In New York, often named the most expensive city in the United States for grocery shopping expense, Zohran Mamdani said on the 27th (local time) that the city would open five city-owned grocery stores and sell meat, vegetables, milk and eggs at prices 30% lower than the market. The city will provide the site and construction costs, and will also shoulder rent, property taxes and the money required for discounts. Owners of existing New York neighborhood supermarkets said they cannot compete fairly against a rival backed by tax support and have begun reviewing a lawsuit.
On the 27th (local time), Mamdani held a press conference at a warehouse in Brooklyn, New York City, to unveil a plan to operate city-supported grocery stores. The 30% price discount that drew the most attention applies only to some items in the store. The city designated basic groceries that residents routinely and repeatedly buy—such as fresh produce and meat and seafood, bread, milk, eggs and butter, and staples like rice, beans and nuts—as a "core basket of everyday groceries." The 30% discount applies only to this core basket. The city said it would include about 20 product categories by adding dairy, refrigerated foods and shelf-stable foods, but has not yet released the full list.
Core basket prices are reset each month at the beginning of the month based on the average price of the same items sold in New York City. Once set, they remain unchanged for the month. The idea is to prevent the weekly price spikes seen at regular supermarkets so consumers can estimate their monthly food expense. Items not in the core basket are sold at general market prices. The New York City Economic Development Corporation (EDC) estimated, "If we cut prices on core groceries by 30%, the overall grocery basket expense at public stores will drop by an average of 15%," adding, "Households can save about $90 per month (about 130,000 won) and about $1,000 per year (about 1.47 million won)."
Mamdani said the 30% figure rolls back price increases since the COVID-19 crisis. "Grocery prices in the United States have risen by about 30% since the COVID-19 crisis," he said. "This discount broadly aligns with that increase." The Washington Post (WP) said recent increases overlap with tariff measures imposed by President Donald Trump and the effects of the war with Iran. In a poll the newspaper conducted with Ipsos, about two-thirds of Americans said grocery prices are hard to afford.
Until now in the United States, programs that cover grocery costs targeted only low-income households. The Supplemental Nutrition Assistance Program (SNAP), known as "food stamps," has played that role. To qualify, a household's gross monthly income must be at or below 130% of the federal poverty line, or its net income must be at or below the poverty line. This year, the federal poverty line is set at $1,305 per month (about 1.9 million won) for a one-person household and $2,680 per month (about 3.92 million won) for a four-person household. In New York, more than one in four residents lives below the poverty line.
City-run grocery stores do not consider income thresholds. They do not collect income documentation. Like regular supermarkets, they sell goods at the same prices to all customers who visit. The city said, "The process is simple, and people can avoid the burden of being identified as welfare recipients." Critics countered that even well-off people would get tax-funded discounts. The Mamdani administration said in response, "With the rising cost of living, we need to provide discounts to all residents."
Although the city will run the stores, City Hall employees will not place orders or man the registers. The city will secure the storefronts and cover rent, property taxes and maintenance costs. Losses from selling core foods at a 30% discount will also be covered through operating subsidies. Private companies will operate the stores. A private operator selected by the city will contract with wholesalers and handle ordering, inventory management, hiring and customer service. On the 27th, the city issued a 44-page request for proposals with these terms and said it would solicit operators until Oct. 16.
For private operators, city-run groceries carry a lighter cost burden than regular grocery stores. Because net margins are thin in grocery retail, trimming a few fixed costs creates more room to lower prices. Regular stores must add not only wholesale purchase costs but also rent, labor, electricity for refrigeration and freezing equipment, losses from theft and spoilage, and loan interest into their selling prices. At public supermarkets, New York City pays rent, property taxes and maintenance and even subsidizes discount losses.
As a result, backlash has mounted among small business owners who run existing groceries, saying they cannot beat a competitor backed by tax support. Frank Garcia, head of the Association of Multiethnic Chambers of Commerce, told the New York Times (NYT) on the 27th, "If the city cuts prices, we go under," adding, "How can we compete with prices that are 30% cheaper?" He said he is preparing to file a lawsuit to block the city-run grocery stores. In the midst of this, Gustavo Gordillo, co-chair of the New York chapter of the Democratic Socialists of America (DSA), which is close to Mamdani, said in a Fox News interview, "If a business can be crushed by a single public store, it shouldn't have started in the first place," further angering small-business owners.
Conscious of the backlash, the city restricted the items sold. City-run groceries will not sell prepared foods and will not carry beer, cigarettes or lottery tickets. Interim EDC CEO Ginny Pak said at a board meeting, "We hope public stores will be an extension that continues the business of neighborhood shops." Mamdani also said at the press conference on the 27th, "We do not intend to compete over the question of survival with grocery stores."
Merchants countered that this measure would not protect their turf. In neighborhood supermarkets, fresh items like milk and eggs serve as loss leaders that draw customers. Shoppers who come for milk also buy drinks, snacks, tissues and detergent. If customers who used to buy these core foods peel off, sales of the items that sold alongside them and wholesale order volumes decline together. As volumes fall, wholesale unit costs rise, further eroding a store's price competitiveness. Lisa Sorin, head of the Bronx Chamber of Commerce, told Politico, "Small businesses facing the same inflation without support are now in crisis."
The money consumers save at the register ultimately comes out of New York City's finances. In last month's budget agreement with the City Council, the city allocated $70 million (about 102.8 billion won) in capital funds to build the stores. But to keep selling meat and vegetables 30% cheaper, separate operating subsidies will be needed each year. The city has not disclosed how much this expense will cost or what it expects the amount to be. Andrew Rein, head of the Citizens Budget Commission, said in a statement to AP, "It is questionable whether subsidizing entire stores and shoppers' entire baskets is the most efficient way to reduce living costs and food insecurity."
The city plans to open the first city-run grocery store at The Peninsula in Hunts Point, the Bronx, at the end of this year. The second store is slated to open in 2029 at La Marqueta in East Harlem, Manhattan. Locations in Brooklyn, Queens and Staten Island have not yet been set. Mamdani said, "I will open all five before my four-year term ends." AP reported that Mamdani called the idea a "small experiment" during last year's campaign.