keep that in mind when working with the community I live in and serve,” she said.

Economic pressures, including massive supply chain disruptions and high inflation, have left businesses feeling less optimistic — and have forced many to pass along rising costs to their customers, the National Federation of Independent Businesses said on Tuesday.

The lobbying group reported that its Small Business Optimism Index, which is based on a monthly survey of business owners fell 1.4 points to 95.7 in February. The survey also found that a net 68% of owners, seasonally adjusted, increased their prices in the past 12 months — a four-year high.

“While most of the economy and some of the broad economic metrics have fully recovered, we know that a lot of small businesses have been left behind,” said Scott Anderson, chief economist at Bank of the West.

‘Everything is going up’

Keith Garrett, a Los Angeles-based chef whose All Flavor No Grease food truck roams up and down the Golden State, has seen his business walloped by rising food prices, supply chain shortages and now shockingly high fuel prices.

“I’m just even scared to put the truck on the road right now,” he said.

Garrett said the pandemic and subsequent inflation forced him to raise prices by a dollar or two per taco, and about three to four bucks on quesadillas. Prices can’t go too high in the particularly competitive SoCal food business, but if gas prices continue streaking north of $6 per gallon, he said he’ll have no other choice.

“Everything is going up right now,” he said.

While he says he is used to California’s traditionally high gas prices — he’s grown to expect paying in the “shallow $90s” to fuel his truck — the latest surge has crossed a tipping point.

“[It cost] $210 to fill up my food truck,” he said.

In South Florida, Mednick Landscape Co. was already reeling from lost business due to the pandemic, halving its operation to one truck from two trucks even before the supply chain woes and climbing inflation kicked in, said Alex Mednick, who started the family-owned company in 2012.

And now the business has rising fuel prices to contend with, he said.

“I just filled up my truck, it has a 32-gallon tank, and it was $130 and change,” he said. Last year, that fill-up would have cost $100, he added.

Then there are the lawn mowers that require 10 gallons of gas each and the two-gallon weedeaters, all of which is making his venture even more costly, he said.

In southwest Montana, Barb Stockwell, owner of property care business Double Duty Inc., is adding a caveat to weekly service contracts: A daily flat fee of $5 if gas prices climb above $4.50 per gallon.

“That’s how I’ve survived it in the past,” Stockwell said of her response to fuel price surges.

Spread over 40 to 50 clients, that move helped ease some of costs for Double Duty while not being too large a burden for clients.

“Our season will start May 1,” she said. “I will have that [caveat] in every contract when they go out for signing.”

The only question will be whether that flat fee might be too low, she said, noting how quickly gas prices have already risen and the uncertainty of where they’ll be in the coming months.

‘Certainly going to hurt’

Earth & Sky’s Lucero has been here before: She bought her business in 2008, at the height of the Great Recession and during another period of record-setting fuel prices.

She found ways then to shave costs while not compromising quality, such as using recycled glassware from thrift stores or spring cleaning efforts as vases, and looks to take similar measures now, she said. She’s taking an online course about sustainable floral designs and also is working with what flowers and plants are available and making designs based on color requests versus promising a specific bouquet or design.

“When you buy a business during a recession … I think it really helped me because it taught me how to be cost-effective,” she said.

In Columbus, Ohio, Wolf’s Ridge Brewing co-owner Alan Szuter is keeping a close watch on how gas prices will affect his business and employees.

“The gas costs are certainly going to hurt,” he said, adding that the increases are “one more straw to throw in the pile.”

Like many other craft brewers, Szuter’s operation has been on a wild ride during the pandemic that has included closed taprooms, shuttered restaurants, can shortages, and packaging increases.

As a means of survival, Wolf’s Ridge, which has self distributed its beer for the past several years, got into the home delivery business, Szuter said. The new offering was a hit with area residents.

“This is the online shopping world, and people expect businesses to meet them where they want to be met,” he said. “It’s one thing we are definitely keeping going.”

For now, he expects to absorb the costs — and do so gladly.

“This is nothing compared to what the Ukrainian people are dealing with,” he said. “I know it’s going to impact our employees, it’ll impact our customers, it’ll impact our business, but nowhere to the extent the Ukrainian people are impacted.”

“If this has the desired effect to shorten or mitigate what’s happening over there, it’s a cost worth bearing,” he added.

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