As New York City Mayor Zohran Mamdani moves forward with plans for city-owned grocery stores, economists and local business owners warn the proposal could crush small grocers while leaving taxpayers with a hefty bill.
The initiative, a key Mamdani campaign pledge, would establish city-backed supermarkets across the city in an effort to lower food costs.
Adam Lehodey of the Manhattan Institute believes the city could address food affordability more efficiently through private-sector partnerships and existing assistance programs rather than operating grocery stores itself.
“I think really it’s a distraction and a pretty wasteful distraction,” Lehodey told Fox News Digital. “There’s an easier and better way to solve the problem.”
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The first location is expected to open in 2027 in the Bronx neighborhood of Hunts Point as part of The Peninsula redevelopment project at the former Spofford Juvenile Detention Facility, according to the mayor’s office.
The larger redevelopment plan includes 740 affordable housing units, more than 50,000 square feet of public open space, 30,000 square feet of light industrial space and more than 50,000 square feet of community facilities. It would also include a 20,000-square-foot grocery market intended to serve the South Bronx.
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Lehodey also warned the city-backed stores could put small neighborhood grocers at a disadvantage because the projects would receive public support that private businesses do not.
“Yeah, the prices might be a little bit cheaper, but that comes at the cost of other businesses running sustainable operations,” he said.
He argued the city is also sacrificing valuable public land and potential revenue by subsidizing the projects.
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“That land does have value,” Lehodey said. “By giving it out for free, the taxpayer again is losing money, and we’re losing revenue that could have been spent on other things.”
A second city-backed grocery market is slated to open next year at La Marqueta, a public market space in East Harlem. The city plans to spend roughly $30 million to build the location.
Critics question whether another grocery option is needed in the neighborhood. Roughly 45 grocery stores are located within a 35-minute walk of the proposed site, according to a Fox News Digital analysis.
Those stores range from major chains, including Whole Foods and Lidl, to smaller neighborhood markets and bodegas. The area is also well served by public transit, with multiple subway and bus lines giving residents several ways to reach nearby grocery options.
Some local grocers say the city-backed market could siphon away customers and hurt already thin profit margins.
Despite the abundance of nearby grocery options, some local store owners fear the city-backed market could undercut existing businesses by offering lower prices backed by public support.
“Of course it will affect this store,” said Sarah Kang, manager at a CTown Supermarkets location about a 35-minute walk south, or one subway stop, from La Marqueta.
“A lot of people walk 20 to 30 minutes to get here,” she explained to Fox News Digital. “If they find a cheaper supermarket, I don’t think they’ll be willing to make that trip. It’s going to affect small grocery stores. Definitely.”
“I hope we don’t lose customers,” Kang added.
About a 30-minute walk north of La Marqueta, Joel Martinez, a manager of a supermarket at 128th Street and Frederick Douglass Boulevard, said the impact may depend on proximity to the proposed site.
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“I hope it doesn’t impact us,” Martinez said in a call with Fox News Digital. “The store will be a little far from us, so that’s good. But it will affect smaller businesses that are closer.”
Bodegas and small grocery stores are a staple of New York City neighborhoods, often serving as primary food sources for nearby residents.
Similar proposals for local government-owned and operated grocery stores and markets have surfaced in other cities, including Boston.
Atlanta officials appear to have pioneered the effort, opening a city-backed grocery store aimed at improving food access in underserved communities.