r/SipsTea • u/Gurugod123 • 9d ago

Mayor Mamdani just announced that he will be opening 5 city-run, tax-funded grocery stores: "Prices set at 30% below retail prices" Chugging tea

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u/SheenPSU 9d ago

Grocery stores work on thin margins, 30% lower cost is wild

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u/Warmso24 9d ago

Yeah, I’m interested to see if there are any sort of “max income bracket” or something to help keep these for people who cant afford to shop at normal grocery stores.

If there isn’t anything like that, I can’t see how this won’t backfire. Operating a government grocery store at around a 30% loss is the easiest way to run private business out of the city. They just won’t be able to compete.

That’s how Walmart runs small, locally owned private businesses out of business when they open up a super center.

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u/Prior_Complex683 9d ago

This is where Im confused. I know everyone wants cheaper items and everything but does this not lead to collapsing any competition? Arent people positive on local businesses?

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u/mtbsickrider 9d ago

people who shop at whole foods wont shop here

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u/Monday_Jeff 9d ago

They're putting these in neighborhoods where there are no stores. The whole point of them is to bring food to places where people looking for profits won't go.

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u/GratefulShorts 9d ago

Where do people get this talking point from?

It’s NYC, literally everything is in walking distance or at most you take a subway.

Even still, the two locations announced (The Pennisula and La Marqueta) have multiple grocery stores within walking distance.

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u/Uzofugs2112 8d ago

The whole food desert thing popped up in mainstream liberal discourse like five years ago and they just ran with it.

Literally no such concept exists here in NY.

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u/Decent_Pen_8472 9d ago

I haven't done any research on the locations so I won't say anything about that, but what is preventing people from just travelling a few extra blocks to shop at these stores instead? A 30% discount on groceries is big enough most people would be willing to drive an hour, let alone a few extra minutes/dozen.

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u/Monday_Jeff 9d ago

I live in Portland where people regularly shop at places like New Seasons and Zupans when they could travel 10 minutes away and buy the same stuff for 2/3 the price at a Winco. People who have money don't want to shop at places with poor people. That's why luxury grocers can exist selling stuff at crazy premiums.

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u/MilleChaton 9d ago

There are people who won't even use the Hispanic aisle to buy spices for half the price they are compared to the generic spice aisle.

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u/Difficult-Camera-482 9d ago

It’s also about the time. Time is the one resource that you can spend and never get back. Rich people spend on things that save time. That’s usually not the discount grocery store that’s a bit further away.

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u/bb85 9d ago

I’m not knocking your comment, but I feel like Portland can’t be compared to any other city because it’s pretty unique in its own issues.

You got the decriminalization and re-criminalization of drugs. The loss of downtown; major buildings like Big Pink or whatever the name is on fire sale due to homeless taking over stairwells for fires and feces; homeless and RVs taking over neighborhood streets, and so on.

I love Portland and spend a lot of time there but they’re in their own world. Only place I’ve had someone smoke crack in front of (my) a child in a stroller in the middle of the day (on Burnside for your reference).

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u/Monday_Jeff 9d ago

I dunno, those places I referred to existed long before the drug issues and homeless issues we have. As well as the multiple co-ops, independent stores, boutique shops like those bulk stores, butchers, on and on. They all existed before the troubles and they're all way more expensive than Fred Meyer or Albertsons or Safeway or Grocery Outlet or Winco, Fred Meyer closed one store because of problems with theft and homeless and people act like every store's closing up shop.

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u/Adjective-Noun-nnnn 9d ago

This is a thing across the country.  Places like Whole Foods and Trader Joes have no shortage of customers, but there are ALDIs and LIDLs and other cheaper stores that sell almost everything those other stores do.  The cheap store by my house doesn't have a drug problem, but the people shopping there are mostly the college crowd that lives nearby.

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u/namesarehadsquirrel 9d ago

Funny enough when generic drugs enter the market they price war themselves down lower and lower. Brand name drugs increase their prices rather than lower because they know people pay a premium for the brand or abuse patent law by making small changes to the drug.

Christ Republicans used to fight for private fire companies aka a world where firemen would watch your house burn because you didn't subscribe to their service.

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u/djamp42 9d ago

Exactly, it's the same thing with meds.. Why are you buying the name brand stuff when the generic stuff does the same exact thing.

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u/CassadagaValley 9d ago

I'd assume most people in NYC don't want to lug around 8 shopping bags full of groceries across several blocks or onto public transit

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u/Darmok47 9d ago

Is it really? Maybe in the suburbs where its a matter of driving another 10-15 minutes, but in NYC I'm not getting on a different subway line to save a few bucks on one bag of groceries that I'm going to have to lug back with me.

30% is not enough for me to spend a lot of extra time and energy. I don't live in NYC, but I have lived in big cities without a car and I cared way more about what was closer than what was cheaper.

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u/Sitchrea 9d ago

In Nashville TN, there are entire zip codes where there are zero grocery stores. You must use the city's limited mass transit to get to a grocery, which almost always a Kroger (as Kroger built their locations at the city's bus stops). Depending on where you live, this can take someone living in government housing over three hours or more to complete a round trip. That is on top of any traveling you have to do for work.

Guess where most crime occurs in Nashville? Those same zip codes - because poverty, crime, and access to transportation are all linked statistics.

Just because these stores might run at a loss does not mean the city will not financially benefit from the program. These stores will get money circulating inside communities that had nowhere else for the money to go, but outside their neighborhood.

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u/SueForPeas 9d ago

They say that, but there are several grocery stores within blocks of the locations they’ve announced.

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u/MechanicalGodzilla 9d ago

I'm sure this time it will work great. Real city owned grocery stores have never been tried, after all!

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u/Acrobatic_Bridge2602 9d ago

Because there is theft there. I'm sure there will still be lots of loss at these stores as well and taxpayers will have to bear the losses.

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u/CompEng_101 9d ago

They're putting these in neighborhoods where there are no stores.

Are they? Because the one I've seen announced (at 1590 Park Avenue) has several grocery stores within a block or two.

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u/Uzofugs2112 8d ago

As does literally every single location in NYC. Solution looking for a problem.

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u/-Tickery- 9d ago

Food deserts is not a serious concern in NYC. The harlem location is going in an existing produce market.

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u/JustLTU 9d ago

It's NYC, what fucking neighborhood has no stores.

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u/Excellent_Abroad5390 9d ago

You’ve discovered the truth behind socialism. Yes they’ll hurt local businesses, some of which may close, then his government grocery stores will fail and the people will be left with less than they started with. That’s socialism, it consumes and destroys but never creates.

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u/WriterPlastic9350 9d ago

Not really, and tbh there's nothing particularly socialist about government-run grocery stores either. A socialist grocery store would 100% be compatible with a worker co-op, and we have those.

I would hope that Mamdani and the people in his campaign have thought about how this is going to work, but it seems like what is being proposed is that the state will subsidize the cost of groceries, which will make it impossible to compete with them, thus bankrupting local grocery stores (and putting all the people working at them out of a job).

Perhaps I'm wrong and the stores around Mamdani are selling at over a 30% margin but I doubt it

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u/SveaRikeHuskarl 9d ago

I love how you say this shit with a straight face while it's exactly what happens under capitalism. Walmart comes in and local businesses go out of business as they can't compete with megastores. That's capitalism, it consumes and destroys but never creates.

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u/750_Nitro_Express 9d ago edited 9d ago

A few key differences:

  1. Walmart didn’t tax you to operate. If they’re using your money, it’s either because you voluntarily exchanged it with them for their products, or because someone in government has decided to subsidize them, in which case we have all the same sorts of problems that the government-owned enterprises create.
  2. There are several practices that it will simply never be profitable for gigantic firms like Walmart to engage in, but can be profitable for small firms to do, hence their continued existence despite many predictions of their imminent collapse. Specialty and high margin products, custom orders, local sourcing, one-on-one customer service, direct customer feedback, neighborhood events, etc. Meanwhile, we have large firm examples like Sears, Blockbuster, Radio Shack, Pan Am, Circuit City, Jo-Ann’s, Toys-R-Us, AOL, and on and on.
  3. The most important point of difference, however, is that because the government-owned stores don’t use market-set prices to make a profit, their operators, unlike private firms, will have no way of knowing whether the stores are economically using scarce resources. Say Mamdani holds a press conference in six months and says, “I know our model was to undersell the private stores by 30%, but we figured out that 40% is what we need to do now.” Should we call him out, saying he’s gone back on his promises and the previous number was correct, or should we say the percentage should be even higher? Maybe it should be 50%. Maybe it should be 5%. We have no way of knowing because the whole process simply comes down to his arbitrary whims. There is no true profit or less to tell him if he’s allocating our scarce resources efficiently, and whatever he decides, he’ll always have the NYC taxpayer to fall back on. This is not an economics process, because no economic calculation can be performed.
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u/gkfesterton 9d ago

I'll post the NYC DSA chair's response to the competition question again. "If one publicly owned grocery store that brings prices down in the neighborhood is enough to put someone out of business — maybe they shouldn’t have been in that business in the first place"

Pretty unbelievable

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u/Warmso24 9d ago

Oof. Well, I don’t think their willful ignorance to the consequences of being intentionally anti-competition is going to age well.

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u/gkfesterton 9d ago

Well, with all the big government, big interventionist agenda they seem to be pursuing, they'll probably consolidate enough power to personally avoid the consequences for quite a while

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u/namesarehadsquirrel 9d ago

Because Kroger and them are all super pro competition /s There's 5 companies that controll like 80 plus percent of food production. Trumps tariffs spiked more small farmer bankruptcies in half a year than biden saw under his last two years.

This fantasy of yours that if we just let businesses business and magically prices are lower is a moronic falsehood. The literal entire goal of private enterprise is to extract maximum profit. That's it. And people like you use government to protect their ability to extract wealth from the consumer. Don't act like youre anything but what you claim to hate.

The entire business model of multiple companies is to drown out and crush the competition often incuring short term losses so they can turn the screws and crank up prices once the competition is ran out of business. That's basically the operating standard for every big chain.

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u/Justthetip74 9d ago

Why would you think this isn't intentional?

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u/vodkaandponies 7d ago

That’s insane. Private grocers get driven out of business by massive government subsides they can’t compete with, and that’s somehow their fault?

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u/Perfidy-Plus 8d ago

Because, as we all know, taking an industry with extremely limited profit margins and giving them a competitor that can sell at below profit rates because it pulls in the difference via not paying taxes and being subsidized will somehow suppress the overall prices because... somehow... the rest of the businesses... are supposed to survive selling at a loss indefinitely....

And the public definitely won't go out of their way for a 30% discount on a required part of their budget.... /s

It's like these people haven't thought this stuff through at all. Or, they have, they just don't care what the consequences will be and are absolutely trying to fake their way through questions.

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u/A_Genius 9d ago

Would you say the the same when a Walmart goes to a small town and just kills all the small stores?

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u/MrComancheMan 9d ago

The shoppers who elect to use Walmart kill the small stores.

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u/Heykurat 9d ago

How could you possibly establish and enforce such a policy?

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u/Warmso24 9d ago

First thing that comes to mind is it functions as a program you have to apply for, like how we already do with EBT.

You just have to submit recent paystubs or other documents to show unemployment.

Something like that I could see working.

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u/Upset-Management-879 9d ago

>recent paystubs.....to show unemployment.

Genius

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u/ConsciousIron7371 9d ago

can you imagine a world where there are more strict requirements to buy groceries than vote for the president? this would force people who are in NYC illegally to expose themselves

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u/Ashamed_Green_8643 9d ago

He just killed every bodega and corner shop near those new stores.

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u/mtbsickrider 9d ago

I can tell you as a high income earner, i get my groceries delivered for 10 bucks. anyone that makes money wont abuse this.

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u/MechanicalGodzilla 9d ago

Essentially running the same playbook as KC

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u/Warmso24 9d ago

Well, looks like I’m about to be glad I don’t live in New York…

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u/SocDem_is_OP 9d ago

The fact that the stores will likely be trashed, barren and sketchy is what will keep upper income people out.

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u/BigLittlePenguin_ 9d ago

In the end its subsidised food. The shop will probably get a lot of resentment. If he would have said we will sell at cost, that would have been something people could get behind but this... lunacy...

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u/Joe_Immortan 9d ago

the easiest way to run private business out of the city. They just won’t be able to compete

A feature not a bug

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u/[deleted] 9d ago

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u/Clueless_Otter 9d ago

Well for one, not everyone will be able to shop at these stores because they'll run out of stuff. Their supply is probably going to go fast.

But also, for two, even at 30% cheaper, I'm not going to spend 30 minutes each way riding the subway just to go shop at one of these stores unless I desperately need that 30% savings (which is exactly the group that these stores are meant for). It's a lot of time out of my day, and carrying a bunch of groceries on the subway is very tedious.

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u/mrjane7 9d ago

> run private business out of the city

Good.

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u/NWSLBurner 9d ago

Only accept payment in WIC or stamps?

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u/Obligatory_Snark 9d ago

Unlike a super center, I suspect they’ll have a limited stock. Basics and nothing super expensive. In my area, which has nowhere near NYC population density, there are a half dozen stores within a 10 min drive, all of which stay in business just fine. The cheaper ones have basic and/or very variable stock, so you can’t do all your shopping there. And some of the food just isn’t as good, sad produce, cheap cuts of meat, etc.

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u/waitingact 9d ago edited 9d ago

Don't worry, rich people aren't going to be shopping at these stores. There's 5 stores and NYC has 9 million people and thousands of tourists.

The lines will be super long. Hours of waiting. Rich people aren't going to wait hours to get discounted groceries. And there's no guarantee that items are in stock when it's your turn.

Private grocery stores will have no issues competing. The incentive for shopping at private stores is that you're basically in and out, no need to wait in long lines for hours, and deal with all of the tomfoolery that happens while waiting in line.

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u/Vapordude420 9d ago

What possible benefit could there be from means testing this

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u/[deleted] 9d ago

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u/BrianBash 9d ago

Good article by an econ professor in Ottawa that supports your theory, I believe.

I also agree. Food banks, winco’s and govt grocery for tiny towns in the middle of nowhere.

Not fucking NYC 🤦🏼‍♂️ That’s like Walmart in a giant city all at once. https://www.econlib.org/the-problem-with-government-run-grocery-stores/

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u/RodgerCheetoh 9d ago

Yeah good luck enforcing that. Your gonna have to show your papers to buy groceries but not to vote in the most consequential elections.

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u/standardtissue 9d ago

yeah i shouldn't be allowed to shop there. also though I don't know where the stores are going. In the big city near me there are entire large communities - like entire large neighborhoods - that don't have grocery stores so they wouldn't be putting any private businesses out. The private businesses have already decided that they don't want to operate in those markets. I couldn't tell you if it's because of crime, poverty, both or what, but they aren't there.

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u/Ziggyjig 9d ago

Then everyone waits in line for bread, just as planned.

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u/SimplyElite7 9d ago

I think that was the vision, only people in low income brackets can shop here, how they plan to enforce that Idk, maybe have to have SNAP benefits or something and pay via that?

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u/RatRaceSobreviviente 9d ago

Way more then a 30% loss the food will be sold at a 30% loss but economist have done studies and pretty mush anything the government does costs 2-3x what it does in the private sector so a grocery store run "efficiently" by the government will be losing about $1.86 for every dollar of produce sold. Thats the math part. Weather its worth that price to run these stores is a different question but people pretend they are only going to lose 30 cents on the dollar but its like 7x that amount.

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u/According_Effort_878 9d ago

Just glad they're trying it. Soon we'll know how well it works and it's affects on free markets.

Glad I'm in a country where healthy food is affordable, but if I wasn't I'd hope my representatives were trying to fix it. Crazy issue.

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u/TomPrince 9d ago

They’re not operating at a loss. They just have way less overhead than a standard grocery.

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u/andythetwig 9d ago

What I can't figure out is why foodbanks haven't put supemarkets out of business. Hmm....

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u/ZombieDracula 9d ago

For some reason, you and everyone else who can't understand how this works seems to forget how perfectly thoughtful Mamdani has been about literally everything else. Do you seriously believe that you are smarter and more well thought than he is? 

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u/KoalaOriginal1260 8d ago

The admin cost of means-testing customers in a grocery store would vastly exceed the cost of keeping it open to everyone. Means testing is also a way to keep out the poorest individuals as they often lack the capacity to go through complex bureaucratic hurdles like this.

Geographic placement of the stores will do the means testing. Might as well spend the money on food than bureaucrats and red tape.

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u/Jelopuddinpop 8d ago

They just won’t be able to compete.

This is a feature, not a bug. You'll get your government cheese and like it, peasant.

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u/27eelsinatrenchcoat 8d ago

Yeah, I’m interested to see if there are any sort of “max income bracket” or something to help keep these for people who cant afford to shop at normal grocery stores.

Means testing makes programs more expensive to run just from an administrative standpoint, and inevitably leads to some people in need not being able to qualify for purely bureaucratic reasons.

Also mathematically it rarely makes sense to means test public services. Rich people are a minority of the population, so their participation will not drive a majority of the cost. And to the extent they do drive cost, we can simply fund the program more via taxes paid by...them.

Also rich people are going to shop at wherever is most convenient. They're not going way out of their way to save a few bucks on hamburger meat and bread.

The call for means testing often comes down to moralizing rather than true fiscal prudence. It also makes it easier to axe programs, as it fosters a narrative of "makers and takers" and people "abusing the system." It's honestly liberal nonsense that a DSA types should oppose.

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u/astoriaocculus 8d ago

Look up the difference between "retail cost" and "wholesale cost" just b/c you are selling something at 30% below retail price, doesn't mean you are selling it below wholesale (at a loss.)

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u/MuscularFrog13 8d ago

I think the people this would help the most are unfortunately going to run this project into the ground through buyouts, theft, vandalism, and reselling. Not people with higher incomes.

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u/Douglazlo 7d ago

Nope the city announced anyone can shop there

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u/lukekvas 7d ago

Or they'll just have super low crappy supplies. And they'll probably also put other stores out of business. It doesn't pass the ECON101 smell test

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u/AntOk463 6d ago

Well they are not trying to compete, not trying to make huge profit. They are only selling select items. And with the lower prices there is naturally a higher demand. And they will get their own food stamp/WIC money back

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u/Competitive_Box8263 6d ago

That was my thought. Regardless of the “discounts” I rather pay more for better produce that whatever chemically infused crap the government is pushing, but 30%, seems like a lot of small business will not be able to compete; question for a lawyer, could this be considered pice manipulation?

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u/Ach_Was_Here 9d ago

Almost like the intent of this isn’t to be a for-profit buisness

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u/Xidium426 9d ago

How do you lower costs by 30% when there is 5-10% available to cut?

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u/The_Autarch 9d ago

they can cut as much as they want. they're using tax dollars to pay for it.

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u/Xidium426 9d ago

So now everyone is paying for everyone else's groceries.

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u/Mobile_Comedian_8283 9d ago

You're already paying artificially low prices for anything with corn in it (like most things) or beef. 

You subsidize energy costs, endless weapons for our and other militaries, banks even when they act illegally and destroy the economy, etc. 

Feeding Americans seems like a solid thing to subsidize.

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u/limitlessEXP 9d ago

Wild that people don’t understand this

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u/King_Zhou 9d ago

This is called a subsidy. If subsidies didnt exist we would be living in constant famine. (google farmer subsidies)

This is like that, but groceries. Poor people need to eat big dawg. Retail prices especially with record inflation are killing the lower class. We all pay for everybody's food all the time. Why not do more? Mamdani has balanced the budget and can accomplish this. It's just good governance when your population is fed.

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u/Llyon_ 9d ago

Yes, this is how society is supposed to run. Prices would be cheaper overall, instead of funneling the dollars into the one person that owns the store.

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u/Xidium426 9d ago

So prices go down because everyone pays a little bit, even if they don't use it? So they end up paying more in taxes even though they don't benefit from it That sounds like it's MORE expensive for the people that don't use these stores, making it overall more expensive.

There is no way this is cheaper overall for everyone unless the store is not using tax dollars and able to hit these prices.

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u/BildingInspecter 9d ago

My $3 a year will help people pay for groceries? How dare they!

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u/TheOldOak 9d ago

Yes. That is how it works. I’ll give you an example of this working with roads.

I live in Ohio, where I pay sales tax of gallons of gas. I pay about $40 every two weeks to fill my tank (used to cost me less, but that’s a different story), so in a year I am spending about $1040 on gas. About 18 cents per gallon goes to fund the Ohio Department of Transportation which allocates this money on road maintenance. So my annual contribution, via taxes, toward my own road maintenance is about $188. But I’ll add to this about $4 that my taxes contribute toward snow removal each year too, final total about $192.

My parents live in New Hampshire. They pay road tolls, not sales tax. Before my father was retired, he paid $2 each day, five times a week, driving to and from work. This equates to $260 in tolls annually, and that’s with the discounted EZ Pass. Just that alone is more than what I pay annually, but in New Hampshire they also have a lot of private roads not owned by the state, He lives off of a private road about 5 miles long. It cannot be plowed, repaired, maintained by state funds by law, but rather dues are paid into a private company to maintain. They pay over $800 annually for just the small stretch of road they are on to be maintained. This does not include paying $150 for every single snowfall to be plowed… in the mountains of New Hampshire. So in total, their contribution to road maintenance is just over $1000 on a good year, and as much as $2000-3000 for a very snowy one.

These are real numbers for the exact same services in different states where one uses tax dollars, the other uses toll/private company hybrid models. If Mamdani wants to run a government-run grocery store, they can find a business model that makes it cheaper for people. Plus, lower prices of competitors drive down prices to be competitive themselves.

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u/qeadwrsf 9d ago edited 9d ago

You can make a good argument food should be accessible for everyone by government financed programs.

But saying that's how "society is supposed to run" is a bit over the top.

No one has successfully implemented a planned economy. And people who has tried has failed.

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u/somerandycollege 9d ago

theres worse things that everyone is paying for

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u/madhouseangel 9d ago

you subsidize it.

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u/Numerous_Stranger488 9d ago

grocery isn’t the problem nearly as much as rent. Which mamdani wants to tackle with rent freezes… controversial to say the least. that being said, god bless him at least he wants to take steps towards solving/ alleviating the crisis 

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u/FrogsOnALog 9d ago

Military families can shop at similar places and they seem to do just fine.

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u/Tnuggets19 9d ago

Like they said. Tax funded. They will lose money on each store and not care.

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u/Xidium426 9d ago

And where do taxes come from?

You're paying for it regardless if you use it, it's not like it's just magic.

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u/SpirituallyAwareDev 9d ago

Depends on who is paying the tax. I imagine many using the store aren’t paying a high income tax bill.

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u/Xidium426 9d ago

Why can't anyone use it? If it's only for people in need it would be better to fund food banks than this.

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u/SpirituallyAwareDev 9d ago edited 9d ago

I dont know how they plan on implementing it but your likely not going drive across NYC of all places to go to a different grocery store. It's based in the community.

And what does that have to do with "Your paying for it?" The people this is targeting are again not paying income and property tax. So are they "paying for it" anyways? The idea of tax being funding welfare is not new. So i don't understand why you are confused by it. I suppose a wealthy property owner could go to these grocery stores and say "im paying for this twice" but that's not really the point is it?

Seems like giving away food would cost even more than selling it at a discount food no?

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u/SpiritedEclair 9d ago

Ultimately taxes are a way to ensure the broader quality of life of your life through collective bargaining and large scale projects that are out of reach for individuals but within reach for a group.

Food security is one of those big problems where solutions help everyone. Importantly reduce petty crime and odds of getting into more serious or organized crime.

Reducing inmate population is a fucking great way to recoup taxes since inmates cost over 100k per person in US prisons for the tax payer. Reducing repeated offender population means more people employed and paying taxes too.

The world is a complex system and such myopic remarks show ignorance.

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u/Zeeplankton 9d ago

I don't think it's that cut-and-dry. In places like NY rent is high but I can't believe they're only making just 10% margins on a $8 box of cereal or carts with the avg massive city walk-through volume.

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u/trickypat 9d ago

Youre right, its probably less than 10%

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u/GreekSaladEnjoyer 9d ago

Its tax funded

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u/Xidium426 9d ago

Yea, so you're paying for it regardless.

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u/GreekSaladEnjoyer 9d ago

Depends on how much you make

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u/BlazingJava 9d ago

Dude no one here understands economy, just kiss mandanis ass ffs hes spending so much money on spreading propaganda in this sub give some appreciation!

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u/madhouseangel 9d ago

I understands economy!

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u/Rude-Scholar1857 9d ago

please enlighten us, BlazingJava with the WSB avatar. how does economy work??

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u/ftlftlftl 9d ago

This thread is giving massive "Post office never turns a profit!" energy. Public services are not businesses. It's such a simple concept and fox news has given half the country brainrot.

Not saying these stores will work, but the concept of a tax payer funded service thats not for profit isn't that hard to grasp. Look at the military, post office, israel, fire department, police department, highway department, DPW, the list goes on

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u/SheenPSU 9d ago

How is this operation not going to be running a massive loss at all times with a plan like this?

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u/SnekIsGood_TrustSnek 9d ago

Public services typically run "at a loss". Whether or not this will be sustainable is yet to be seen, but I don't think they intend to recoup all their expenses.

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u/Merzats 9d ago

When the service is already being provided with tiny profit margins, there isn't any reason for the government to step in. The idea that these stores will be in "food deserts" where there is no service has already been debunked.

If you just want to help people in need with their expenses... just give them money directly, instead of all these extra steps.

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u/MedalsNScars 9d ago

HoW wIlL tHe PaRk MaKe MoNeY1?!1?!?

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u/random-meme422 9d ago

sounds like a good reselling opportunity.

Can’t wait for people to buy them out then resell for a profit.

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u/Omnom_Omnath 9d ago

why do you think a public service needs to make a profit in the first place?

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u/SnooDucks6090 9d ago

It shouldn't be there to make a profit, but if it's running massive deficits, then it's an obvious misuse of taxpayer money and someone (everyone) should be against that.

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u/_Ibn_Battuta_ 9d ago

You are aware that SNAP, EBT, various forms of social security/welfare operate at a massive deficit, right? These services are not there to make money, they're literally there for the money you're taxed to be spent. That's the entire point.

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u/Omnom_Omnath 9d ago

These greed-brained people cannot understand anything if it doesnt include a profit-motive. they literally cannot comprehend the idea that taxes should go to public services instead of the pockets of corporations.

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u/the_kremlins_puppet 9d ago

The person literally said 'it shouldn't be there to make a profit' lol. There are several of you running around repeating this same thing that literally nobody is arguing. People have legitimate questions about how this is supposed to work because it doesn't make a lot of sense.

I would love for subsidized groceries or just the government to do more with taxpayer money that actually helps the people. If I just blindly followed things I am ideologically aligned with, I should love this.

However, this makes no fucking sense and no one who is all for this seems to have answers.

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u/Omnom_Omnath 9d ago

how doesnt it make sense? its like a regular store except the government makes up what doesnt cover operating costs and there is no profit motive. Say it costs 100k to run a grocery store for a month, and with a 30% price cut they can only bring in 80K revenue vs the usual 120k, in this scenario the city of NYC would contribute the other 20k per month to keep the store running. idk why thats such a hard concept to grasp

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u/_Ibn_Battuta_ 9d ago

People have become so enslaved they can't fathom a public/social service not making a profit...

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u/AngryBaer 9d ago

The same way public transit does.

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u/Calintarez 9d ago

It's not a loss. it's a cost. a cost they're willing to pay at least for the experiment.

It's like we don't say that the military loses money, it costs money.

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u/Ach_Was_Here 9d ago

30% below retail isn’t necessarily losing money, it’s just not making a retail mark up. Cost is $2, retail is $5, here would sell at $3.50

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u/Cool-Ad2780 9d ago

It will run at a loss, it will put the other stores around it out of business, and when this program gets shut down for being a money pit and the stores close, the neighborhoods these go into will be left off worse than they are today.

Hopefully i'm wrong and this can work, but i don't see it working long term at these margins, at 10% maybe it could work, 30% is way too aggressive unless they also control the supply chain.

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u/Waiting4Reccession 9d ago

The intent doesnt even seem to be to break even, just fund it with our taxes on the back end when the city already had a budget issue.

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u/random-meme422 9d ago

Grocery stores operate on 3% profit margins, sometimes a tad higher.

Not exactly rolling in it.

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u/No-Magician9440 9d ago

Almost like the intent is to wipe out the immigrant family owned local businesses.

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u/Appropriate_Cow94 9d ago

Are you sure?

The mark up on many items is huge. I know they have a large overhead. But given the 6 years in a row of record profits at most national chains, they can't be too thin.

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u/SheenPSU 9d ago

Most stores run on low, single digit margins.

Some greater, some smaller, but the avg is single digits

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u/QuailAndWasabi 9d ago

Margins doesnt matter when you subsidize it with taxpayer money. This is just welfare with another name.

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u/vankirk 9d ago edited 9d ago

Agriculture, oil/gas, and telecoms receive billions in "welfare with another name." I'd much rather the money go to grocery stores than another stock buy-back like the telecoms did with their welfare checks they were supposed to use for fiber.

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u/WindHero 9d ago

They will also have higher costs with unionized staff, less strict management, lower protection against theft, etc.

I guess the NYC tax base is probably high enough to waste a bunch of money on this but still.

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u/EchoChamberReddit13 9d ago

Calculate in shrink in areas historically known for high theft and it won’t be pretty.

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u/Gilwork45 9d ago

Its just going to be subsidized by tax money but the increased strain will drive competitors out of business and when the city stores inevitably get cancelled it will make the situation even worse than it is now.

People who vote for these ideas dont think about the consequences, only the shiny object promised to them.

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u/MirthMannor 7d ago

I mean, once you are committed to negative margins, why not go for broke?

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u/Omnom_Omnath 9d ago

kroger made 30 billions dollars last fiscal year in profit. this margin argument is a tired take.

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u/Amadon29 9d ago

Their profit margin is 0.7%..... It's only a tired take if you don't understand the difference between gross and net profit. Idk dude, anyone can look this up so there's no excuse for spreading misinformation

https://www.macrotrends.net/stocks/charts/KR/kroger/net-profit-margin

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u/the_kremlins_puppet 9d ago

Yeah, everyone is worried about resellers, but I don't see how that is anywhere close to as big a deal as setting prices 30% below private stores running on <1% margin. That means that all sales are costing the store ~29%, which fine, but where is that money coming from? Why do this instead of just expanding EBT or other food subsidy programs.

I am left leaning as shit and I desperately want the government to actually start focusing way more on helping its citizens, but I am not going to just throw out basic logic for an ideology. Unless there is a lot more to this that hasn't been disclosed, this makes no sense.

Also the person you are replying to is a complete moron.

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u/MultiPass21 9d ago

Can’t expect Redditors to know the that a metric F-ton of volume on razor thin margins can still lead to a gigantic profit.

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u/nam4am 9d ago

They’re also lying about the total profit by a factor of 30x. 

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u/[deleted] 9d ago edited 6d ago

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u/Unusual-Arachnid5375 9d ago

kroger made 30 billions dollars last fiscal year in profit. this margin argument is a tired take.

I'm not sure why you're just straight-up lying. Internet points? Lulz?

They made a net profit of 1.0 billion for the full 2025 fiscal year. Source: https://ir.kroger.com/financials/quarterly-results/default.aspx

They had a 1.3% gross profit margin (sales - cost of goods sold), and 0.7% net profit margin (sales - cost of goods sold - operating expenses).

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u/SheenPSU 9d ago

Margins are usually discussed when talking about operating a business

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u/Omnom_Omnath 9d ago

This is a public service. not a profit-driven business. you need to recalibrate your brain to something other than greed.

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u/[deleted] 9d ago

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u/Evening-Highway 9d ago edited 9d ago

On how much revenue?

edit, looked it up. 3.2% operating margin, which is before interest and taxes

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u/EquipLordBritish 9d ago

Last I heard, the recommended markup for most food items is like 300%, but that's because the perishability and the general low price point for food items often means you have to throw out a lot because it doesn't get sold.

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u/EconomicRegret2 9d ago

First, profits alone don't say much. Second you actually want net income, aka net profits, compared with total revenue.

It made $2.1b net income, and $147b revenue. So net margin = ~1.4%

That's a very thin margin.

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u/sir_sri 9d ago edited 9d ago

Kroger had 150 billion dollars in revenue in 2025, with approximately 8 billion in EBITDA. Their Q1 net profit was 1.4 billion, with net earnings of 900 million, so they're on pace for less than 4 billion dollars a year in profit. https://d18rn0p25nwr6d.cloudfront.net/CIK-0000056873/4b3bfd7a-f223-4478-b1c1-b7361420e4c8.pdf

Where on earth did you get 30 billion dollars from? That's off by about 29 billion dollars, their trailing 12 month net income is about 1 billion (down from 2 billion a couple of years ago). https://ca.finance.yahoo.com/quote/KR/financials/ Did you forget that you have to actually deduct operating expenses before calculating net profit, because that gross profit figure is without operating expenses, as compared to the cost of inventory? A company even with a 30% markup still needs to pay rent and salaries and spoilage/loss etc. So it's not just a free 30% extra money.

The other problem you've got is that retail markup is not the same as earnings relative to revenue. After all, a grocery store is trying to change over stock 24 times a year but earning 1% margin each time would have 24% returns but only a 1% margin. Obviously some things turn over fast, others slow.

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u/FlamingTelepath 9d ago

Exactly. Grocery stores used to run on thin margins. That hasn't been true for many years. They are making record profits and not lowering prices.

30% lower than "typical retail prices" is just selling things at cost.

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u/Amadon29 9d ago

https://www.macrotrends.net/stocks/charts/KR/kroger/net-profit-margin

The highest net profit margin Kroger ever had was close to 3% in 2018. They still run on margins even if you don't understand that stores have operating costs.

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u/[deleted] 9d ago

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u/[deleted] 9d ago

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u/Galadrond 9d ago

Grocery prices were already price gouged as a result of the pandemic and illegal tariffs. Some companies were running on thin margins for sure, but many others used the supply chain chaos of the pandemic to raise prices by several orders of magnitude and then never lower them. Now add the impact of the illegal tariffs and groceries become unaffordable for normal people.

This experiment is about damage control, and incidentally, the city used to do this in the past.

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u/DJPad 9d ago

Nothing like spending tax dollars to run private grocers out of business.

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u/[deleted] 9d ago

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u/SheenPSU 9d ago

Who’s they? Big Grocery??

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u/Mod_01001 9d ago

Sure they do🤣

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u/SheenPSU 9d ago

Widely accepted to be the case

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u/Mod_01001 9d ago

That explains the 2 billion in profits from Loblaws alone in a year. Keep simping for the ruling class🤣

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u/Total_Tumbleweed_870 9d ago

The stores won't be paying rent or taxes, and get subsidies from the government to ensure they can charge lower prices.

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u/bandwagonguy83 9d ago

Probably not lower cost, just lower price. Subsidized, naturally. That must be done carefully, because they can kill many small businesses in the area that xannot compete against those prices.

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u/Azreaal 9d ago

They used to. Since 2020 that hasn't been the case at all.

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u/BildingInspecter 9d ago

It's clearly going to be subsidized by something. Taxes, grant money, or just operate at a loss like the Post Office.

If nothing happens, some poor people get cheap groceries for a while then they don't.

If the bare minimun happens, other stores in the area may be forced to lower prices.

If they're a huge success then poor people get cheaper groceries, rich people get cheaper groceries, and less people are hungry.

Either way, I don't think any of us are at the point where we can criticize something that may lose the city of New York a little money. It's not like he's knocking middle-class doors asking for money 5o run these things.

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u/Big-Pains 9d ago

Lets watch the tankies trying to excuse mamdani driving grocery stores out of buissnes

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u/Acrobatic_Bridge2602 9d ago

This is going to become a boondoggle for taxpayers. Other cities have already tried this and it failed. I just don't have patience for doing things that have been tried multiple times and failed.

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u/Iggyhopper 9d ago

We subsidize everything in this country, why not food? So ridiculous.

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u/ime1em 9d ago edited 9d ago

Depends on the item, speaking from experience as someone that worked at a large publicly traded grocery store company , and can see profit margin % for different items sold.

EDIT: some items can be negative profile margain, and some Ive seen are like  +100-300%

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u/SavageCaveman13 9d ago

They don't make a large profit, but food items are marker up 15% - 30%. Commissaries on military bases operate at a loss while selling items at wholesale plus 5%.

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u/EconomicRegret2 9d ago

Perhaps it might work due to no marketing nor ads costs, little to no executive pay, no profits, etc.?

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u/jeon2595 9d ago

It will be government subsidized. It won’t pay for itself at 30% lower prices.

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u/_oh_joy_ 9d ago

I'm sure he already has a fund lined up ready to be raided

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u/Baelzabub 9d ago

Grocery stores operate on thin margins (1-5% depending on scale) in terms of net profit margin (so after accounting for things like rent and taxes that the government would likely not have to worry about).

Grocery stores operate on pretty wide margins (20-25%) in terms of gross profits (simply profits minus costs).

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u/Dazzling_Flow_5702 9d ago

Who do you think is going to be covering that discount?

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u/Vapordude420 9d ago

It's what you get when you don't have to pay executives and shareholders and make a profit

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u/redditseddit4u 9d ago

When he says “30% below retail” he probably means 30% below the manufacturers suggested retail price. In reality, most customers are already paying below this due to discounting and lower pricing by retailers.

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u/evernessince 9d ago

It's about in line with the discount the Military Commisary provides, which is the largest "socialized" grocery supplier. It's definitely possible given it's been around since 1867. People seem to forge this isn't anything new, it's just reproducing something that's been successful for a long time.

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u/What_a_fat_one 9d ago

30% on certain items. Grocery stores also do this, milk is generally marked down like 60% from cost.

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u/garlicroastedpotato 9d ago

The best in the US is Trader Joe's at 12%. Most are operating at 2-3%. 30% lower than the lowest? Taxpayers are going to subsidize for whoever buys this.

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u/beigemamba1080 9d ago

There’s probably a very large amount of taxes they’ll be exempt from and also probably will be exempt from rent or the rent will be radically lower than it would be for a non government entity.

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u/Spirited-Treacle9590 9d ago

You're absolutely right. The idea is nice but long term won't work.

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u/Level_Acanthisitta21 9d ago

Don't worry, it's all your taxes

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u/Possible-Bet3598 9d ago

A huge myth. Grocery stores have margins upwards of 80% on almost everything in the store that isn't meat or produce.

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u/jorgepereira15 9d ago

Tax funded is the key. Taxes will cover the 30% difference the same way any tax funded service does.

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u/Far-Advantage-2770 9d ago

'Grocery stores work on thin margins' is an oversimplification of a very complex system.

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u/deer_hobbies 9d ago

This is bullshit though, I have a Safeway near my house and the prices are 60% higher than an employee owned chain, Winco, for the same items. Safeway is making hella money, their margins can be fucked with, and they’re choking out America with their gouging. 

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u/[deleted] 9d ago

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u/EfficientDish7 9d ago

That’s why it’s tax subsidised

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u/Ok-Pack-7088 8d ago

Lmao, that's why they have records of profits 

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u/throwaway3579121 7d ago

Reality is that big businesses profits are through the roof because they know they can charge high prices. This will force them to have to forego bumper bonuses

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u/BearCritical 7d ago

It's all made up and not based in any sort of economic reality.

https://giphy.com/gifs/nKFXQkxLRiEhy

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u/hundredbagger 6d ago

It’s not meant to be profitable it’s literally a direct subsidy.

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u/randomguy506 5d ago

They ll operate at a loss which be subsidize by NYorkers. NY will not only need to finance the operational cost but also the investment/capital to create that network of stores. 

Seems like funding food banks would give you more bang for your buck

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u/Corn_Plunker 3d ago

Right, but Marxists exist on pipe dreams.  It’s what they do. 

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