As the retail food industry wades through today’s challenging economic climate, the cost issues it faces are filtering dramatically to consumers.

“As business leaders, we’re all affected by similar things,” said Don Keprta, president of Dominick’s Finer Foods Corporation, speaking at the Greater Oak Brook Chamber of Commerce annual meeting and awards breakfast at the Oak Brook Bath & Tennis Club. “It’s amazing how some of the cross connections happen between businesses.”

He is referring to the trickledown affect the hike in energy prices is having on the cost of business.

“The increased cost in fuel across the board has affected us all,” Keprta said. “It hits (retail food chains) in two ways, both in our acquisition costs and our distribution expenses.

“Our vendors are charging us more because they are facing additional costs. Then we have additional distribution costs as we take those products from our warehouse and transfer them to our stores.”

As a result, wheat futures traded at the Chicago Board of Trade rose to an all-time high of $13.49 a bushel on Feb. 27, 2008, noted Keprta. Additionally, further price increases for milk and milk byproducts are expected this year because of the increased demand for ethanol.

“Forget about four dollars for gas, now it is four dollars for milk,” said Keprta.

What’s more, the cost of poultry will also continue to rise.

“Poultry prices have increased largely because of additional costs for feed because of the pressure on the corn market from ethanol production,” Keprta said.

“It’s amazing how those connections take place that you really don’t think about.”

In essence, as energy prices rise, so will everything else.

Thus, paying high prices at the pump will result in paying markedly more for commodities.

In addition to the mounting costs of doing everyday business, Illinois state taxes have reached unprecedented levels, putting even more pressure on business owners. With new tax bills expected to be proposed in the state Senate, it is up to the state’s business leaders to fight those proposed tax increases, said Keprta.

“We know the economy is a concern when every level of government is looking to put additional taxes on businesses,” Keprta said. “It has been a tough year, but we’ve fought for fair tax treatment.”

Last year, Dominick’s joined the fight against the proposed Illinois gross receipts tax, which would have cost business owners between $7 billion and $8 billion. The House voted 117-0 against that bill.

Business leaders and organizations also fought to successfully repeal the governor’s 3 percent payroll tax, which would have affected all businesses operating in the state of Illinois that employed nine or more persons.

“When business people get together to fight against an unfair and unjustifiable tax, we get results,” said Keprta. “All of the pressure we applied paid off and it will continue to pay off.”

One of the more pressing taxation issues involves Cook County’s sales tax hike, which will go into effect July 1 and has resulted in outrage among many of the county’s municipalities, especially those bordering lower-tax counties or states.

“I guess it’s nice to be number one at something,” Keprta said, “but to be number one in the entire United States for the highest taxation rate (in a city), I don’t think is something to really be proud of.

“This tax hits our customers on their purchases but then additionally business owners have to pass along some of those costs (to costumers) as all of our businesses are going to be hit with additional expenses for electricity and fuel because of that tax.”

In order to defray some of these costs, Dominick’s has initiated a health care plan that pays 100 percent for preventive care and rewards employees for good behavior, allowing employees to take more control over their personal health care decisions.

“Rewarding employees for taking better care of themselves sounds like an innovative idea but we’re really just following the lead of the car insurance group,” said Keprta.

Car insurance companies lower premiums and provide other incentives for safe drivers and this idea is being transferred to health care.

“Fifty to 70 percent of the nation’s health care costs are directly associated with behavior—tobacco abuse, obesity, alcohol abuse,” Keprta said. “It’s surprising that prevention incentives for healthy behavior have not become a bigger part of the plans across Illinois and the country.”

Part of the plan provides financial incentives through health care reimbursements for healthy choices. It also covers an array of preventive care such as 100 percent coverage on yearly physicals and cancer screenings as well as 100 percent coverage for tobacco cessation, weight loss and stress reduction programs.

“The theory is that if you get people healthy, the costs are going to be a lot less as you go forward,” said Keprta.

“All of this we’ve accomplished and we’ve reduced the overall health care costs of the company and our employees by 15 percent so far, while reducing the out-of-pocket health care costs for our employees by between 20 and 34 percent.”