New York is opening five city-run grocery stores promised to undercut private prices by 30 percent, a plan paid for by taxpayers and criticized for using public money to compete with neighborhood shopkeepers.
Francisco Marte runs a Bronx bodega and leads the Bodega and Small Business Group, and he put it bluntly: “It’s unfair,” he told Gothamist. He argues the city is using public funds to build competitors that will sell staples well below local prices. The first four lanes of price pressure will be carried by independent owners like Marte, who still must cover every operating bill without the city’s subsidies. Now the city is even talking about tax relief for grocers it plans to undercut.
The budget math already on the table shows big up-front public spending. Mayor Zohran Mamdani has committed $70 million in capital funds to build these stores, a number he campaigned on as $60 million, and one new ground-up build at La Marqueta in East Harlem is listed at $30 million alone. That La Marqueta location is not expected to open until 2029, leaving roughly $10 million to be shared across the other proposed sites. Three of the five boroughs still have no announced site for a store.
Beyond construction there are annual costs the city has left unpriced. The Economic Development Corporation running the program is asking bidders to state their “requests for subsidy,” which means rent, property taxes and the ongoing discount will be whatever the city agrees to pay. The administration promises a basket of staples “on average 30 percent below market prices,” cutting an average grocery bill “by 15 percent, about $90 a month,” but the city has not published the underlying calculations.
Officials have offered mixed signals about support for private grocers facing the new city stores. The Economic Development Corporation told Fox News it is “not currently considering any grant programs for existing grocers,” while also saying it is “looking at the potential for tax abatement, incentives, and zoning benefits through existing City programs.” A program official had earlier suggested the city was weighing “grants, incentives that can come alongside these grocery stores,” language that was later softened.
One obvious municipal lever is the existing FRESH program, Food Retail Expansion to Support Health, which provides property tax breaks and zoning relief to lure supermarkets into underserved neighborhoods. The city is now floating that kind of abatement as compensation for stores it will own and operate, a shift that simply replaces one public cost with another. Property tax breaks matter little to a tenant grocer if the landlord collects the savings instead of the operator.
Grocery margins are notoriously thin, and industry insiders warn the math does not favor private competitors. Rep. Mike Rulli, whose family runs the Rulli Brothers chain, put it plainly: the industry “runs on about 27% gross. That’s before you pay your bills. Once you pay your bills, you’re about one-and-a-quarter, one-and-a-half-percent net.” A promised 30 percent cut on shelf prices slices through that gross margin and leaves private shops no path to survive.
Retail veterans make the same point. John Catsimatidis, long time operator of Gristedes, said free rent and waived property taxes could allow a store to cut prices “20% across the board.” Atlanta’s city-backed store landed roughly 18 to 22 percent below comparable shops. Either New York misses its own 30 percent claim, or it fills the gap with extra public cash; both outcomes hurt neighborhood bodegas and grocers.
Local leaders who backed Mamdani now face the fallout. Radhames Rodriguez of United Bodegas of America, who endorsed the mayor, warned that “Having items that sell for 30% less than our prices means nobody will go to our stores.” That endorsement caused splits in his group, and the reality is stark: a city-subsidized competitor can outlast private owners precisely because it does not need to earn a market return.
The city will also carry the rent regardless of a store’s success. Errol Schweizer, a former Whole Foods executive consulting on the program, noted that construction costs are small compared with the recurring expense of covering rent and taxes. Those are the two bills most likely to shutter a grocer in a tough year, yet this plan commits the city to carry them in good times and bad while outsourcing day-to-day operations.
Past experiments with public grocery models are cautionary. Kansas City’s Sun Fresh market ran on nearly $18 million of city money over ten years and still closed in August 2025 after customers fell from about 14,000 to roughly 2,000. Chicago examples are similar: roughly $26 million in incentives helped Yellow Banana reopen Save A Lot stores, including $13.5 million in taxpayer financing, and multiple locations later shuttered. These cases show public investment without a reliable drop in grocery bills for residents.
Mamdani points to market halls that did not crash nearby businesses, but those operations do not undersell neighbors by 30 percent. Gustavo Gordillo, co-chair of the New York City chapter of the Democratic Socialists of America, summed up a harsh view on Fox News: “If one publicly-owned grocery store that brings prices down in the neighborhood is enough to put someone out of business, then maybe they shouldn’t have been in that business in the first place.” For small shopkeepers like Francisco Marte, that means taxpayers build the competitor and the community pays the bill.
