The High-Stakes Gamble on City-Owned Grocery Stores

Mayor Zohran Mamdani’s plan to establish five city-owned grocery stores in New York aims to provide affordable produce, meat, and seafood at 30% lower prices than typical retail outlets. Critics argue that this effort will ultimately harm small business owners, who are already struggling to stay afloat.

Carlos Collado, a Dominican immigrant who has managed independent grocery stores in the Bronx and Manhattan for over three decades, claims that the city’s tax breaks for big corporations have made it difficult for him to compete. Mamdani’s plan, he says, will make it even harder for him and others like him to succeed.

The city’s allocation of $70 million from its budget to fund these stores is a significant investment, but it remains to be seen whether this venture will bring the intended benefits. The model being proposed by Mamdani involves private operators managing the stores, with the city issuing a request for proposals. This approach has been tried in other parts of the United States with mixed results.

In Baldwin, Florida, a similar experiment ended in failure when the town closed its market after four years due to poor sales and high operational costs. Similarly, in Kansas City, a grocery store and shopping center funded by the local government shut down in 2025 due to crime increases and slow sales. On the other hand, Atlanta’s city-owned grocery has received positive reviews since opening last year.

Stephen Zagor, an adjunct associate professor at Columbia Business School who focuses on food businesses, notes that “it’s a very low-margin business.” The mayor’s plan to negotiate large-scale pricing from suppliers may help reduce costs, but it is uncertain whether this gain will offset the expenses associated with operating these stores.

Labor costs are also a concern. Mamdani has promised workers union-level standards, which is welcome, but it remains to be seen how feasible it will be for the city to maintain profitability while providing fair wages and benefits to employees.

The decision by Mamdani’s administration to exclude hot foods from the city grocers may prove to be a strategic mistake. Prepared foods have become a significant source of revenue for many grocery stores in recent years, and limiting their offerings could make it harder for these businesses to stay competitive.

Some critics argue that small business owners are overreacting, and that if they cannot compete with lower prices, perhaps they should not be in the business at all. However, this perspective overlooks the complexities involved in running a retail operation, particularly in an industry like food retailing, where margins are already thin.

Ultimately, the success of Mamdani’s plan will depend on how well it is executed and whether it addresses the needs of New Yorkers who struggle to afford basic necessities. The city must carefully consider the potential consequences for small business owners and ensure that the benefits of this initiative are equitably distributed among all stakeholders.