COMMENTARY: A poor record for city-owned grocery stores

A generation ago, Ronald Reagan won the White House by declaring that the most frightening words in the English language are, “I’m from the government, and I’m here to help.”

In New York City, the Democratic candidate for mayor, Zohran Mamdani, is hoping to win next week’s election with his own version: “I’m from the government, and I’m here to run your grocery store.”

A new report from the Taxpayers Protection Alliance says Reagan, not Mamdani, is winning that debate. “Mamdani doesn’t understand markets and the private sector,” said the alliance’s President David Williams. “Government creates problems, and the private sector solves them.”

Mamdani, a self-described Democratic Socialist, has proposed a pilot program of five city-run grocery stores in New York City, one in each borough. He thinks the stores can bring down costs for shoppers and fill what he claims are gaps in the availability of grocery stores in neighborhoods underserved by the private sector.

Mamdani’s plan would cost taxpayers $60 million.

In its new report, protection alliance notes that similar schemes have been tried in other cities and have nearly always failed. “The truth is that there are almost no credible examples of successful government-owned stores that could survive the test of competition and efficiency,” the report states.

“Stores in Erie, Kansas, and Baldwin, Florida, have failed to break even despite receiving subsidies for years. The city of Erie ultimately transferred operations to a private company, and the Baldwin store closed last year. Ironically, Kansas City, Missouri’s, failed attempt to run Sun Fresh Market, which foundered despite millions of dollars in taxpayer funding, met its unceremonious end during Mamdani’s fervent campaign for city-run groceries.”

Mamdani argues that by using government property (no rent) and operating tax-free, the stores will keep prices lower and bring fresh food into neighborhoods where options are limited.

Are New York shoppers suffering from limited options? Research ranks the city third nationally in supermarket accessibility, with residents, on average, less than half mile from a store.

Williams counters that, aside from the government’s poor track record in operating businesses, Mamdani wants to spend tax dollars to fix a problem the private sector is already solving.

“Mamdani doesn’t understand the innovation in the grocery sector over the past decade,” Williams said. “While he’s talking about the government running brick-and-mortar stores, New York City shoppers are already using services like Peapod, Instacart and other delivery services. Amazon, which has long delivered groceries, has launched a ‘price-conscious’ grocery brand. That’s going to be a game changer.”

The report notes that those delivery services are also available to families who rely on SNAP benefits.

Williams also notes that the stores most likely to be negatively affected by these taxpayer-subsidized, rent-free grocery stores aren’t the big players such as Whole Foods or Trader Joe’s, but the neighborhood bodegas and corner markets nearby.

“That’s a shame, because these local bodegas are a hub of activity in these communities,” Williams said. “In a city of millions, these stores give you a hometown feel.”

Mamdani has made affordability in one of America’s most expensive cities the centerpiece of his campaign. The alliance report argues that the way to bring down prices isn’t with more government intervention — such as running retail businesses — but less.

“Rationalizing building codes, zoning laws and fire codes to end the one-size-fits-all approach to rulemaking would help small corner stores compete with large supermarkets,” the report states.

“Reforming licensing and permitting protocols and eliminating redundancy of inspections from federal, state and local agencies with overlapping mandates would relieve regulatory pressure still further. So long as expectations imposed on would-be grocers remain unreasonable, so will grocery prices.”

Williams acknowledges that Mamdani’s message of lower grocery costs might help him beat Andrew Cuomo and become New York’s next mayor. But if Manhattan shoppers are counting on a future of government-run grocery stores, they may be disappointed.

“This is not going to work,” Williams said. “In the end, Mamdani’s plan will mean fewer choices, weaker markets and higher prices for New Yorkers.”

Michael Graham is the managing editor at InsideSources.com.