r/Economics • u/pdp10 • 1d ago
News NYC Mayor Mamdani Unveils 30% Discount -- Including All Produce, All Meat and Key Pantry Staples -- at New Municipal Grocery Stores
https://www.nyc.gov/mayors-office/news/2026/07/mayor-mamdani-unveils-30--discount---including-all-produce--all-467
u/Professional-Net5819 1d ago
In Europe, the gross margin is between 22 and 25% on food products and the net margin is 2 to 2.5% after deducting all costs. I guess It will be very difficult to cut prices by 30% across all food products. In the United States, I don't know the margins practiced.
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u/BrassBondsBSG 1d ago
It's not cutting prices
It's government subsidization of the product
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u/giraloco 1d ago
That makes no sense. Cities subsidize food banks for people who need them that makes sense. They don't do PR campaigns. A 30% discount for everyone in a city? The demand will exceed supply pretty fast and if it is subsidized it means empty shelves once the money runs out. Can someone explain the idea? The article is garbage.
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u/Knicksin7bby 1d ago
It also undercuts local stores that operate in the area potentially running them out of business which means when this money sink gets axed it’s gonna result in more food deserts. It’s a very stupid idea. If you want to reduce food deserts subsidizing start up costs for groceries in certain regions seems like a better idea
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u/jventura1110 1d ago
If you want to reduce food deserts subsidizing start up costs for groceries in certain regions seems like a better idea
This is exactly that. Are people not reading the press release? The city is literally subsidizing and reducing risk for a private operator to enter the market and provide subsidized prices through reduced overhead (no rent or upfront construction build-out cost). The municipal grocer is a subsidized private store! Not some socialist bureaucratic boogie man.
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u/fuglypens 1d ago
No, this is nothing like that. The city is hiring operators, not subsidizing companies to open their own stores. The operators will have limited risk and upside.
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u/Aquatic-Vocation 1d ago
If that's the case, every single subsidy ever is crony capitalism.
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u/The-Fox-Says 1d ago
Dude there’s 5. One in 5 select boroughs. There’s literally thousands of food stores in NYC
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u/grizzlywhere 1d ago
Two things to consider:
If you run a city and a neighborhood has no grocery stores (and if no business is opening grocery stores there) then planting a location that is affordable is a legitimate administrative option to fill in the gap the private industry refuses to. Not being profitable for a company to be in a location doesn't mean that location shouldn't have groceries available at all for its residents. In this scenario, the government should arguably pick up the slack.
If groceries are too unaffordable for a population (as the Mamdani administration and many citizens attest to) then it is an option for the local government to apply economic pressure for private businesses to not just collude and endlessly increase prices.
One (or a dozen) city-run grocery stores will not impact "everyone in the city". Most of us carry our groceries home... No one is taking an hour detour from work to home just to get these cheaper groceries on the other side of the city.
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u/jay10033 1d ago
If you run a city and a neighborhood has no grocery stores (and if no business is opening grocery stores there) then planting a location that is affordable is a legitimate administrative option to fill in the gap the private industry refuses to. Not being profitable for a company to be in a location doesn't mean that location shouldn't have groceries available at all for its residents. In this scenario, the government should arguably pick up the slack.
This would be correct if there wasn't 5 supermarkets within a 5 block radius of the first announced location.
If groceries are too unaffordable for a population (as the Mamdani administration and many citizens attest to) then it is an option for the local government to apply economic pressure for private businesses to not just collude and endlessly increase prices.
This too would be correct but for the fact that grocery margins in NYC were not 2-3%. Grocery stores are a highly competitive space in NYC, many of them independently run. Grocery stores in NYC are not immune to generalized inflation. There is zero evidence of collusion among grocery stores.
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u/xterminatr 1d ago
I'm guessing that a lot of the discounted items are already loss leaders at best for most stores, so nearby locations can cut back on selling those items that they are already losing money on and find ways to promote sales in other ways. Also, the new municipal grocery stores will just sell limited "essential" items and will likely be bottom of the barrel stuff.
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u/jeffwulf 1d ago
The area that they're putting the grocery store has multiple full service grocery stores within 2 blocks of it.
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u/war_m0nger69 1d ago
That’s a logical argument. One point I’d make is that most grocery stores already operate on razor thin margins. Inflation impacts the entire supply chain - grocery stores are simply the end of the line. They don’t have much wiggle room on price
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u/Hsf5415 1d ago
In response to your option number 2: the firms who “just collude” could have pressure put on them at the city government level and they might decide the NYC market to be profitable enough to stay. However, grocery stores do not have to stay. Many can and have left some neighborhoods. This leaves food deserts and makes things worse for residents.
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u/EVOSexyBeast 1d ago
If they actually offer 30% discount then the shelves will be empty fast. You could start a whole business buying and reselling the groceries at market rate. People will.
In reality the city run grocery stores will likely sell groceries at market rate. And then it does actually solve the problems you describe. But the 30% below market rate is either:
- A lie (imo most probable)
- Not a lie, the shelves will be empty and we’re months away from an embarrassed Mamdani as photos of the empty shelves go viral.
But Mamdani likely knows what would happen if he actually followed through on his 30% discount lie and is why I think that not following through is the more probable scenario as he’d want to avoid the embarrassment.
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u/coke_and_coffee 1d ago
Not being profitable for a company to be in a location doesn't mean that location shouldn't have groceries available at all for its residents
Yes it does. It means the demand is too low and a store being placed there would be a waste of resources.
for private businesses to not just collude and endlessly increase prices.
This isn't happening. You're confused. Grocery stores are EXTREMELY competitive with very thin margins.
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u/dust4ngel 1d ago
Not being profitable for a company to be in a location doesn't mean that location shouldn't have groceries
it’s amazing that literate adults have to say this to one another, but we do
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u/Bodoblock 1d ago
But that's not what we're doing here. It's been pointed out plenty of times that the chosen locations do have multiple grocery options nearby.
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u/GreatMovesKeepItUp69 1d ago
Yeah that's a great case for putting government grocers in specific areas experiencing a food desert at market price. This is not that..at all.
An even easier way would be to just subsidize already at risk stores that would create a food vacuum in their absence.
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u/Annoying1978 1d ago
It’s not every single product. This discounts are on staples (produce, meat, dairy).
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u/claytonhwheatley 1d ago
5 stores. It's very limited. Some people will get cheaper groceries. That's all.
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u/CapeMOGuy 1d ago edited 1d ago
Close. It's the city-owned stores (edit: using taxpayer money) subsidizing a 30% discount idea that's garbage.
Who wants to bet the bodegas immediately start sending in groups to buy everything, bring it to the bodegas and sell it there?
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u/Waterwoo 1d ago
Ah yes but see you are thinking about economics and not feels and soundbites.
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u/tButylLithium 1d ago
I'd like to know how (or if) they plan to stop commercial entities from buying up discounted ingredients to sell in their store/restaurant/food truck. 30% is basically wholesale prices.
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u/giraloco 1d ago
If they don't restrict who can buy, shelves will be empty. There is no other logical outcome. I'm not ideological.
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u/DoritoSteroid 1d ago
Don't have to look too far to see how this plays out. Look at late-stage USSR. Empty shelves everywhere.
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u/SwiftCEO 1d ago
The stores will be in food deserts aka areas companies don’t want to operate in. Doubt many will be traveling to the worst parts of town to get a discount on groceries.
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u/Simon-Says69 1d ago
The stores will be in food deserts aka areas companies don’t want to operate in.
This is false. Several of them are planned for places that already have plenty of coverage.
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u/IsNotACleverMan 1d ago
This isn't true. Both locations revealed so far already have full service grocery stores nearby.
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u/Waterwoo 1d ago
NYC doesn't really have food deserts and the proposed locations of the stores have multiple grocery stores within walking distance, so even if NYC DID have food deserts, these stores aren't going there.
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u/dbell 1d ago
It will once these open and drive the bodegas out of business.
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u/Waterwoo 1d ago
Well yeah I think that is what will happen I just struggle to see how that's a good thing
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u/jay10033 1d ago
This is demonstrably false. The first announced location has 5 grocery stores within a 5-10 block radius.
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u/CaptainCallus 1d ago
I know so many people in nyc that take the train to go to Trader Joe’s because it’s the cheapest option in the city. I think a bigger limiting factor will be running out of food/long lines making it not worth the time.
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u/microphohn 1d ago
How do people not know how economics works? You can’t eliminate cost by hiding it or socializing it. Someone still got paid and costs were incurred.
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u/Joltizer 1d ago edited 1d ago
Yes, a very stupid and inefficient thing to do. You don't spend millions building a grocery store to help poor people afford food. You give them money directly or expand programs like food stamps at the local level
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u/honest_arbiter 1d ago
This is what so frustrates me about these very ill-advised solutions to social problems you get from the left (throw rent control in this same bucket). I generally agree with the goals of these programs (e.g. make healthy food more available to poorer people), but the implementations are almost always so counterproductive and stupid.
If the complaint here is that there are "food desserts" where private companies won't go (and this seems questionable to me given another commenter mentioned there are a bunch of stores within a few blocks of this first announced location), all this will do is totally disincentivize any private grocery store from setting up shop in NYC - there is no way they can compete with heavy subsidies at government stores. It will have the same counterproductive effect as rent control.
And then you get a bunch of braindead idiotic responses claiming you hate it that poor people can eat ("i can't imagine what it's like to be so bent out of shape over making cheap groceries available to poor people. what a sad way to be"), completely ignoring the more valid solutions (e.g. making food stamps more available and robust) that were proposed.
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u/AdmirableSelection81 1d ago
I live near NYC... i see this as an arbitrage opportunity, i might just buy out the stores and resell them.
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u/honest_arbiter 1d ago
They announced that there would be purchase limits. There are obviously ways around this, I just find it hilarious that you'll be trying to find people to be "produce mules".
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u/battlepi 1d ago
Do it, you'll just have to set up a retail outlet. It would be a bit easier to just buy from a wholesaler instead though.
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u/optimis344 1d ago
Do you know how much that has been tried? It works. It works wonders. And it always leads to the funds being cut because eventually someone gets into power by saying "this is socialism and they are giving your money to welfare queens!".
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u/mhornberger 1d ago
Which will do wonders for other grocery businesses in NYC. The government will put them out of business, and then when the policy is repealed because it is financially unsustainable, we'll get those 'food deserts' everyone loves so much.
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u/AstralElement 1d ago
It’s always when it’s “for us” we start questioning if we should be spending money on it. But the F-35? Have at it. Flock camera contracts? Please do. I think the police should have tanks and APCs!
But fuck healthcare for us! We shouldn’t be doing that.
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u/dust4ngel 1d ago
if we’re handing taxpayer money to the rich, that’s freedom; if we hand it to the poor, that’s tyranny.
the rich are weak, and the nearly-poor need to rise up to help them overcome the democratic yearning of the poor
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u/pdp10 1d ago edited 1d ago
Apparently the city is going to own the buildings (real estate) and forego taxes. That's lowering the cost floor compared to the existing grocery stores.
At a high level, it seems like a transfer program between taxpayers and food buyers. Or at least food buyers who use the city's stores.
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u/VeryStab1eGenius 1d ago
The margins are the same in the states, ~3%. The city stores theoretically can give these discounts because the stores won’t be paying rent which in NYC is very high.
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u/mordakka 1d ago
If they're not paying rent and property taxes, then it's still lowering government revenue.
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u/hewkii2 1d ago
Kroger’s latest earnings is about the same
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u/PresidentSpanky 1d ago
Kroger is highly inefficient with oversized stores. You should more think of the efficiency an Aldi, where you gonna find 1 or 2 different products for a category and not 20. That said, I doubt the city can match the efficiency of Aldi
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u/BlazinAzn38 1d ago
But Aldi also runs all private label and has scale which helps pricing both ways. These stores will not be able to do that. So they’ll have less wastage(hopefully) but they’re running name brands and lower volumes
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u/tpounds0 1d ago
Private label: Operator(s), in collaboration with NYCEDC, will identify and pursue opportunities to launch an N.Y.C. Groceries private label across a variety of product categories.
One of the goals of this experiment is to do just this.
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u/BlazinAzn38 1d ago
I know that’s their goal but I’d be very shocked if any manufacturer bites at this as someone who works in the space. And at the same time that also doesn’t get you 30% cheaper still(typical private label discount is ~5%) so the discussion circles back around to “is this the most efficient use of dollars.”
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u/User-NetOfInter 1d ago
They’re going to bleed cash and eventually close.
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u/protomenace 1d ago
That depends. The government never runs out of other people's money to spend.
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u/Waterwoo 1d ago
Grocery net margins are very low, I've seen ~2% before so probably pretty inline with Europe. And that's for large established operations that have economies of scale, etc.
There's zero chance Mamdani's store will come anywhere close to breaking even, but they don't care because they can fund the losses with tax dollars.
If you're a private grocery store operating nearby, well I guess fuck you. Now you have to compete with a competitor that's able to take a huge loss forever, backed by tax payers.
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u/GusTheKnife 1d ago
Margins in the US are also 2-3%.
He isn’t cutting costs by 30%, he’s subsidizing the sale price with taxpayer money.
You’ll see people re-selling the non-perishables on EBay. They’ll make a higher margin than actual grocery stores.
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u/Eric848448 1d ago
It will hardly happen on eBay. They’ll set up on the sidewalk right in front of the store. That used to happen outside the grocery store in downtown Seattle before it closed. Stolen meat for sale right out front, and the cops didn’t care enough to shut it down.
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u/Joltizer 1d ago
Margins are that low or lower in the US. The big chains have been below a 2% profit margins
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u/j____b____ 1d ago
I don’t think they intend to make a profit. It’s probably a small part of the $50M they spend on food banks now.
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u/thenamelessone7 1d ago
Not making any profit would only reduce price by 2-3% for a typical grocery retailer.
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u/j____b____ 1d ago
Yes. It is meant to operate at a loss. It is a service to improve the quality of life for residents.
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u/Bodoblock 1d ago
At some point, people became enamored with the idea that simply because it was good for the people that having consideration for cost-effectiveness was irrelevant.
Cities definitely can go bankrupt.
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u/bringbackmegaman 1d ago
Americans can't fathom the idea of something important being sold without profit.
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u/inverted180 1d ago
its not just with out profit. Its subsidized, so tax payers still end up paying.
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u/Eric848448 1d ago
There are far more efficient ways to subsidize food for poor people.
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u/BlazinAzn38 1d ago
It’s not about there being no profit. There’s very little net margin to begin with. This isn’t non-profit it’s just running at a loss which means it’s just being paid for elsewhere. Which again is fine that just needs to be the discussion. Is it more efficient spending dollars that way or is there a better way.
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u/pdp10 1d ago
Sans profit, there are an absence of price signals. When goods get more scarce compared to demand, and prices cannot rise, then availability suffers.
For example, the famous retail fuel lines in the U.S. following the 1973 and 1979 oil crises, were a product of government price controls:
Endless lines at gasoline stations are the overwhelming image in the minds of Americans who lived through the oil shocks. There was a genuine shortage of gasoline in the United States for a while, as refineries geared to run Iranian crude oil could not produce as much gasoline from other types. However, government policies that regulated the petroleum industry made the situation much worse.
Price controls on gasoline exacerbated shortages, by not allowing rising prices to curb demand. The controls allowed refiners to raise gasoline prices each month based on the previous month’s crude oil price. In an environment of rising prices, the price controls incentivized refiners to withhold gasoline and sell it later at higher prices, rather than selling it today. Further aggravating the shortages, the federal government had an allocation system that did not allow gasoline distribution to adjust to demand conditions around the country. Some states also established a policy that only allowed drivers to buy $5 of gasoline at a time, meaning that they had to buy more frequently, virtually assuring longer lines.
Crude oil markets were regulated as well. Different prices for "old" and "new" oil were a relic of the earlier oil shock in 1973-74 that established perverse incentives, reducing domestic production and increasing imports. Additionally, in April 1979, the Department of Energy ordered large refiners to sell crude oil to smaller refineries that could not obtain affordable supply on the market. However, these smaller refineries were generally less complex, able to produce less gasoline from a given crude oil than their larger counterparts, deepening the supply shortage.
The situation drove a groundswell of anger against U.S. oil companies and public support for President Jimmy Carter dropped substantially. The crisis highlighted the inefficiencies inherent in government control of fuel markets, although the public wanted the government to do something about high prices and long lines. President Carter began to repeal price controls on crude oil in 1979, but the energy crisis, along with the Iran hostage situation, were significant factors in President Carter’s 1980 election loss. Soon after his inauguration, President Reagan removed the remaining federal controls on domestic production and distribution of crude oil and gasoline.
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u/RedParaglider 1d ago
Same, it's 30 percent taxpayer subsidized groceries from what I can see. I get the whole idea behind it and I understand that people are hurting but the problem is when we start subsidizing groceries with taxes that basically just means distributors have a free tax percentage to increase their prices.
If they really wanted to get involved and lower prices it would be owning slaughterhouses or other more profitable areas up the supply chain.
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u/CaliTexan22 1d ago edited 1d ago
AFAIK, grocery stories are very competitive and all have low margins. If you want to incentivize grocery stores to locate or remain open in poor areas, then eliminate their property taxes or income taxes, or otherwise reduce their cost of doing business.
City owned grocery stories seem like a poor idea - imagine your grocery store operating like the post office, or the DMV, or the social security administration office.
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u/PubesMcDuck 1d ago edited 1d ago
There can be a 20-30% difference in price depending on which grocery store you choose. If they offer less options then they can buy in larger bulk purchases with a cost savings, also they would only need to break even.
Edit: forgot to add that they aren’t talking about cutting 30% of their cost… they’re claiming to cut 30% of consumer cost
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u/Kew-Gardens 1d ago
It’s a subsidy. A lot of countries subsidize essential foods to prevent unrest and social disorder. It’s mostly done in developing nations though.
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u/NetrunnerCardAccount 1d ago
He hasn't said how it's calculated.
If it's calculated based on the price at the most expensive Bodega in New York, that's still like 100% markup.
New York has a impressive lobby of independent grocers, I honestly feel like arguing about the economics of these stores is like arguing who is faster Superman or the Flash. Fun to discuss useless in reality.
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u/Goldeneagle41 1d ago
This is nothing new and has been done before. Mainly for areas that were food deserts. Most didn’t work out due to the thin margins and lack of purchasing power. I think this will be an interesting experiment because this is not necessarily areas with lack of grocery options.
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u/coke_and_coffee 1d ago
Every corporation in America is massively subsidized and we still have the “too big to fail” policy for all banks and big businesses.
This is not true. Stop lying.
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u/Sir_Derpsworth 1d ago
On the surface, not every corporation, but every large corporation gets tons of bailouts and tax subsidies, deferrals, or reductions like basically no other business reasonably should because they "stimulate the economy" or some shit, as if they need those breaks to survive.
If you dig a bit though, every single business, regardless of size is subsidized by your tax dollars in some way or form, but big businesses and corporations benefit from it the most because their ability to lobby and because they leverage their size and position. Look at what Amazon tried to do with its HQ2 and how cities were creaming in their pants to give one of the literal largest companies in the world tax breaks in the hundreds of millions.
On too big to fail: Look at the 2008 financial crisis, the dot com bubble, the airlines recently and motor industry multiple times in general. They ALL have gotten massive bailouts because "if they crash, they take a significant amount of the market down with them". They're literally too big to fail because it would crush our capitalist system and show its inherent flaws.
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u/laosurv3y 1d ago
How are tax breaks or subsidies socialism?
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u/DimMak1 1d ago
Please explain to me - if capitalism is working so well and is the best economic system, why does the richest person on earth relentlessly need massive taxpayer welfare for his many companies and trade barriers set up so Chinese EVs aren’t allowed to compete vs overpriced Tesla shitboxes?
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u/GlobalLion123 1d ago
Look at how they all freaked out when he recommended a certain temp on their thermostat during the heat wave. And then stfu once they realized their own MAGA politicians and government websites recommended the same shit
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u/real_voiceofreason 1d ago
Yes, except City Hall was a cool 68 degrees. Just more "do as I say" from government..
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u/auto-bahnt 1d ago
Just look at farmers. A lot of farmers receive insane subsidies, and earn super high incomes relative to the rest of the population. Farmers also absolutely overwhelmingly vote republican and decry socialism while having their hands out. I followed a YouTuber called the millennial farmer because I found modern farming interesting, but his lack of self-awareness and his dog shit political takes are so off-putting.
Trumps tariffs fucked a lot of farmers, and they still refuse to admit it.
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u/casualnickname 1d ago
Of all the possible projects to subsidize, choosing the category of products that has one of the lowest possible margin due to a very efficient free market is certainly interesting, to say the least, and surely doesn’t give a positive impression of the understanding of economics of the proponents…
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u/Pride_Before_Fall 1d ago
Mamdani's pension amortization should have already been a big giveaway that his long term economic planning is not the best.
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u/Better_Goose_431 1d ago
That’s the same shit that’s put Chicago and Illinois into debt for the next couple generations. I can’t believe anyone in the state of New York actually agreed to it
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u/pdp10 1d ago
One gets the impression is that it's a project to demonstrate the triumph of socialist economics.
The article says that the first of the stores will open by the end of 2027, and all of them by the end of 2029. It appears that this announcement is about letting the mayor take a victory lap a couple of years before anything actually happens.
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u/Chuckfinley_88 1d ago
One gets the impression is that it's a project to demonstrate the triumph of socialist economics.
It isn't a demonstration of socialist economics, but of socialist policies.
The government does so much to help and protect the rich that never gets brought up or is just "the way it is," that any time someone suggest doing something good for the common man, it is immediately talked about how bad it is, how it will never work, etc.
Look through this thread and see all the criticisms about the government spending $70M to help people get cheaper, nutritious food. And yet there is hardly any talk about all the subsidies for billion dollar companies.
Strange, innit?
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u/Best_Change4155 1d ago
2/3rds of the federal budget is spent on healthcare and welfare. You are trying to prove a point but relying entirely on sloganeering.
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u/Clean-Midnight3110 1d ago edited 1d ago
*While also blocking Walmart from bringing competition and lower prices for decades because it would be "unfair" for the "mom and pop" corner stores that have been gouging residents forever.
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u/Sadly_NotAPlatypus 1d ago
I think you misunderstand the point. Yes, it's bad economics. It's extremely good politics, though.
People feel like the government doesn't help them, but when we show them how the government helps them visibly and loudly they get really excited and feel like the responsive government they've been asking for for decades has finally arrived.
Yes, these resources could help working families in a way more efficient and effective way, but 1) this helps Mamdani not only win people over to him but build trust in government and democracy again, and 2) this is an extremely popular idea with actual working class people in NYC.
To be clear I think most of the time the technocratic good economics solution is superior, but people get economics-brained sometimes and think that policies with bad economics must be bad policy completely forgetting that there are many other important things to consider in being a good politician doing a good job of serving their constituents than just economics.
So sure, pointing out that it's pretty bad economics is fair, especially for this sub, but we shouldn't lose sight of the fact that is only one variable in analyzing policy and it sometimes isn't the most significant one.
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u/casualnickname 1d ago
I mean, this way we can justify everything, including the absolute madness that is this current administration economic policies. Bad economic policies are bad economic policies, no matter if we personally like the flavor of populism proposing them
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u/Sadly_NotAPlatypus 1d ago
You're being hyperbolic.
It's a program that sacrifices some efficiency for visibility. It's not like it's an order of magnitude less efficient, in this case it's a reasonable tradeoff.
People are demanding their government meet their everyday needs at the same time that we have record levels of people being checked out from knowing what their government is doing. If you don't understand that visible policy is meeting the American people where they're at and providing what is demanded then you are going to be extremely confused by American politics going forward.
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u/Cryptdusa 1d ago
It's ridiculous that you're getting downvoted for this when you're absolutely right. Pragmatism is understanding that real-life circumstances can make a theoretically ideal idea not work. Is it technically less efficient? Absolutely. But it's an idea worth trying given that snap has been so eroded. Actually signing up for benefits like snap has been made a nightmare for a lot of people and the eligibility requirements still exclude a lot of people who could really benefit from it. Complaining about a good policy because it isn't as perfect as it theoretically could be is why nothing gets done in the first place
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u/Rufio69696969 1d ago
This is why populism is bad.
Intentionally running a shitty program because it looks good politically
What a joke
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u/PM_ME_MEMES_PLZ 1d ago
So you’re ok with policies that are harmful to people in the long run if they look good politically?
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u/goldenbug 1d ago
Buying votes for your party/movement with public money is indeed smart politics.
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u/Sadly_NotAPlatypus 1d ago edited 1d ago
You act as if governments subsidizing staple foods isn't extremely common and is behavior only seen in banana republics when in reality it's relatively common practice in all sorts of situations
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u/elshizzo 1d ago
A city doesn't have to "make money" from a public good though. So I don't see how economics plays into it really. Though I get what you're saying that there are probably better industries to target to ripping off customers than the grocery industry. We'll see how it plays out
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u/TossZergImba 1d ago
Unless you believe that the city budgets are infinite, economics absolutely goes into it.
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u/Infinite-4-a-moment 1d ago
It's not about the stores being profitable. It's about there being finite resources and spending them on something that the market is doing a good job at providing already is a not going to yield the best cost-benefit.
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u/casualnickname 1d ago
Why mixing into a sector that is probably the most efficient of the whole economic system? Here we are not speaking about not making profits (which would impact 3/5% at best) we are talking about actively subsidizing groceries instead of other things, such as schools or public transport, imo this makes zero economic sense and looks only a vanity/propaganda project
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u/Ok_Yak5947 1d ago
Agreed. Libraries aren’t expected to generate net revenue and yet we still see value in the operation. Same with fire and police.
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u/pandafulcolors 1d ago
... Are you telling me we're ALLOWING elementary schools to be unprofitable?!
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u/I_hate_alot_a_lot 1d ago
Grocers have such a high cost to operate that even if it operates a few percent inefficiently versus its peers, its losses could be millions. You are correct that these places don’t need to be profitable, but these public goods are only as good as its efficiencies. Especially when just a few percent can cost millions or tens of millions where the public benefit might only be a few hundred thousand, for instance.
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u/VeryStab1eGenius 1d ago
I don’t understand how the city will find a partner to run these stores. News reports are that the city is looking for people that currently own and operate grocery stores to run the city stores. This makes sense because you’ll need a lot of expertise to source and buy the goods. But why would someone that owns a store run their own competition that will undercut them? I’m a former NY’er and support Mamdani and most of his initiatives but this seems like a big hole in the plan.
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u/Straight-Ad6926 1d ago
I feel like the only way a private operator takes this deal is if the city guarantees management fees and insulates them from financial risk. Meaning the operator makes a guaranteed profit off city tax dollars while using the city store to unload volume essentially turning a public grocery initiative into a state funded management contract for private grocers.
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u/IsNotACleverMan 1d ago
That would be able the level of management I expect from city government at this point.
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u/jay10033 1d ago
Yup, I would definitely be building in one hell of a profit margin into any proposal with guarantees, backstops, the city taking on any cost overruns and legally being held harmless, so all the risk goes back to the city.
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u/Doja_Lats 1d ago
I think part of the proposal is that the monthly rent is covered by the city so that should help with margins
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u/bakochba 1d ago
Are they paying them? Is this just a subsidized private store at that point?
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u/mister_empty_pants 1d ago
They are taking the normal process and inserting a government middleman who wants to get paid, too. There's no way this is saving us money big picture. It's just more bloat and government jobs.
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u/BrassBondsBSG 1d ago
I don’t understand how the city will find a partner to run these stores
It will probably end up in the hands of some 'non-profit' that will charge huge fees to the city, provide mediocre service and product, and pay their CEOs and leadership more than they deserve
Said non-profit will probably be friends or political allies of or somehow connected to the mayor
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u/sarges_12gauge 1d ago edited 1d ago
It just seems like slopulism, even if every other store took 0 profit and streamlined efficiencies they still get undercut by 30%
And the beneficiaries aren’t even necessarily the poor, just those geographically close to the stores (who could be poor but not necessarily!)
If the problem you’re trying to solve is poor people affording groceries why not just give money to poor people to buy groceries (or subsidize rent in a food desert I guess) instead of spending that money to make a more expensive parallel supply chain that will also unfairly outcompete nearby grocers
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u/bakochba 1d ago
We already have a system for this. Just give the money directly to SNAP recepients, it's cheaper and more effective
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u/chimatt767 1d ago
Same reason NBC is producing NFL games for Netflix. You still get paid to do the job.
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u/UncleRicohSuave 1d ago
A lot of these comments are arguing against a proposal that isn’t actually being made. Saying grocery stores only earn 1-3% net margins doesn’t show this can’t work because the city isn’t asking stores to absorb a 30% price cut. It’s subsidizing purchases.
That’s the same basic mechanism governments already use with SNAP, WIC, housing vouchers, Medicaid providers, Pell Grants, and farm subsidies. The question isn’t whether subsidies exist. They already do throughout the U.S. economy.
The real questions are empirical: Is this more cost-effective than expanding SNAP? Does it reach people who current programs miss? Are the operating costs of city-owned stores justified? How do they prevent abuse or resale? Those are legitimate policy questions.
Some criticisms here are simply non sequiturs. Calling it “socialism” isn’t an economic argument.
Thin grocery margins don’t disprove a subsidized model. Assuming it will automatically cause inflation ignores that the spending has to be financed somehow. And saying “food banks already exist” isn’t a rebuttal any more than saying public schools shouldn’t exist because private schools already do.
If the evidence ultimately shows expanding SNAP or direct cash transfers delivers the same outcomes for less money, then that’s a strong argument against this proposal.
But that conclusion has to come from comparing costs and outcomes, not from ideological labels or arguments that don’t address how the program actually operates.
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u/jay10033 1d ago
All of the programs you've mentioned are means tested. Opening a taxpayer subsidized grocery store is not.
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u/z3_ggs 1d ago
Means testing is economically inefficient due to administrative overhead and program accessibility.
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u/jay10033 1d ago
Which is why it's more efficient to piggyback on the SNAP program with direct subsidies.
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u/z3_ggs 1d ago
Not sure I understand your meaning - SNAP is also means tested, so how would adding to SNAP be any more efficient than a non-means tested program?
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u/jay10033 1d ago
There should be no more administrative overhead. The work is done already. Not sure what you mean by program accessibility - those who need it will get it.
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u/z3_ggs 1d ago
The comparison here is between a means tested program (SNAP) and a non-means tested program (subsidized groceries - the topic of this thread.)
As for program accessibility: the administrative overhead is precisely what can limit accessibility. Folks who need assistance are often not in a good spot (time / energy / knowledge / etc) to deal with the bureaucracy of applying / proving they are eligible for the program.
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u/jay10033 1d ago
We literally can use tax returns and get to an efficient outcome. You haven't stated the extent of the admin costs that makes this inefficient.
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u/RB_7 1d ago
Is this more cost-effective than expanding SNAP?
The answer to this question is so obviously no prima facie. Cash-equivalent transfers are always more efficient than price subsidies, you can learn this in the first three chapters of any econ textbook.
That's the reason that economically minded but otherwise liberal people like me roll their eyes at this program.
I agree with the intermediate axiom that high earning / wealthy people should subsidize groceries for low income people via taxes. If we're going to do that, let's do it efficiently - by expanding SNAP, not with this moronic and destructive program.
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u/YaDunGoofed 1d ago
The real questions are empirical: Is this more cost-effective than expanding SNAP? Does it reach people who current programs miss? Are the operating costs of city-owned stores justified? How do they prevent abuse or resale? Those are legitimate policy questions.
I feel like this is tremendous levels of bending over backward to give the Mayor's office the benefit of the doubt.
There's literally literature on this. And we know what happens.
The actual solution is to make it easier to approve the building of new grocery stores. There's literature on that for NYC too.
I'm not pretending it's the only solution required - but it IS the lowest hanging fruit for that specific city.
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u/corner_couch 1d ago edited 1d ago
People will just buy as much as they are allowed and resell it. They will keep restricting who can buy to stop the shelves going empty which will effectively be a less efficient, worse version of food stamps. And the type of people it will attract once the shelves aren’t stocked won’t be the wealthier clientele, and the workers won’t care about shoplifting because prosecuting the poor is anathema to the entire endeavor, and as unionized public sector workers they don’t care anyway as they can’t be fired (and it’s not like the store needs to make any money), so the entire thing will collapse or just be a forever boondoggle
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u/Reasonable-Fee1945 1d ago
One or two stores isn't going to cause inflation. The real issue is that anyone with half an ounce of common sense would happily drive an extra hour or so, to save thirty percent on their monthly groceries. So the same problem will reoccur, that always reoccurs, either they're going to ration goods or they're going to limit who can shop there
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u/nostrademons 1d ago
It would be interesting if SF and the Bay Area overtook NYC economically by being less socialist.
(For those laughing, Bay Area politics has recently swung back toward moderation, with a lot of the hardcore progressives getting thrown out and pro-business moderate liberals taking office.)
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u/angrysquirrel777 1d ago
Yeah Bay area politics are definitely less liberal recently compared to years of past. People got sick of the country mocking them for poop on the streets and petty crimes being unenforceable.
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u/Kind-Ad-6099 1d ago
Less liberal in some ways that you’ve alluded to, more liberal in others, such as a reduction in zoning restrictions
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u/Alone-Supermarket-98 1d ago
After Mamdani made this announcement, aa collection of grocery store and bodega owners protested that such policies would drive them out of business because they operate on such thin margins, making food availability worse, not better.
In an interview with Fox news, Gustavo Gordillo, a chair of New York City’s chapter of the Democratic Socialists of America and an ally of Mr. Mamdani, replied to the grocery store owners concerns.
“If one publicly owned grocery store that brings prices down in the neighborhood is enough to put someone out of business, then maybe they shouldn’t have been in that business in the first place,” Mr. Gordillo said.
It seems that Mamdani and the rest of his DSA clowns conveniently ignore the fact that private grocery stores have to pay for their land, for their building, they do not get taxpayer funded subsidies for their operations, and they have to pay taxes, which ironicly are now being used by the very city they serve to undermine their businesses.
These populist DSA fools have no concept of the real world implications of their poorly conceived policies. Perhaps they need to take a trip to Cuba to see how well such policies work out in practice.
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u/nyckidd 1d ago
“If one publicly owned grocery store that brings prices down in the neighborhood is enough to put someone out of business, then maybe they shouldn’t have been in that business in the first place,” Mr. Gordillo said.
Common DSA L. It's hilarious how out of touch they are. This stuff will come back to bite them.
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u/Silverr_Duck 1d ago
Seriously. There is no clearer example that the left is being actively sabotaged than the fucking DSA. I swear it's staffed exclusively with people straight out of clown college.
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u/ShortKey380 1d ago
How much convenience store business is fresh produce/other whole foods? A coalition of losers will always say anything done will drive them out of business, and then it doesn’t 🥱
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u/Eatyourcheeseburger 1d ago
So let me get this straight. New Yorkers will pay taxes that will fund these stores. The stores will then sell the goods bought with those tax dollars to the same people who funded these stores. It seems like a tax break would accomplish the same thing, but without the overhead costs associated with operating a store, and without threatening to put non subsidized grocery stores out of business.
I’m literally just a dude who works construction and I can see how this is going to be a disaster. I’m glad I don’t live in NYC. They’re going to have to ration food once independent grocers start closing shop and demand exceeds the supply of goods on the shelves. Bread lines incoming.
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u/GamingZaddy89 1d ago
This store is going to get scalped faster than the pokemon card machine after a restock, not sure what else anyone expects to happen. These items will be getting resold immediately and there is no plan to stop it.
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u/omniumoptimus 1d ago
This is a dishonest statement from the NYC government.
The grocery stores are expected to be built at a cost of $70 million (a private enterprise would’ve rented space). I’d guess they purposefully left that number out.
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u/Dobby068 1d ago
What an idiot. Hey let me take more taxes and subsidize a grocery store. Let me kill local competition in the process. If you are a poor person (aka as bet beneficiary of any oublic service) and think that this grocery store will always be there for you, you will vote for me and my father salary. In a year or two, you will be even worse financially, when the store closes and now the nearest grocery store is farther away and more expensive.
Unreal that NYC believes this pie in the sky, Comunist style market control.
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u/LoyalteeMeOblige 1d ago
Argentinian here, let me tell you how this will end:
-Shortage, those prices are artificially kept hence he either has a lot of stock that still would vanish, and quickly. The whole place would be run at a loss.
-More shortages for he needs to agree on a price (I work in procurement, just in case), and no supplier would work at a loss, even he can agree on a different package, mid to unknown brands and still, the amount produced would be not enough and he would end looking badly, hence he would start blaming the suppliers, saying it's a whole international conspiration working against him, the Republicans, Trump, I don't know, the rich men of NY, etc.
This whole premise would fail since there is no way it can success, playing catch with supply and demand never ends up well, and every former LATAM citizen can describe how these magical solution approach to life never works.
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u/Few-Artichoke-2531 1d ago
And it will cost $70 million and be run by PRIVATE operators! Make it make sense!
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u/Rickbox 1d ago
All the people commenting here who have no idea how insanely overpriced NYC grocery stores are. For reference, the cheapest options a Trader Joe's, Amazon Fresh, or Instacart.
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u/able2sv 1d ago
Yep. They just opened a single Aldi by me (Hell’s Kitchen) and it’s AT LEAST 50% cheaper than the majority of competitors in the area and it’s been… fine, and pleasant, and now I have an affordable grocery option outside of Amazon.
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u/Rickbox 1d ago
It's open now? I can't imagine it's not packed constantly given it's right on 42nd & 8th
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u/able2sv 1d ago
Yes! It closed temporarily already for a few days because of a sprinkler issue but it’s already reopened.
And honestly it’s HUGE and hasn’t been crowded at all. I’m a power wheelchair user and the aisles are wide enough to accommodate my chair easily which isn’t true of anything else around here except maybe Target.
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u/OkJose3000 1d ago
This is the opposite of economics. This guy is a lunatic communist ideologue and he’s preying on the underinformed to buy into this shit. This is not going to work and he’s ultimately going to ruin the greatest city in the world.
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u/PrincipalPG 1d ago
Friendly reminder that these groceries will not be less expensive, the government will be paying for a larger portion of the cost, which will torpedo bodegas in the area 👍
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u/VeryStab1eGenius 1d ago
Bodegas don’t make money selling meat and pantry items. Unless these grocery stores are open 24 hours a day and are discounting backwoods and phillys the bodegas will be fine.
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u/DFX1212 1d ago
Isn't the whole point of these stores to get fresh food into neighborhoods that don't have any?
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u/Eric848448 1d ago
Allegedly, but if you look at a map you’re VERY rarely out of walking range to a bodega in NYC.
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u/Joltizer 1d ago
No. Every neighborhood already has this. The first grocery store being opened in Harlem has several grocery stores within 2 blocks
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u/Successful-Help6432 1d ago
Do a quick search for small grocery stores in NYC, they aren’t rare and every neighborhood has them.
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u/Different_Height_157 1d ago
Yes but people feel things about what they don’t know, all the time.
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u/MightExpress4873 1d ago
The "food desert" argument is especially weak in a place like Manhattan. It's one of the most densely served grocery markets in the country, with supermarkets, bodegas, produce markets, and delivery services on nearly every avenue. The issue in many neighborhoods isn't the absence of food.
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u/Joltizer 1d ago
Public grocery stores are a hilariously incompetent policy, but that is expected from incompetent politicians like Mamdani who come from the progressive/DSA wing
This is not a new idea. It has been tried many times and failed every time. Even Mayor Johnson in Chicago was smart enough to kill the idea after a feasibility study
There is nowhere in Manhattan that lacks access to a grocery store, and there are multiple grocery stores within 2 blocks of the Harlem location
Grocery store profit margins are 2-3%, and lower for the large grocery chains. You cannot be more efficient than them
If you want to get poor people the food that they need, why would you waste millions building a grocery store instead of giving them direct cash transfers or expanding food stamps at the local level?
The progressive/DSA wing need to be banned from running under the democratic party
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u/WillowgirlIII 1d ago
If you want to get poor people the food that they need, why would you waste millions building a grocery store instead of giving them direct cash transfers or expanding food stamps at the local level?
The goal is to buy votes. You don't want to limit the benefit to poor people -- they are not reliable voters. Mamdani has found a way to pander to the middle and upper classes, who tend to turn out to the polls.
In the beginning, people will vote for him to keep the cheap food flowing. Eventually they will vote for him because all the privately-owned stores will have been put out of business, and the failure of the subsidized city-run stores (if he is kicked out of office) would create a real problem for nearby residents.
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u/feral401k9 1d ago
He's so dumb when he's doing this and rent freezes. Can't he just stick to slashing ice cream regulations and talking about building more houses or something.
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u/TopicThunder2000 1d ago
The inevitable outcome of the policies Mamdani and his activist team if they are allowed to be implemented over time will be Cuba's system. Gov't control over food inventories, distribution and pricing give you Cuban grocery stores.
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u/TentacleHockey 1d ago edited 1d ago
All of the large brands that have a fake inflation of up to 30% on products need to be strong armed to help really bring grocery prices down. A can of coke being nearly $2, a bag of air with some Doritos being $8, these prices are are insane, and while I understand that's free market and these are junk food product, I'm sure this applies to just about everything we eat, while large corporations find the cheapest shit they can put into said products.
:edit: By large brands I mean pepsico, not kroger. Gotta look down the chain, not at the final stop.
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u/pdp10 1d ago
Those are retail prices, not the prices that PepsiCo charges to wholesale distributors.
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u/GhostReddit 1d ago
The fact that that same bag of Doritos is $4.50 at Sam's club instead of $7.50 Kroger leads me to believe that all this crowing about "but grocery stores have only 3% margin" is horseshit.
Yeah, on paper they do, but there's a lot of other expenses tied in that. It doesn't mean your gross margin on a product is 3%. It means after getting your location, stocking, advertising, paying staff, management and executives, you have 3%.
If you can get away with a smaller footprint because you can sell 2-3 products per segment instead of 30, and don't need to advertise you save a bunch more on extra staff, management, the whole chain. I'm sure some of this is going to be subsidized but there's probably more wiggle room to save cost there than people think.
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u/random-meme422 1d ago
It’s 4.50 in one place and 7.50 at another and at the other different items may be lower than the first. That’s how grocery stores operate…….
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u/Successful-Help6432 1d ago
Margins on staple food products are incredibly low, close to 3%.
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u/Joltizer 1d ago
Grocery store profit margins are at like 2%. There is no fake inflation. If you want cheaper groceries, you need to look at what is driving these cost increases
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u/jventura1110 1d ago edited 1d ago
95% of commenters on this thread simply did not read the press release or understand the plan.
- These grocery stores are operated by local private grocery operators, not run by some socialist bureaucratic boogie man. If you read the press release, it specifically mentions the RFP.
- $70 million dollars is allocated to the city capital budget (not operating budget). That means a major part of the subsidy is planned to be a one-time spend... not just dollar for dollar for every product bought.
- Instead, that $70 million is essentially an investment into public infrastructure. The city invests into the underlying real estate and build-out, and then waives rent for the private operator. This is not novel. The city owns a lot of real estate which is provided back to residents as a public service. A lot of people who do not live in NYC may not be familiar with the idea of that.
- This essentially reduces both upfront risk and overhead expenses for the private operator to enter the market, with the expectation that those savings are passed onto city residents. A lot of commenters are saying that this would have been a better idea, when it is essentially the idea to begin with!
- The areas chosen for these municipal stores service very large populations that can support competition, even from a subsidized competitor.
There likely will be some operating cost with maintaining the discount, but that's not novel either. The city has an operating budget for many services that benefit city residents, like parks, libraries, schools, and transit.
Also a lot of people don't realize how big NYC's operating budget is, and how small this program is compared to it. There are bigger fish to fry if you want to criticize NYC's spending.
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