City-run grocery experiments are collapsing in multiple places, and New York’s plan to open five municipally owned stores selling produce and meat at 30% below market risks repeating the same mistakes while wiping out immigrant-owned corner stores that keep neighborhoods fed and employed.

Chicago paid more than $13 million of taxpayer money to bring seven grocery stores to underserved neighborhoods, and all seven closed on Saturday, July 25 with no warning to shoppers. Cleveland’s city-owned market shut in April, and Kansas City, Kansas invested about $7 million in a downtown grocery that folded in December. These aren’t isolated flukes; they form a pattern of public dollars creating fragile, short-lived ventures.

New York’s mayor announced a plan to build and own five grocery stores, one per borough, and to hold prices 30% below other retailers for fresh produce, meat and a set of pantry staples. The city says it will set those prices monthly and keep them steady, with the first store slated to open in Hunts Point at the end of 2027 and the remaining four promised only by the end of the mayor’s first term. The program carries a $70 million price tag and no income limits, so wealthy households would get the same discount as the poorest.

New York has 13,000 bodegas. The mayor’s plan never mentions them. Those corner shops already sell milk, canned goods and produce on nearly every block, and the mayor’s announcement does not explain how these municipal stores will avoid crushing that existing network. The omission matters because small grocers operate on razor-thin margins and rely on revenue streams the city did not promise to leave alone.

Cities that tried this approach offer grim evidence. A handful of government-backed grocery projects opened with fanfare and public funding, then closed within months or a few years. Some failed to hit basic sales targets, one left large unpaid bills, and others shut despite contracts intended to guarantee long-term operation.

Local leaders and officials have used different phrases to describe those outcomes, including the blunt observation that a promising launch must not be followed by an inevitable shutdown: “the worst thing you could have is a grand opening and a grand closing.” In Chicago the closure prompted officials to consider recouping taxpayer funds, while the mayor deflected blame onto federal policy, saying “I heard that the federal government had a little hand in this particular one.”

Independent grocers operate on net margins that average about 1.9% and a food-retail industry figure near 2.1%, so owners typically keep roughly two cents of every dollar in profit. Gross margin figures, which come before rent and payroll, sit in the 20s, so a 30% price cut on key items outstrips what a private store can absorb. As one analyst put it, a supermarket trying to match such discounts “would suffer a 28% loss on these important products,” and those failures could mean “the food deserts would expand, not shrink.”

The city cannot buy its way to those prices simply by shopping smarter: five municipally owned stores are too small to command the volume discounts major chains secure. Instead the real advantage comes from government subsidies: no rent, no property taxes and public capital underwrite a level of pricing private businesses cannot match. That edges out taxpaying competitors and bends the market toward taxpayer-funded operations.

Owners of the small stores targeted by this plan are organizing and alarmed. United Bodegas of America leader Radhames Rodriguez said the 30% figure would devastate a single-store operator: “having items that sell for 30% less than our prices means nobody will go to our stores.” The National Supermarket Association called the move “a big slap in the face to us,” while industry representatives called using tax dollars to compete against independent businesses “frankly offensive.”

Immigrant entrepreneurs—Hispanic, Asian, Caribbean, African, Middle Eastern, Jewish and South Asian—run most independent neighborhood stores and are mobilizing in response. Their Multicultural Business Coalition voted to sue the city if officials refuse to meet and is raising funds to mount a legal challenge, arguing that the mayor campaigned as their defender but is now advancing a program that will put many of them out of business.

The mayor’s political allies have even conceded the human cost. When asked what happens to private grocers driven under by a government competitor, the co-chair of the mayor’s organizing group said, “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.” That blunt framing suggests the city accepts closures as an acceptable outcome.

The mayor publicly insisted he will not compete for alcohol and lottery sales, saying “Those are not things we have any interest in competing for,” and claimed bodegas would remain safe because those items drive revenue. But his proposal still targets produce and meat with a 30% discount, and the arithmetic shows private stores cannot match those prices without failing. The policy choices here trade away other people’s livelihoods to deliver politically appealing discounts.

This is a political decision as much as an economic one: the city can choose to subsidize grocery prices and accept bankruptcies, or it can support existing merchants and private markets. The plan as announced makes the choice clear, and the neighborhoods that rely on small grocers should plan for the consequences of that decision.