The Numbers Come First
New York City Mayor Zohran Mamdani has a plan to fight grocery inflation: spend $70 million in taxpayer money to build five government-run supermarkets — one per borough — all operating under the brand 'NYC Groceries.' The first location, a 15,000-square-foot store in the Hunts Point neighborhood of the Bronx, is slated to open in 2027 inside a former juvenile detention center. A second, 9,000 square feet in East Harlem's La Marqueta district, follows in 2029.
The 34-year-old mayor, a self-described democratic socialist, has framed the initiative as a response to grocery prices that have climbed 30% since the onset of the pandemic. His solution: city stores that sell a standardized 'core basket' of goods at prices 30% cheaper than the private market.
A Record With No Winners
The historical precedent is not encouraging. According to Fortune, Chicago scrapped plans for a city-owned grocery store last year as impractical. Kansas City — reportedly the only major American metro ever to open a taxpayer-funded supermarket — shut the experiment down in early 2025. Municipal broadband ventures, the closest analog in scale, are either struggling or have already collapsed. Mamdani's own predecessor, Eric Adams, shuttered a $2 billion fiber-optic buildout launched under Mayor Bill de Blasio.
If Mamdani proceeds, Fortune notes, his plan 'would probably reign as the biggest push any city's ever made to launch its own business amid a galaxy of private players.'
The Real Culprit: Regulation
Here is where the story turns. The food deserts Mamdani cites as justification are not a market failure — they are a regulatory one. Mitchell Korbey, chair of the zoning group at Herrick, Feinstein, LLP, who has represented major chains seeking to enter New York, told Fortune directly: 'Many new, large supermarkets would open if the city would lift the rules that have long outlived their usefulness.'
E.J. Antoni, an economist at the Heritage Foundation, was equally blunt: 'New York is really unaffordable by design, not as a natural outcome of the free market. Its zoning regulations create artificial monopolies that reduce competition and limit what would without those rules be far more and better places for people to shop.'
In other words, private capital is ready and willing to build the supersized supermarkets New Yorkers want — the kind that already line the suburbs just beyond the city's borders. Antiquated zoning rules are blocking them.
Subsidized Competition Destroys the Competition
The mechanism of harm is straightforward. City stores backed by public subsidies can underprice private retailers in the same neighborhood. Those retailers — many already operating on thin margins — face closure. When they close, the food desert expands. The remaining private players, facing less competition, raise prices. The taxpayer-funded 'solution' manufactures the very problem it claimed to solve.
Mamdani's other headline affordability moves — free bus service and a rent freeze on one million apartments — follow the standard Democratic playbook of price controls and government giveaways. The grocery gambit goes further: it puts the city in direct commercial competition with free enterprise, armed with public money that private operators can never match.
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Capital rewards clear rules — and punishes their absence. New York's grocery deserts exist because city hall spent decades erecting zoning barriers that locked out the large-format retailers consumers actually want. The answer is deregulation, not a $70 million government store that will subsidize itself into viability at the expense of every private grocer trying to survive in the same zip code.
Mamdani has correctly identified a real affordability crisis. His diagnosis of the cause — market failure — is wrong, and his prescription will deepen the wound. The market has already voted: private chains are ready to invest their own capital the moment the regulatory barriers come down. The question is whether City Hall will get out of the way, or spend another $70 million proving, once again, that government cannot beat the market.
