3 Reasons Why Zohran Mamdani’s City-Run Grocery Stores Will Fail

New York City Mayoral candidate Zohran Mamdani says City Hall needs to get into the grocery business because New Yorkers are being “priced out” of private supermarkets. If elected, Mamdani says he’ll spend $60 million on opening one government-run grocery store in each of the five boroughs that would deliver healthier produce at lower prices. Here’s why that’s a terrible idea.

Mamdani says that New Yorkers should think of city-run grocery stores as a “public option” that would deliver cheaper food by saving on rent and taxes. And they wouldn’t need to make a profit.

Except profit margins for grocery stores are typically below 2 percent, and private grocers keep costs down by utilizing complex supply chains and economies of scale that Mamdani’s stores won’t have access to.

“The grocery business is really tough,” says Scott Lincicome, who is the vice president of general economics at the Cato Institute. Private grocery stores provide “a vast variety of fresh frozen produce and other goods that everybody wants all the time, which is actually really difficult to do, particularly at reasonably low prices.” In Kansas City, a government-run grocery store scheme lost nearly $900,000 just last year. 

Lincicome says that if New York politicians want to give their constituents access to cheaper groceries, they could allow Walmart in the Big Apple. But New York politicians have used zoning regulations to keep the nation’s largest and most affordable supermarket from opening a store anywhere in the five boroughs. 

“Walmart is the absolute leader in supply chain efficiencies,” Lincicome told Reason. It “does this via a truly global network of warehouses and trucks and airplanes and all of these amazing things that shave off fractions of a penny off of every transaction.” The idea that New York “could somehow try to replicate Walmart’s global supply chain and entire business model is just laughable.”

Mamdani says his grocery stores will help address the problem of neighborhoods lacking easy access to fresh food. But Lincicome cites a recent study showing that “ranked the Big Apple the No. 1 U.S. metro area in terms of residents’ ‘equitable access’ to a local supermarket.”

“You can basically walk almost everywhere in New York City in 10 minutes and find a grocery store,” he told Reason.

Lincicome cites multiple studies (1, 2, 3) showing that new grocery stores don’t improve food access. But this is old news: In 2012, Reason covered three earlier studies that exploded the myth that adding neighborhood supermarkets improves the diets of their surrounding communities.

Mamdani said that he is going to pay for his grocery stores by “redirecting” $140 million worth of city funding that is already being spent subsidizing corporate grocers. As the Washington Examiner’s Timothy Carney was the first to notice, that number is based on a misreading of a city website. The city subsidizes some private grocery stores at a cost of about $3.3 million per year.. As some Bronx residents told Fox News‘ Kennedy in a new video published by Reason, the city should focus instead on helping the homeless, dealing with “rats the size of cats,” and cleaning “all of the needles on the street.”

Direct assistance is a more cost-effective and less destructive way to support low-income households than government-run supermarkets, and it’s something the federal government already does in abundance. Through the Supplemental Nutrition Assistance Program (SNAP), or food stamps, 1.79 million New Yorkers—20 percent of the city’s population—receive help purchasing groceries each month.

As one New Yorker told Kennedy in Reason‘s latest video, “you’re focusing on the wrong things, Mamdani.”