Clothing. Food. Gasoline. It seems like everywhere you look, prices for everyday things keep on going up. Inflation rose nearly 7% in the U.S. in 2021 compared to last year — the highest increase since the early 1980s.
Typically, wholesale price increases mean business owners pass their higher costs onto their customers. But what happens when your regulars work at the bottom of the wage scale? It’s a very difficult position for many small business owners in Los Angeles.
KCRW caught up with a couple to find out how they’ve adjusted their prices and are preparing for the new year.
Elizabeth Garcia, owner of La Patrona
Elizabeth Garcia spends almost every day on this industrial street in Boyle Heights. Photo by Benjamin Gottlieb.
Elizabeth Garcia runs a breakfast and lunch cart in Boyle Heights called “La Patrona.” She earns $350-$500 in sales each day. But as prices go up for her everyday ingredients, from food to fuel, it’s eating into her profits.
Benjamin Gottlieb: How much have the prices gone up for some of your staple ingredients?
Elizabeth Garcia: The biggest impact [of inflation] for me is the price of my raw materials, so the price of meat, vegetables; also the price of disposable goods: cups, forks and plates. To give you an example, onions are one of the main ingredients of my cooking. Months ago, I was getting a bag of onions for $14 to $16, depending on the quality. Right now it's $24 to $27.
Most of Garcia’s customers work in the nearby warehouses in Boyle Heights. Photo by Benjamin Gottlieb.
Did you raise your prices? And if so, how did that go over with customers?
Yes, I tried raising my prices to cover my increase in costs. But then I noticed that many of my customers were ordering less. Others stopped coming altogether. So I had to bring my prices back down. A lot of my customers make minimum wage, and so this inflation … really affects them too. Right now, my tacos are $2.25. I would need to charge at least $2.50 to make up the cost of inflation. So I’m just eating the extra cost right now.
La Patrona serves these carnitas tacos. Garcia says most of the guisados (stews) she uses are her grandmother’s recipes. Photo by Benjamin Gottlieb.
What worries you the most about your business heading into next year?
My greatest concern is how much more prices will rise in the next few months. When I go to the supermarket now, I notice that prices are higher week to week. What will happen to me if they keep getting more expensive? What am I going to do? I am going to have to raise prices more and hope my customers keep coming. But I have to tell you, I have a plan. My strategy is to keep looking at all the prices in the supermarkets around me so that I can keep looking for the lowest prices.
Juan Arreola, owner of AG Woodworking and Finishing
Juan Arreola standing inside his cabinet and furniture warehouse in Boyle Heights. Photo by Benjamin Gottlieb.
Juan Arreola is the owner of AG Woodworking and Finishing in Boyle Heights. It’s located on a street full of both commercial and residential properties. Before the pandemic, Arreola says he had no problem filling orders. But supply chain disruptions coupled with inflation have pushed his business to the brink.
Benjamin Gottlieb: How much have the prices gone up for some of your staple materials?
Juan Arreola: This inflation has impacted me very negatively. Very, very negatively. I’ll give you an example: Plywood is one of my staple materials. The price has skyrocketed. A sheet of plywood that was costing me $37 last year is now $67. So it’s almost doubled.
Arreola says he’s working on several custom chairs for a client. Photo by Benjamin Gottlieb.
Did you raise your prices? And if so, how did that go over with customers?
Well, one of my big problems is that I am months behind because it’s also hard to get materials. So I’ve quoted clients for a cabinet months ago and now it costs me a lot more to make. Some of my quotes are six months old, but the price of materials has more than doubled in some cases. And so I have to either eat the cost or risk losing my clients. It has completely destabilized my budget and I’ve been coming out with negative profits.
What worries you the most about your business heading into next year?
If it wasn’t for the loan I got from Inclusive Action for the City, I would’ve had to shut down. They helped me pay my power bill. So, for now, I can keep going. … When you start a business like this, you want to do well. You want to make money. I have two daughters, one going to college. So I have to do well. Sometimes there are difficulties along the way, but one has to hope that it will turn out better in the future.