Over the past year I’ve tracked the roller coaster trends in commodity food costs that affect the restaurant industry. It started in late 2007 with the “corn bubble” where over zealous farmers were chasing the ethanol craze, creating a ripple effect on the world food supply. The resulting food cost escalation squeezed restaurant profitability and forced many to shutter their eateries for good.

In early 2009 it appeared the bubble had burst and the sky-high costs of proteins, wheat and dairy came crashing down. As is typical with this economic condition, high prices led to over supply and now dairy prices have plummeted to 30 year lows. This is great news for restaurants and specifically, pizzerias, who consume 25% of  cheese in the US. While consumer spending continues to apply pressure to top line growth, there has been some commodity cost relief following an awful 2008.

Yep, the market forces of our great economy are at work. We can expect that lower production will offset any market oversupply to naturally stabilize prices. It may take some time and the overflowing coffers of the suppliers from the record high prices of 2008 may suffer a bit. On the flip side, the wholesale consumers get to enjoy a little extra profit that had all but vanished during the same period.

Just when you thought it was safe to draw a paycheck from your small business…