SUN PRAIRIE — With four 3.5-gallon containers of butter cream at his side, Carl Loeffel sits in his glass-enclosed booth, expertly smoothing icing on a layer of a wedding cake.

Food Fight Restaurant Group, a company that owns area restaurants, including Market Street Diner, said the two had talked over the years about teaming up, and "this time it just worked."

Loeffel, who had to close his own location of Carl’s Cakes in January, has sold his business to Sun Prairie’s Market Street Diner, 110 Market St., where he now operates.

It was not a move Loeffel intended to make.

"Carl’s Cakes on Cottage Grove Road was supposed to be the be all, end all of my life," said Loeffel who opened Carl’s Cakes first in Monona in 2000 and moved to Cottage Grove Road in 2004.

But "we ran into trouble this last spring (2008) with the commodity increase so terrible in so many ways," he said.

Coupled with the cost of providing health insurance for about a dozen employees, it was more than Loeffel could afford.

In 2008, the U.S. Labor Department reported consumer prices in the U.S. were up 4.3 percent over the previous year, reaching nearly a 16-year high. That meant bakeries, pizzerias and other businesses using commodities such as wheat flour and soy products either had to increase prices or find another way to make ends meet.

Tom Siewert, general manager at Clasen’s European Bakery, likens the commodities crunch to what bakeries went through during the Atkins diet fad.

"When times get really tough like that, you really have to throw everything on the table," Siewert said. "You can’t make up what you’re losing by just raising your prices. It’s impossible to price yourself that high."

To adjust to the higher commodities, Siewert said Clasen’s did raise prices on several items, but it also took steps to run a leaner business, such as having garbage collection every other week and re-evaluating supply contracts.

Siewert said while commodities prices have evened out somewhat, prices are still high.

A 50-pound bag of flour used to be $6 a bag, he said. Over the years the price increased to about $10 a bag, but in the spring of 2008 it skyrocketed to $35 a bag, he said. Now it’s come back down to about $15 a bag, still more than double what it used to be, he said.

"Prices have stabilized a bit now, but after a period of incredible instability," said Jean-Paul Chavas, professor of agricultural and applied economics at UW-Madison. "It has been quite a roller coaster."

The extent that prices have changed varies with each commodity, Chavas said. However, "it’s good news for consumers that the very high prices that we saw last summer did not persist," he said. "The current prospects now are for more moderate prices but with continued high volatility."

When Loeffel closed Carl’s Cakes in January, it was not before calling an old friend, which ended up providing a way for his business to continue.

Monty Schiro, president of Food Fight Restaurant Group, a company that owns area restaurants, including Market Street Diner, said the two had talked over the years about teaming up and “this time it just worked.”

Bringing Loeffel to Sun Prairie "just seemed like a really natural, good fit," said Deb Riphahn, general manager of Market Street Diner and Bakery.

The diner has always done baking from scratch, but "wedding cakes are new for us," Riphahn said.

It didn’t take long for word to spread.

"We have hundreds of wedding-cake orders on the books," Riphahn said.

At his new location inside the diner, Loeffel decorates wedding and graduation cakes out in front where people can see him — providing customers a glimpse into what it takes to create love birds by using icing.

The cake business "doesn’t seem to be missing a beat," said Loeffel, who is now in the heat of the wedding season. "People are willing to drive to Sun Prairie for a good cake," he said.

Loeffel describes the move to the diner as "bittersweet," but "it’s getting sweeter every week."

"We haven’t lost anything in the cake business," Loeffel said, adding his wholesale business has actually increased since moving to Sun Prairie. "I feel like they’ve given me a lot of respect," he said. "They’ve made the move really as painless as they possibly can."