Hamilton eateries are seeing rising costs of ingredients, and shrinking profit margins. How are they managing?

What broke the camel's back for the owner of Mikey's Cream Pies was a dead air conditioner in the peak summer heat.

Mike Jensen was convinced it was time to let go of his passion project-turned-pie business. He said he didn't have the slush funds" to cover the cost of repairs, putting him in a bad position."

But the ungodly" heat and broken air conditioner wasn't why this Barton Street East-based business was thinking of closing. It was the compounding effects of rising costs of ingredients," costly packaging, and shrinking profit margins since inflation started soaring.

It isn't unique to him.

Lisa Stanton, the owner of Vintage Coffee Roasters on King Street East, was contemplating where to make cuts.

While the downtown cafe survived the pandemic, the cost of production spiked. She decided to reduce the hours of the cafe to save on staffing and other logistical costs while making sure her team was doing fine.

I just want to make sure my staff is taken care of, and that I'm still getting customers," Stanton told The Spectator. It feels like a very thin line that we're all walking and most small businesses are in that same place."

The easy solution to their problems could've been raising prices like many other eateries. But that could harm small businesses, or worse, scare off the customers with aggressive price hikes.

Tomah: Taste of Syria is in the process of reopening. In February, Mohamad Tomeh had to make the hard choice to close the previous location at Queen Street South as the rent spiked.

Now, as Tomeh prepares to return to the market with a new location at King Street West, he's finding everything too expensive. Still, he wants to stick with the original menu and prices because he doesn't want to surprise my customers and my community with any increase."

With all this going on, how are they managing?

In simple words, barely.

Jensen recalled being laid off from his 30-year-long career in construction right before Christmas 2020. Soon after, he found himself baking from home. Fast-forward three months, Jensen opened his pie shop in March 2021.

It happened fast. He maxed out his credit cards and took out loans to support his passion. At that time, he said, he was easily making an average 17 to 18 per cent profit per pie.

Then the prices started going up, partly because of inflation and the war in Ukraine. Jensen said ingredients went up about nine per cent, which hurts but that's doable."

The unbearable cost was for packaging. Six months ago, each pie plate used to cost 50 or 60 cents. Eighteen months later, each pie plate costs about $2.

That's really killing me," Jensen said.

He has been running the store single-handedly with occasional help from family and friends, and driving for hours to get deals on ingredients like butter, all to keep the operational costs low.

And he remained determined to not raise his prices.

On Aug. 9, tired of the overbearing costs of packaging, Jensen announced on Facebook he was planning on closing the store. Within a week, he started receiving support and offers for refinancing and a decent discount from his landlord, saving Mikey's Cream Pies from shutting down.

Stanton of Vintage Coffee Roasters has been finding supplies more and more expensive" every week. The biggest production expense is the cost of flour and packaging for takeout, she said.

For packaging like cups for iced drinks and takeout boxes, she said, every time I order, that costs me $40 more per case." Meanwhile, the store has been facing back-orders with supplies for ingredients and packaging.

Stanton also hired a baker who could use leftover fruits and supplies to create new recipes and save food from getting wasted. Last week, they (the baker) created a peach galette using leftover peaches and items that we have in the fridge."

That creativity certainly helps because it stretches further," said Stanton.

On a positive note, the rent hasn't changed, she said.

Tomeh knows it's going to be hard adjusting to the changing market. Prices of the must-have items for his restaurant, including chicken, beef and oil, have soared over the last six months. For instance, between January and September, wholesale oil prices increased from $39 per 16 litres to $53 per 16 litres, according to Tomeh. When he started the business in 2019, oil was $20 for the same amount.

He doesn't see raising prices as an option, especially when he's returning to the business after the break.

Tomeh said he doesn't want a lot of profit from this," but wants to focus on returning to the community.

His family-run business had been open to customers for three years in Hamilton. The owner said although it's very hard because of high inflation," he is hopeful the restaurant will do well.

In my work experience, after a pandemic or recession that occurs in the world, the demand for food increases," Tomeh said.

Ritika Dubey is a reporter at The Spectator. rdubey@thespec.com