On April 14, New York City Mayor Zohran Mamdani “announced La Marqueta as the first site identified for the City’s municipal grocery store program.”
“The 9,000-square-foot store in East Harlem will be constructed from the ground up and is expected to open by 2029. The first City-owned grocery store is expected to open in late 2027. The Mamdani administration plans to open one store in each borough by the end of the Mayor’s first term,” according to the mayor’s office.
The total cost of construction is estimated to be $30 million, which raised many eyebrows among those who know a thing or two about building grocery stores, reports the New York Post.
“Even a high end, gourmet store in the middle of Manhattan wouldn’t cost that much to build,” said Anthony Pena, president of the National Supermarket Association.
“$30 million is an awful lot to spend to build one supermarket,” concurred Avi Kaner, the former owner of New York’s 17-store Morton Williams grocery chain.
Despite the exorbitant construction costs, Mamdani argues the city-run supermarket will “deliver affordable, high-quality groceries that provide meaningful savings to New Yorkers and strengthen neighborhood food access citywide.”
“Grocery prices in New York City have risen nearly 66% over the past decade — significantly outpacing the national average,” said Mamdani. “The city-owned grocery initiative is designed to lower costs on everyday staples by using public ownership to eliminate costs that are currently passed on to consumers.”
First, the main reason grocery prices are so high in the Big Apple is not due to a lack of government-run grocery stores. Rather, it is due to a ridiculous regulatory environment that has made it nearly impossible for private retailers to build new supermarkets in New York City.
“The most egregious planning barrier is that grocery stores over 10,000 square feet are not generally allowed as-of-right in so-called ‘M’ districts, which are the easiest places to find sites large enough to accommodate the large stores that national grocers are used to,” notes Stephen Smith in an article titled “The Real Reasons New Yorkers’ Groceries Cost So Much.”
Thus, in New York City, to “open a full-sized grocery store in these areas, a developer must seek a ‘special permit,’ which requires the full City Council to get together and vote for an exception to the rules. This is a long, uncertain process, and has in the past even been an invitation to corruption.”
In the Big Apple, space is limited, which is typically used as justification for onerous zoning laws. However, just to show how arbitrary these zoning laws are, they do not apply to subterranean supermarkets. Such is why retailers like Whole Foods and Trader Joe’s have opened underground stores in New York City in recent years.
Mamdani wants New York City residents to believe that Big Apple grocery stores are price-gouging customers, and that a government-run supermarket “allows us to intervene where the market has failed.”
But this is not the case at all. Most grocery stores, whether they are national chains or mom-and-pop shops, operate on thin profit margins, typically between one to three percent. In a place like New York City, with sky-high property taxes and retail rent rates among the highest in the nation, it is not easy for supermarkets to stay in business.
In recent years, especially in the aftermath of the pandemic, scores of NYC bodegas and other corner grocery stores have closed because they simply couldn’t stay profitable.
This is not a market failure; it is a governance failure. And the addition of five government-run grocery stores over the next few years will do little, if anything, to solve the problem.
If I were the mayor of NYC, I would address the root cause of the grocery store crisis by injecting more competition into the NYC supermarket market. Mamdani should work with the New York City Council to rescind and reform regulations that stifle the opening of more supermarkets in the Big Apple.
“Economic justice means making sure the basic necessities of life — starting with food — are affordable and accessible in every borough,” said Deputy Mayor for Economic Justice Julie Su. “The city-owned grocery stores initiative is a centerpiece of our economic justice agenda because it addresses affordability, worker dignity, and neighborhood vitality all at once.”
Su is half right. We all want and deserve access to affordable groceries. However, it is completely absurd to believe that government-run grocery stores can deliver so-called economic justice.
Make no mistake, government-run grocery stores are not a new idea; they have been tried and failed too many times to count in places all over the world over the past century or so. Not that long ago, government grocery stores were considered a bad joke that conjured up images of Soviet bread lines and empty shelves. Sadly, Big Apple residents, primarily those without access to stores beyond the city limits, will pay the ultimate price for this awful idea.
Chris Talgo (ctalgo@heartland.org) is editorial director at The Heartland Institute.