Former New York City Grocery Chain Owner Questions Viability of Mamdani’s Plan for City-Backed Stores

Mayor Zohran Mamdani’s detailed plan for how subsidized grocery stores should offer cheap groceries to struggling New Yorkers is ambitious but will be “extraordinarily difficult” to implement, according to a former co-owner of upscale chain Morton Williams, Avi Kaner.The New York City Economic Development Corporation says the city has allocated $70 million to pay for the “construction and fit-out” of five stores and to “cover rent and property taxes.” The city will also make “affordability payments” to help vendors offset the cost of selling discounted groceries.The first of the “public funded, privately operated” stores is supposed to open in 2027, offering discounted prices on groceries that have risen in cost by roughly 30 percent since 2020. However, the city’s 44-page request for proposals, or RFP, from contractors bidding to run the stores is facing criticism from industry insiders.Mr. Kaner tells the Sun he shares Mr. Mamdani’s goal of trying to make food more affordable but disagrees with the city’s strategy. He said the city should focus on reducing taxes and the cost of utilities and other operating expenses instead of building five city-backed stores, which will be far from many residents’ homes.“People don’t shop for groceries the way they shop for a destination restaurant or a specialty retailer. They shop close to where they live, work, or commute because groceries are heavy, perishable, and purchased frequently. Convenience is part of affordability,” he says.“Even if these stores offer lower prices, many New Yorkers would spend additional time and money getting there. A subway ride, a bus trip, an Uber, or simply carrying multiple bags of groceries over long distances can quickly offset much of the savings. Neighborhood supermarkets exist for a reason.”Mr. Kaner also raised concerns about city leaders’ requirements for how the stores should operate, such as their demand that the stores offer “family-sustaining wages” while selling food at discounted prices and at the same time relying on as little government support as possible. The former grocery store owner addressed one portion of the proposal that went viral earlier this week: the question of whether shoppers will have to show ID to shop at the city-run stores. At a press conference last week, a reporter asked how the city will ensure that opportunists from other jurisdictions don’t buy up the discounted groceries, leaving empty shelves for struggling New Yorkers.The interim president of the New York City Economic Development Corporation, Jeanny Pak, told the reporter that officials are looking at a “library card-esque” form of identification to track inventory.Her comment fueled speculation that a form of ID would be required to shop. But Mr. Mamdani’s office says there will be no income or residency requirements to buy the discounted groceries, and that the card will function more like a voluntary rewards program. Mr. Kaner said that retail stores should not be required to verify a shopper’s income or residency, and that those who need assistance “should not have to feel embarrassed or singled out” when they buy their groceries. However, he says that if New York City wants to help residents struggling to pay for groceries, a “targeted approach,” is better than a “universal subsidy.” “A subsidy that’s available to everyone, regardless of income, means public resources are also benefiting people who could easily afford to pay full price,” Mr. Kaner warned.Mr. Kaner also worries about the RFP’s insistence that the stores offer a “best-in-class, family-sustaining wages-and-benefit package” alongside a “core basket” of groceries at a 30 percent discount. The request for bids adds that the stores should have “culturally diverse product assortments” and fresh foods. While officials want stores to offer premium wages and benefits for employees and high quality food for consumers, they also want the vendors to keep the subsidies as low as possible. “Each of those objectives is worthwhile on its own. Trying to accomplish all of them simultaneously while operating one of the lowest-margin businesses in America will be extraordinarily difficult,” Mr. Kaner said. There are plenty of costs that will add up and make it “difficult” to operate, according to Mr. Kaner. The RFP says the city will “cover” rent, but Mr. Kaner says that is “only one line item on a very long income statement.” Between the labor costs and other operating expenses — such as electricity, insurance, repairs, refrigeration, and garbage pickup — Mr. Kaner says store operators could face operating costs around $6 million a year.“That doesn’t include spoilage, retail theft, technology systems, distribution costs, or corporate overhead. Those costs don’t disappear simply because the rent is free,” Mr. Kaner said. Instead of spending money on building stores and “affordability payments,” he suggests the city should work on lowering costs for existing grocery stores.Representatives for Mr. Mamdani’s office did not respond to the Sun’s request for comment by the time of publication.

Former New York City Grocery Chain Owner Questions Viability of Mamdani’s Plan for City-Backed Stores

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