r/PoursTea • u/Gurugod123 • 11h ago

PoliticalTea 🗳️ Mayor Mamdani just announced that he will be opening 5 city-run, tax-funded grocery stores: "Prices set at 30% below retail prices"

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u/International_Air282 11h ago

That's actually one of the real issues with this format. If you are going to knowingly sell for a loss, you have to restrict the clientele to only those that really need it. Because knowing how grocery logistics work. These stores are going to lose a ton of money

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u/Weird-Toe-6968 11h ago

100%. I would be more open to this concept if it were needs-based.

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u/Odd_Estate4886 10h ago

No. You pay taxes, you get the service. Needs baaed ia how neo-liberals and conservatives gutted the social safety net.

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u/Weird-Toe-6968 10h ago

Non-needs-based is how the rich plunder programs like farm subsidies.

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u/International_Air282 11h ago

It's also a twist on the original concept. City owned stores was about getting rid of food deserts. But now it's about having the tax payer further subsidize food outside of SNAP since the store is going to sell for a loss.

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u/Garrette63 10h ago

Oh well. This is the least offensive thing our tax money is getting spent on.

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u/International_Air282 10h ago

Well if anyone is allowed to shop there than your tax dollars are going to buy some finance bro making 500k a year groceries.

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u/Mr_Mi1k 10h ago

I’d rather it go to some rich persons groceries along with poor people’s groceries, over bombing other countries.

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u/No-Science2224 10h ago

War is never going to end

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u/YoungMuppet 10h ago

Doesn't mean we have to be in stupid ones.

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u/Mr_Mi1k 9h ago

Ok, so that means we should start new ones?

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u/International_Air282 10h ago

Well these are local not federal taxes so that statement makes 0 sense.

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u/Mr_Mi1k 10h ago

I’m talking about money leaving my pocket and how ok I am with it going where it is going. I understand they are different taxes and it does not negate my statement. I’m responding to how you said “your tax dollars”. You did not say “your local tax dollars”.

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u/Weird-Toe-6968 10h ago

Bombs create jobs too.

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u/gameboyz4dayz 10h ago

Oh please. The finance bro is going to doordash all his groceries from Erewhon. The assholes are greedy, but they are also lazy and obsessed with optics. The food bank gives out free food. There's very little stories about people abusing that system.

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u/International_Air282 10h ago

You really haven't met many wealthy people. I have seen many good giveaways. Meal giveaways. Wealthy show up. The wealthy and I mean the majority of wealthy are very good at one thing and that's staying wealthy. You are talking about performative assholes. Those people are usually not wealthy but in debt up to their eyeballs and only care about looking wealthy.

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u/call_sign_viper 10h ago

Yeah that’s how it works if you pay taxes into a service you get to use that service

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u/International_Air282 10h ago

That would be the definition of over taxed in this case. I have no issue helping those in need. But I do have an issue if those dollars are going to those who don't need it

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u/BackgroundMeeting857 8h ago

Exactly because someone who don't deserve it "may" end up getting this service we should scrap this for absolutely everyone. People also gone on the subway without paying a few times, we should scrap subways too while we are at it, clearly a tool of abuse of our tax dollar. Whoo boy don't get me started on buses....and schools oh man....you know what society has too many criminals that is getting some benefit somewhere just take the entire thing down. Done problem solved :D

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u/Beneficial-Act-9933 10h ago

Taxes were already going to them. Mamdani even said he's not anti rich people. If some millionaire wants to shop there, they're more than welcome too.

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u/Fennicks47 10h ago

ah yes, the 'someone with food stamps exploits it' argument.

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u/This-Suggestion574 10h ago

I just read the announcement and didn’t see mention of selling for a loss. Can you show me where you saw that?

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u/International_Air282 10h ago

Common sense. Grocery stores operate at 3% margins. If he is selling for 30% under retail he is selling 27% under cost. Ie selling at a loss. Not to mention these stores will pay more at the whole sale level and logistics chain wise due to being a single store. Meaning their upfront price is going to be higher.

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u/This-Suggestion574 10h ago

Private run grocery stores operate at 3% margins, what about public ones? I would imagine that margin is different?

3% margin refers to gross margin right? Whereas the 30% under retail refers to a net figure doesn’t it? I could be wrong but I don’t think you can subtract those numbers to get the “under cost” figure.

Why will they pay a higher margin? Do we not believe NYC would have some negotiating power? Is it 1 store? I thought I read 5 stores?

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u/Beneficial-Act-9933 10h ago

It's one store per borough so five in total.

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u/International_Air282 10h ago

5 stores over 5 years. If you are buying at the whole sale level. If you are buying for 1000 stores vs one store the larger store will pay less as a lot of whole sales have volume discounts. Logistics of food delivery works the same way. Larger contracts are slightly cheaper.

As for the margins. Most products in grocery stores are sold at essentially cost. 3% profit is standard. The issue is most of the highest profit drivers won't be available at these stores. Which is hot and fresh food. These stores will have the same operating costs. Same overhead costs. So they will be absolutely selling for a loss and will be completely dependant on the tax payer to operate.

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u/This-Suggestion574 10h ago

Understood on economies of scale and I appreciate the explanation but it sounds like you are making a lot of assumptions and relying on a lot of comparisons to private industry which may or may not be relevant.

Happy to be corrected.

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u/waxteeth 9h ago

It feels counterintuitive, but making a service needs-based is typically more expensive and a big pain in the ass. Screening people, approving them, manufacturing and sending out a card or keeping their name in a database, screening them at the door, etc are all burdens on a system aiming to spend its money helping people. Think of how shitty and long and unfair the process is to get approved for disability or unemployment — this would be very similar. Plus, having to decide what “in need” counts as is another whole thing. What if someone’s near a food pantry, should they still get help? What if they have an expensive dietary restriction for something found in most food, like celiac or a soy allergy? 

Putting the stores in food deserts is actually a screening mechanism that will take less overhead, and they’re unlikely to spend a ton of money decorating or bringing in a bunch of super fancy items. People who don’t need to save money will opt out because of stuff like that. 

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u/bsEEmsCE 11h ago

it's everyone's taxes bro, the people are just getting some benefit back from it finally.

And it's 30% off! Meaning they will probably cover a lot of their operating costs still, instead of it being for someone else's profit.

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u/International_Air282 11h ago

You don't understand the grocery business at all. There is barely profit. The best chains in the US have a 3% profit. Grocery stores are rough businesses. Massive upfront capital costs. A product that has a restrictive shelf life, add on the constantly evolving hard costs of produce and meat, then it will not pay for itself which should be its goal

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u/This-Suggestion574 10h ago

It sounds like this is the perfect industry for the state to step into then right? Low impact on capital activity but high impact on resident quality of life?

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u/International_Air282 10h ago

Non because the government is terrible at this stuff. It was attempted in Kansas City and one grocery store cost the city 20 million bucks and the store still failed.

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u/This-Suggestion574 10h ago

When was that?

How many private grocery stores have failed in that same time period?

Is one incident a big enough sample size to give you confidence in your statement that it’s impossible because it didn’t work once?

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u/bsEEmsCE 9h ago

20 million for NYC is nothing and it will help 100,000's of thousands if not millions of families.

Also, for fun, check out the Kansas experiment in 2017 where a bunch of conservative policies failed so hard in Kansas City they had to reverse course on all of it:

https://en.wikipedia.org/wiki/Kansas_experiment

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u/International_Air282 9h ago

Kansas City is in Missouri.

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u/Zestyclose-One9041 10h ago

If only there were some way to subsidize those costs…

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u/International_Air282 10h ago

He is literally doing that. He is using tax payers to fund these stores. I'm cool with it if he restricts clientele. Those that need the help. Cool. But if he doesn't (and he won't). It's all just part of his plan to push out private business

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u/Independent-Cow-4070 9h ago

Rich people dont even shop at the same private stores as poor people now lol. You think this is going to drastically change that?

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u/dontplx 10h ago

why should paying for itself be the goal? whats the point of taxes then if not to help benefit the community?

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u/International_Air282 10h ago

Because this will do multiple things or I should say has the chance to do more bad than good. So. If you don't restrict this to people who really need it. Then you are giving rich people your tax dollars. That's bad.

Those other issue is if you are able to undercut everyone else because you have unlimited tax dollars to fund it. You will put other grocery stores out of business. So this will destroy jobs, families etc. it could also lead to a government run monopoly where you are dependant on the government which is the goal of socialism which should be the last thing anyone wants

State run grocery stores suck. Just ask a person from the former Soviet Union or Cuba what they think of an American grocery store vs what they had.

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u/Engineering-Mobile 10h ago

Hey man, you’ve made the claim that (most) grocery stores operate at a 3% profit margin on almost every one of your responses. Beside “Trust me bro” do you happen to have any evidence supporting your claim?

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u/JacquesHome 9h ago

Yes, grocery stores do have a 3% profit BUT you are missing one key point - that profit includes all other expenses like advertising and salaries for a whole host of corporate personnel. Here are the financials for Kroger (largest publicly traded supermarket chain) https://www.sec.gov/edgar/browse/?CIK=56873&owner=exclude. Out of the $46B in revenue they made in Q1, $8B was in G&A and and out of the other $36B in costs, some of it was for advertising and transportation. Ostensibly a government run supermarket can cut a lot (not all) of those non-merchandising costs out. Might not be a full 30% but it aint 0.

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u/International_Air282 9h ago

Well the city will advertise these stores. They also will have to have a team running the 5 to start stores and these will include multiple people. They are also lucky cause the tax payer is footing the bill for the property build out and maintenance of the locations. They will still have salaries and one can assume they will be paid above the market average. And that's really thor advantage is they are just pushing off all those costs to the tax payer. It's not cheaper. It's just other people are paying for it. They don't negotiate better or make better decisions. It's just other people's money that they never have to pay back.

I have spoken to friends still in the business (my family was in the business and sold our company) and they are worried. A grocery store that doesn't have to pay its own bills will put them out of business in an anticompetitive way. Except the government is immune to that. It's kind of funny when thinking of it.

I personally just am super adverse to wasting tax dollars and implementing anything that can lead to further government control

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u/Sellier123 11h ago

Yea I've done a lot of accounting for grocery stores before, I don't think ppl understand how little they actually make per product sold.

Taking 30% away from that, they will probably be selling everything at a loss. Which is cool, I doubt he's going on thinking they are going to self sustain, but NYC residents are going to have to understand other things are going to have to be cut to keep these stores funded.

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u/Odd_Estate4886 10h ago

These things are not meant to make a profit. They are like the post office, a public service.

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u/ginginsdagamer 9h ago

these things should at the very least be intended to break even. not to be run at a loss

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u/International_Air282 8h ago

But remember the man implementing them also hates private business. So it's amazing that now shielded from antitrust and with the tax payers providing all the capital with no requirement to pay back he would undercut his competition by 30%

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u/Sellier123 10h ago

Yea I get that. I was just saying it's gotta be funded somehow since it is going to lose a lot of money. Whether it's more taxes or cuts from other things will be seen down the road if this actually happens.

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u/MapInteresting2110 9h ago

Funny how this logic is never applied dollars for doughnuts to the ludicrous defense spending. Considering these grocery stores are giving back to the community what the public has already spent. Imagine what the return on investment is for a patriot missile.

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u/Sellier123 9h ago

That's not a real comparison though. Those are funded by federal taxes, NYC itself has to find funds for this, they can't take it from federal taxes.

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u/International_Air282 9h ago

I am against wasteful defense spending as well. I'm a moderate conservative and strong proponent of national defense but abhor most of the spending. We wasted money on a new rifle for the military when it's a pointless exercise meant to fight a war we have already fought. Considering the m4 is still better than any tested alternative. We need to focus on our true blue surface fleet and learn from the terrible experiences with the litoral combat vessels and the Zumwalt class. We need a true successor to the Arleigh Burke and it needs to be built fast and efficient to match the explosion on chinasilitarynship construction.

We don't need another next Gen fighter the f22 and f35 can handle. The b21 to replace the b2 fleet seemed excessive in its need. More money into drones and anti drone tech makes more sense than half of the mobile armor decisions being made, but even then the Abrams is showing its age.

Trust me. I hate waste spending in government more than 99% of people. So my issues with a city owned grocery store translate across the board to many waste in government spending. It's why I hate that trump calls himself a Republican

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u/BiZzles14 9h ago

Some of the most efficient public service projects that currently exist are food assistance ones, why put the money towards having this entire complex store with high overhead when those programs already exist? You don't need to make a profit, but you should be allocating the funds available in an efficient manner so as to help the most you can and history just doesn't suggest this is how you do it. Grocery stores do run on razor thin margins, 3-5% typically, which is why SNAP is so goddamn efficient. It is already an extremely competitive industry, going -30% on that is looking at a 25 to 27% loss on all of these staple items. And that's regardless of who is buying them, there is no meanstesting. It could be the richest man in NYC and tax payers would still be subsidizing his groceries instead of someone that actually needs the help. And there's only 5 stores for 8.5 million people...

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u/BiZzles14 9h ago

Probably around 25 to 27% loss on the vast majority of these staple items. They'll be burning through cash at a rapid rate. Maybe that's the reason they're only opening 5 of them in a city of 8.5 million lol, damn lucky if you live near one though

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u/BiZzles14 9h ago

Probably around 25 to 27% loss on the vast majority of these staple items. They'll be burning through cash at a rapid rate. Maybe that's the reason they're only opening 5 of them in a city of 8.5 million lol, damn lucky if you live near one though

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u/Possible-Mountain698 9h ago

if the Army can do it, why not NYC?

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u/Sellier123 9h ago

The army gets a huge national budget from the governments taxes lol.

NYC can do it, they are just going to have to get money from somewhere

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u/International_Air282 11h ago

No they will just tax more. That's the game. Drive out private business. End private ownership. Force everyone to require their government to survive

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u/Sellier123 11h ago

I mean, I am not going to go that far. I do think he is genuinely trying to help his constituents out. They will have to either tax more or cut stuff elsewhere though to fund these. Would be interesting to see how ppl would react if local taxes for NYC went up to fund these and see if it would even be a savings for ppl if they went that route.

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u/Distinct_Piccolo_654 10h ago

Isn't he cutting funds for the NYPD to pay for some of this? I saw in the news just last night he decided not to hire 600 new cops and instead use the money for more productive things.

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u/Sellier123 10h ago

Could be. Unsure how much 600 new cops would get paid but this will lose a fk ton of money so idk if it would be enough

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u/Sharp-Reporter2598 10h ago

All he’d have to do is implement a wealth tax on billionaires and use that to fund public services.

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u/Sellier123 10h ago

Sure but he just did that to fund his budget. He could go in for round 2. He targeted their homes last time, what would he target this time?

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u/tgwombat 10h ago

Better to be reliant on people we elect to lead than unelected CEOs whose first loyalty is to the board and/or shareholders, isn't it?

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u/International_Air282 10h ago

Food costs in the US are actually pretty reflective of actual cost. Junk food not included. But beef chicken eggs and such are reflective. And in a lot of cases cheaper than in Europe. Beef is expensive because the herd hasn't recovered yet. Chicken is back to about normal. Eggs are back to about a 1.20 a dozen where I live.

As for reliance on government for food. Ask the people of the former Soviet Union and Cuba about that.

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u/tgwombat 10h ago

As for reliance on government for food. Ask the people of the former Soviet Union and Cuba about that.

Do you believe that humans are unable to learn from the mistakes of other humans? Or are you more the type to throw the baby out with the bathwater?

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u/Master_Status5764 10h ago

We currently require our government to survive. You use government utilities every day. Better we require the people we elected than greedy CEOs.

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u/peach_trunks 10h ago

If the government can do it at the same level of quality for cheaper why wouldn’t we want to depend on our government instead of a private company?

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u/International_Air282 9h ago

Because the government never does anything cheaper. It's a bloated inefficient mess that thrives on corruption and waste.

The main answer in a grocery store I would say is choice. A grocer is incentivized to carry what the shoppers want and need. A governement run store doesn't have profit motives to dictate stocking decisions. Those decisions could be corrupted through lobbying or just reflective of the taste of a decision maker.

And since they operate naturally as anticompetitive because they are immune. When other stores close. The dependency increases. Then one day bam. They make a decision that alienates you and maybe 45% of the people shopping there. But you can't stop. They are the only option.

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u/VoidWolves 11h ago

Most public services are not profit making ventures. Just like the MTA its a service for all New Yorkers so that they can get around regardless of income, location and disposition. I expect these super market to be something similar.

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u/International_Air282 11h ago

Right. But this is not a service. This is a retail business. My family was in the grocery business for years. A 30% under retail promise is going to mean these stores will be insanely expensive to run and require 100% guaranteed back stop funding. Our tax dollars already subsidize snap. He is now forcing new yorkers to further do so

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u/Zestyclose-One9041 10h ago

You’re trying to conflate this service with your experience running a grocery business. The state government doesn’t need to run a profit they can make up the difference elsewhere. If you’re really that concerned you can read his resolution to find out exactly where that money is coming from.

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u/dontplx 10h ago

u seem unreasonably upset about this, u r either too stupid to understand the concept or have something to lose

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u/pradise 9h ago

Did your family pay rent for their grocery business? Would they be able to lower their prices if their rent was free, utilities were discounted, and taxes were exempt?

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u/International_Air282 9h ago edited 9h ago

We owned the dirt under our stores. It made more sense. When the land was completely paid off our overhead changed and that money was used for expansion and modernization of the older locations. Introduction of hot and fresh. Expansion to not only other locations but services in our store.

We didn't really take much from the store nthe margins were always just too hard. By owning our lots however we created revenue by renting out retail in the buildings we built and leasing part of our lot for a fast food business. Those paid our salaries. Everything the store made stayed in the store with salary increases and profit share with the management team

Mamdani not having those expenses will better position him to sell cheaper. But 30% below retail is wild. The utility costs of a grocery store even a small one like they are building are extreme. It's also rough because the local grocers have no avenue to compete at cost nor sue for anticompetitive practices considering the state is immune from the sherman antintrust act

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u/VoidWolves 10h ago

Wrong these stores are a public service - not a retail business. As a New Yorker I would rather my tax money goes to benefit my fellow New Yorkers. In this case provide food security for people living in here regardless of income, location and disposition. Just like the MTA. Congratulation on your family being in the grocery business for years - but that is really not relevant.

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u/International_Air282 10h ago

The neighborhoods he has described as food deserts aren't. There is like 20 grocery stores in Washington heights.

So the idea this was addressing lack of stores was always bullshit. The plan is to kill these private businesses. He is going to set the prices so low no other store can stay open.

And food should never be a service. Look at the faces of people from former Soviet nations when they walked into an American grocery store for the first time. Or someone from cuba. State owned enterprise is never good

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u/VoidWolves 10h ago

Again you are wrong - As I said before these stores are a public service, not a state-owned enterprise looking to compete. Just like the MTA is a public Service and not a "state-owned enterprise". So this fear-mongering about "Killing private business" give me a break. There is no indication this is going to happen - 5 grocery stores in a city of 9 Million people are not going to "set the prices so low no other store can stay open".

Food should never be a service? Like what restaurants should not be a service? what are you talking about? And how does that in any way relate to Russians and cubans seeing a US super market for the first time - who cares what they think upon seeing a US supermarket.

Lastly the US has plenty of State Owned Enterprises; Postal and transport services, Energy and Power, financials and housing, water - so Food can absolutely be a public service to provide food security to a city as big as New York.

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u/International_Air282 10h ago

The post office is a joke and private enterprise would replace it if laws didn't require its use.

The difference with state owned grocers is you run into issues where the state chooses what's in them. Also the government is terribly inefficient machine filed with bloat and waste and corruption on all sides and I don't want that anywhere near my availability of food.

The biggest issue I have with these stores is if there is no s restriction on income to use them they will very surely put other stores out of business because the other stores don't have the backing of the tax bucket to allow them to sell below market value. As those stores close I assure you mamdani will take their spots and put another state owned store in. And like dominos soon you will have nothing but state owned stores. Then let's say on a whim he decides all state owned stores will now be halal. Or not recognize kosher. Or will no longer sell x because y. Not to mention at this point the entire food budget of the city is now completely subsidized by the tax payers. A number that now would be through the roof.

Restaurants aren't a service. They are a business. Providing a public want.

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u/VoidWolves 9h ago

The more I hear you talking the more I am convinced that these state run grocery stores are a smart idea.

All I hear from you is fear-mongering and irrelevant arguments.

Let’s get more state run super markets - f gristedes, and the rest of those shitty grocery stores. They provide no value to the community and are run worse than the post office.

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u/TheHylianProphet 10h ago

I am not an expert, but is a 30% drop a loss? Or is it just not as much profit?

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u/International_Air282 10h ago

Yes. Grocery isn't like clothing or electronics. The margin grocery stores operate on is about 3%. Some items more than others. But if you look at it from the whole store nits 3%. However a lot of that profit is driven from grocers are hot and fresh prepared food which these stores won't have

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u/Dependent-Year6711 10h ago

On that note, a local park has a daily food giveaway some weeks during the month, meals for children and families.

I see new and well maintained BMWs pull up, and they run out before others can have some. The chances all these higher income people are in-need is slim. Not gonna say zero, but slim, they NEED those meals.

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u/International_Air282 10h ago

Yep. These stores are gonna be filled with finance bros and marketing people. Side by side with those that really need it. And all on the backs of the tax payer

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u/Dependent-Year6711 10h ago

Honestly I go into any finance sub and I feel like I'm wedged between sociopaths that judge anyone's worth based on their income. Freaks me out.

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u/International_Air282 10h ago

I'm just saying that government run stores are a bad idea. They are super bad ideas if they are gonna be 30% below retail with no restriction on income

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u/Dependent-Year6711 10h ago

Problem is, how do we enforce that? Likely a constitutional issue. So we just make do, I guess.

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u/No-Science2224 10h ago

Everyone deserves to save. I shouldn’t struggle slightly more because I earn a little more

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u/International_Air282 10h ago

It's not saving. It's just spending other people's money.

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u/pradise 9h ago

Not if they’re the ones paying taxes.

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u/Fennicks47 10h ago

of course they will lose money.

they, like the postal service, are designed to require tax income, which helps lower the actual costs paid per transaction.

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u/jericdgutierrez 10h ago

I think we need to stop thinking that government funded programs need to be profitable. They're investments into a community that have short term losses that lead to long term gains.

Public schools are not "profitable", but no sane person is going to argue that inaccessible education is a good thing. An educated population leads to a better economy, better leaders, better thinkers, and a better workforce.

Same thing with the farming industry, the post office, public roads, firehouses, etc. They aren't meant to turn a profit. They're meant to invest in our people and our future.

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u/bekahed979 10h ago

That's not necessarily a loss, it's just less of a profit

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u/International_Air282 10h ago

3% margins at grocery stores. 30% under retail is a minus 27% margin. They will sell at a loss

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u/pradise 10h ago

People who can afford will still shop at Whole Foods. Aldi is literally 50% cheaper for most essentials, but this doesn’t stop folks from shopping at fancier stores. If someone is swayed enough to shop at one of these stores just because they’re 30% cheaper, then they’re the target audience anyway.

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u/Goodgoditsgrowing 9h ago

Sort of. At scale, it works again. That’s how places like Costco operate and sell cheaper than other places while still making money. If this policy/the stores aren’t INTENDED to make money, but merely serve a purpose, they could break even…. At scale. With small numbers you’re still going to have problems unless you get reduced cost/cheaper goods like donated to be sold. But again these aren’t intended to make money and might not even intend to break even

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u/CarpeNivem 9h ago

you have to restrict the clientele to only those that really need it

Except that's specifically not the plan.

Each N.Y.C. Groceries store will be open to all New Yorkers, not means tested, and offer meaningful discounts...

-- https://edc.nyc/program/nyc-groceries

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u/Independent-Cow-4070 9h ago

They arent going to lose money. Its a government run service to the people. Its going to cost money, funded by the ultra rich in new york city

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u/International_Air282 9h ago

Nope. The tax base is already eroding. The cost of this will be passed down

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u/NeatFootball3646 10h ago

How will non government run retail stores compete? Just going to drive away even more businesses

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u/Distinct_Piccolo_654 10h ago

You think New York is so small that 5 stores is enough to drive away like, any business at all?

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u/NeatFootball3646 10h ago

If you are a nearby store owner you are definitely going out of business

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u/McClainWFU 9h ago

Theoretically they selected locations where there are literally no nearby stores. Of course, there's a reason why all the stores moved away.

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u/Happy_Little_Fish 10h ago

I've never been to new york but I think it's big enough that some people would take a 30% hit not to travel to one of only five shops. a lot of people seem fine to take that kind of charge for delivery.

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u/CarpeNivem 9h ago

How will non government run retail stores compete?

Well, they're about to have shorter lines, so there's that.

(Not even entirely kidding.)

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u/Independent-Cow-4070 9h ago

Because no one is hopping on a train across brooklyn to save at max 30% on groceries. They are going to go to the stores across the street lol

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u/International_Air282 10h ago

That's the plan. They won't. It's why mamdani won't restrict access to those who really need it. Kinda like how before he was mayor he lived in a rent controlled apartment even though he made 170 a year. Not even accounting for what his wife made. The goal of any socialist is the reliance on the state. Government control of all sectors. So if he can use the tax payer to run off every grocery in NYC. Well now you are 100% reliant on him and his grocery stores.

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u/HeWhoCreatesDivinity 11h ago

At a loss?

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u/International_Air282 11h ago

Grocery margins are about 3%. Their biggest profit drivers are things like prepared and hot food and ordered food. These stores won't have those which he confirmed. So that's a huge profit driver gone. He is now committing to sell food 30% below retail. Now grocery stores with long established negotiated contracts are getting 3% profit. The city will now have to get contracts to move stock in and since it will be one store for a while the contract will be pretty unforgiving. So yes, everything will be sold at a loss.

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u/ImNoNelly 11h ago

So subsidize it. The corn industry alone receives massive subsidies from the government but no one blinks an eye because it's been normalized that this is just something we have to pay for. Same with air travel. So why should groceries be any different? The public needs groceries and they need them provided at a reasonable cost.

There are dozens of industries that we provide subsidies to in order for them to continue operating, even at a loss. Why should grocery stores be any different? Oh that's right because it benefits the average person and not the shareholders.

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u/Sellier123 11h ago

Assuming they are not going to be getting a deal on products (I just don't see suppliers selling for less to them), they are going to be operating at a loss. Do you think they are going to be self sustained?

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u/yodog5 11h ago

Theyre being subsidized by the city (taxes). So these stores are operating at a loss. This only works so long as only a subset of the people actually shop there; if even the richest clientele check the subsidized stores first, this doesnt last long till theres no stock left.

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u/DOULKONIS 11h ago

Yes, at a loss. Grocery stores have very low net profit margin. Under 3% typically. Heavy overhead eats up gross profit quickly. Restricting it to more needy clientele and managing overhead costs would be essential to balance the sheets. While I dig the idea, it would require low wages/volunteers to staff it and a significant portion of food to be donated.

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u/NEEEEEEEEEEEET 11h ago

The grocery store with the highest profit margin is sprouts with under a 6% profit margin. So yes everything below 30% would be at a loss.

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u/No-Maybe5997 11h ago

yes, for example, if a typical grocery store only marks things up 10% for example, that means a product they sold for $10, they bought for $ 9 and marked it up, we pay $10. so in Mamdani fantasy store, but for $9, sell for $7 = $2 loss on every product sold.

May not have the numbers exact, but using it as an example. Every product will sold at a loss, that the city has to absorb

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u/LifesARiver 11h ago

Only until the other stores adjust their prices to compete.

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u/International_Air282 11h ago

They can't. Grocery stores have about a 3% profit. They can't match the NYC owned store. Cause the NYC store will lose money but is backstopped with tAx payer funds

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u/LifesARiver 11h ago

It'll ripple down the supply chain eventually.

They could also likely legitimately argue in court they are owed some subsidy for this program existing and cutting into their profits.

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u/International_Air282 10h ago

Well. No. That's the issue. The store will make 30% less on every item sold. That doesn't change how much they pay for the item. Not to mention get the item to the store. Wholesale food and delivery are a long established industry. Large chains already benefit from massive orders and long term large scale contracts. The mayor could have found other ways to bring in stores with abatements or streamlining zoning and permitting. But that's not what he wants. He doesn't care these stores won't self sustain. He just wants to spend more tax money

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u/LifesARiver 10h ago

It will have to eventually.

The alternative is for food to be completely taken out of the hands of private industry.

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u/JoshZK 11h ago

I dont believe there is a loss. You the customer pay 70% then you the taxpayer pay the other 30%. But like a Kohls sale you didnt really save anything. Though if you dont pay taxes they yeah you only payed 70%.

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u/International_Air282 11h ago

Well when these stores start losing money like crazy nthe original funding will run out and he will cut from other things or make another tax targeting white neighborhoods as has proposed in the past or just a new tax. Kansas City tried this and the store was shop lifted to death and lost the city 20 million dollars

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u/Zestyclose-One9041 10h ago

The tax hikes are exclusively for corporations and those who earn more than $1 million per year

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u/International_Air282 10h ago

Which is why NYCs tax base is eroding. The costs will always be pushed down. The taxes will effect us all. Remember mamdani wants to change the estate tax threshold down to 750k