Recently, New York City Mayor Zohran Mamdani announced that he was making good on his campaign promise to bring down food costs by opening state-sponsored grocery stores that would sell goods at below cost. The stores will also not be required to pay taxes or rent.
By establishing these state-sponsored stores, Mamdani is not reducing food costs. He is reducing the price for consumers while placing a larger burden on taxpayers, most of whom will not be able to access the city stores.
To make matters worse, these stores are required to pay a “living wage,” which is estimated at more than double the minimum wage. Furthermore, they are required to provide healthcare and other benefits for employees. So, not only will the government have to supplement the lower prices of goods, but it will also have to support dramatically higher operating costs.
Apart from the fact that selling goods below cost in stores that cannot cover their operating expenses is an unsustainable model, the other problem with state-sponsored grocery stores is that they make it difficult for the private sector to compete. Private grocers and bodega associations have protested the decision. A bodega trade group, the United Bodegas of America, representing roughly 14,000 businesses, is preparing a lawsuit arguing that the taxpayer-subsidized stores create unfair competition, both on pricing and through the use of rent-free city land.
John Catsimatidis, CEO of Gristedes and D’Agostino’s, has threatened multiple times over more than a year to close, sell, or relocate his stores. Before the election, he told Fox Business, “If the city of New York is going socialist, I will definitely close, or sell, or move or franchise the Gristedes locations,” adding that he would also consider moving his corporate offices to New Jersey.
After Mamdani won the election, Catsimatidis predicted the plan “would collapse our food supply, kill private industry, and drag us down a path toward the bread lines of the old Soviet Union.” More recently, he has said he might relocate operations to Florida instead, citing declining sales and increased shoplifting that he attributes to city policy. He also said profitability has suffered for two years, making layoffs and operational scale-backs more likely. He has not announced a definite timeline for relocation or layoffs and is still evaluating his options.
On the unfair-competition point specifically, Catsimatidis told Fox News Digital, “The people that are going to run those five stores are not going to pay any real estate taxes, not going to pay any rent,” adding, “If I don’t pay any rent or real estate taxes, I can bring down the cost of a product 20% across the board.”
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