Aaron Cahall and Andrew Cannarsa, The Examiner
2008-05-20 07:00:00.0
Current rank: # 2,731 of 3,098

BALTIMORE -

For a while, Mark Danner was cruising along.

Danner has delivered pizzas for the Papa John’s on Snowden River Parkway in Columbia since 2000, and until recently used a fuel-efficient Honda Civic to make his runs as gas costs skyrocketed. But then the car’s engine gave out, and Danner had to make deliveries in his other vehicle — a gas-guzzling Chevy Tahoe SUV.

“I’m really feeling it because I’ve got to make runs in the truck to keep my job, to keep the money coming in,” he said. “Most of the other guys, they’ll drive [fuel-efficient] Corollas.”

The increase in Danner’s costs parallel the jump in gas prices affecting virtually every business on some level. Although fuel costs factor into the bottom line of most industries, for some, it’s an expense that far exceeds pizza dough or desk planners.

THE COST OF DOING BUSINESS

Most of Matthew Laraway’s business is done outside the office.

Laraway, senior director in charge of industrial real estate sales and leasing for Cushman & Wakefield in Baltimore, travels throughout the region to look at available buildings, meet with sellers and make deals with buyers.

One cost of making those deals? Gas station stops to fill up the tank on his Toyota Sequoia SUV.

“I wish I couldn’t drive as much as I do, but it’s a necessary part of the business,” Laraway said.

Just last week, with appointments in Harford County and Washington County, Laraway estimated he logged about 600 miles. Laraway said travel reimbursement policies differ from firm to firm in the commercial real estate industry, but some, such as Cushman & Wakefield, ask the broker to cover   transportation costs.

“We look at it as a necessary cost of doing business,” Laraway said.

“It’s a physical business. You have to go to the site and you have to meet the buyers,” Laraway said. “It’s very difficult to sell anything from your desk.”

BREAKING EVEN

That’s the problem facing Bruce Cohee and agents at his two offices in Towson and Kent Island. 

Cohee, owner of Nationwide insurance provider Bruce Cohee Agency, travels back and forth between the offices several times a week and said he’s tried to limit those trips when possible. He said his agents have started doing more work over the phone or online. They don’t receive reimbursement for mileage, other than their sales commission.

“It’s always better to see a customer face to face when you’re either adjusting a claim or even at the point of a sale, recommending insurance,” he said. “But with the price of gas, we’ve had to do more over the phone.”

The Internal Revenue Service set the standard mileage rates, used for tax deductions of work-related travel this year, at 50.5 cents per mile driven for most businesses, 19 cents per mile for medical or moving purposes, and 14 cents per mile in service of charitable organizations. But many employers don’t count mileage as an expense, leaving the employee responsible for deducting it.

PASSING ON THE PRICE

Danner and other drivers at Papa John’s make an hourly wage — his is $7 per hour — and take $1.05 from the $1.60 fee charged for every delivery. Earlier this decade, Danner said the situation was reversed, with the company paying drivers 70 cents per delivery out of its own pocket.

Daram Bk, owner of local pizza joint Mikie’s on Fort Avenue in Baltimore, said he’s been faced with potentially increasing not only his employees’ pay, but menu costs. His drivers pay for their own gas, and suppliers’ costs are up about 10 percent.

And however they might or might not be reimbursed for travel, many employees simply aren’t bringing home as much money as they were when gas was $2 a gallon.

“They make money off tips and their salary,” Bk said. “They can’t make the same kind of money when gas prices increase.”

acahall@baltimoreexaminer.com

acannarsa@baltimoreexaminer.com