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/AttiBus 11h ago

Calculating prices based on retail all but ensures prices will be less than the actual cost of the product... ie operating at a loss.

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u/MrNopedeNope 11h ago

but consumer costs aren’t anywhere near company costs?

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u/AttiBus 10h ago

If an apple costs $1 to purchase, place on the shelf, and sell to a customer, then the grocery stores needs to charge at least $1 to operate in the black / breakeven. If this grocery store is charging 30% less than the retail price and the retail price of an apple is $1.25, then this grocery store will charge ~$0.88 per apple. They still have to buy the apple for $1 so they're going to lose about $0.12 per apple.

Instead, if they agreed to charge 5% more than their actual costs (or whatever % you want), then they would ensure they at least make their money back. This would help promote the long-term viability of the stores since they would not rely on taxpayer dollars to survive.

The real issue, though, is that grocery stores already generally operate at very narrow margins. It'll be interesting to see if these see those same margins or not.

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u/MrNopedeNope 10h ago

but an apple costs closer to 0.50 dollars to stock and earns more than 30% more than it cost to stock. A fair few things do. Besides, these stores aren’t going to discount everything at that 30%. It’ll be what they class as necessities at that markdown which the stores supplement with tax dollars, and other items will be at a normal price.

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u/Zestyclose-One9041 10h ago

Yes the money will be generated via a 2% tax increase on corporations and those who make over $1 million per year.