06/28/2007 8:19 AM ET

REHOBOTH BEACH, Del.- Who doesn't love a slice of cheese pizza? But rising cheese prices have pizza shop owners wondering if they should bump up their prices or swallow the expense themselves.

Nicola Pizza is a family-owned and operated restaurant in Rehoboth Beach. The restaurant has been selling Italian food, including pizzas, for 35 years. Owner and president Nick Caggiano said food prices are constantly going up, so this is nothing new.

"I'm not happy because of the prices, sales aren't going to be as great they have been, but it's not going to be catastrophic, we're going to survive," he said.

Caggiano said his restaurant will mostly likely balance its budget by absorbing the extra cheese costs. He said the restaurant's prices will not go up that much. But Caggiano said he is able to do that because his pizza is so popular. He said that during lunch and dinner, the lines are out the door.

But other mom and pop shops may not be as lucky. The prices of cheese has gone up 78 percent since last year. A pound of cheese costs $2.08 compared to $1.17 lb. a year ago. Industry observers blame this increase on rising milk and gas prices.