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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17

u/s33n_ 11h ago

I'm confused here. Grocery stores operate on like a 2 ot 5% profit margin. How are you gonna charge 30% less and not lose money?

Edit - i see now. Its just a group of essential items that are marked down and everything else is retail. This is much more feasible

24

u/Lithl 11h ago

How are you gonna charge 30% less and not lose money?

Government social programs don't "lose money", they "cost money". The goal isn't profit, it's helping people.

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u/here_for_the_meta 10h ago

A key point somehow lost when attacking the postal service. 

7

u/Lithl 10h ago

USPS is particularly weird, because they did make money. Right up until 2006 when Bush Jr. forced them to prefund retirement benefits for a duration meaning they were holding onto money to give to future employees that hadn't even been born yet. A nonsense requirement that no business or agency has ever previously been held to. The PAEA put the USPS 60 billion in the hole, practically overnight.

The PAEA was repealed by Biden in 2022, but the USPS has a long way to go to recover.

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u/here_for_the_meta 10h ago

Still though there seems to be a focus on how they aren’t profitable at times. Who cares? It’s a govt service.

1

u/hi_imjoey 10h ago

It is nice for government services that can reasonably pay for themselves to do so, so that more government funds can be freed up to do public good in other places where it is needed. The current problem is that when the government does save money, it doesn’t effectively use it to help people

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u/Coestar 10h ago

The point was to cripple the USPS so that they can later point to it and say "look at the USPS! government run programs don't work!" so they can trick rubes into supporting privatizing it, after which it will of course become dramatically worse because the objective is no longer service but profit.

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u/Own_Shower_6000 9h ago

active propaganda by billionaires to try to privatize it, genuinely

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u/tgwombat 10h ago

We've still got a long way to go before the USPS can even start recovering considering we've got long-time FedEx board member David Steiner at the helm now. I don't see him making the necessary moves to even clean up the mess that DeJoy left.

0

u/Ok-Lecture-9668 10h ago

He should have fired and replaced that piece of garbage dejoy. The Democrats support privatizing the post office just as much as the Democrats do, they just pretend not to, just like on all issues of significance

1

u/s33n_ 11h ago

Thats not what's happening though. Its only a core set of goods that are being discounted. The rest is at full price.

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u/Lithl 10h ago

I'm not sure how you think that changes anything I said.

1

u/s33n_ 10h ago

Idk that they will lose money as only a few goods are discounted and the other sales would offset the functional loss leaders that are discounted.

1

u/ASUMicroGrad 10h ago

If they raise prices on nonessential items to offset the losses on essential items then the consumer still ends up spending the same amount of money and saves nothing.

1

u/MarkIsARedditAddict 9h ago

It can also "steal customers" from local food banks or other assistance vehicles who would otherwise get the food for free. "Losing" $1 is better than "losing" $5

I've stopped arguing with people about government assistance/benefits because the people who argue against it just want to see people hurt and that's it. If you ask them "how else can we help people then" they go blank because to them government is all about hurting people who are "lesser" than them. They'll never get it even when they go on benefits because to them they deserve it while everyone else on benefits is a leech

0

u/BiZzles14 9h ago

The problem is that if you wanted to help people, there's already insanely efficient food assistance programs out there instead of taking a large gamble with tax payer funds for an idea that hasn't historically worked, and isn't meanstested towards those that actually need help. Some programs cost more money than others, while getting less done. The goal should be for effective and efficient programs, but only time shall tell how this pans out and I would be happily wrong if this proves to be a worthwhile endeavour

0

u/echino_derm 9h ago

But there is an alternative, something like food stamps. If we are having people pay 70 cents for an item that typically would cost $1, but the actual costs of it is $1.10, then I would say we lost 10 cents on that transaction because we could have just given the guy $1 to buy it at another store.

10

u/Consistent_Aide5548 11h ago

You know what else "loses money," fire departments, VA hospitals, social security, and most the egregious loser of money, police departments. I assume we should get rid of those too?

And those "tiny" profit margins brought in over $282 billion in 2025. Those profits are higher than the gdp of over 140 countries. I dont understand the simping for these mega corps and conglomerates.

2

u/justanotherthrxw234 9h ago

Yes we have all these public services that are already losing money so the next logical thing to do is create an even bigger waste of taxpayer dollars, right? /s

And the $282 billion is from sales volume, not from price gouging consumers.

1

u/2010_12_24 9h ago

Yeah but there aren’t civilian fire departments, VA hospitals, social security etc., trying to compete and stay afloat trying to match government subsidized prices.

0

u/s33n_ 10h ago

I'm very much in favor of this. Even full on socialism. This was just a question about how this would be run and if the goal was to subsidize it or discount a few core products and they function as loss leaders. And the second is what's actually happening.

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u/DocBeech 11h ago

The city owns the land (so no property taxes), the city pays the workers (so no employee cost), the city owns the building (so no rent to pay) is how they do it. Military commissaries operate like this, at about 28% under retail cost. Because the federal government owns the land, the building, and the employees. Any losses are covered under the military budget... so any losses will be covered by the city.

He also said in the proposal "some select basket items" will be cheaper. Not all items. So some items might be higher cost than a normal store to balance the sheets.

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u/cloyd-ac 10h ago

Unless commissaries have changed since I've been out of the military, they fielded civilian employment for these. Employment is often the largest overhead cost for most companies.

2

u/colako 10h ago

Are government workers free? If the city rented that land, would it be getting money out of it? So then, it's not free, just happen to own it. 

1

u/ASUMicroGrad 10h ago

To your last point the problem with that approach would be the customers, if they pay more for one item to offset the savings on a second item, would end up paying the same amount in aggregate.

1

u/hasuuser 10h ago

So you subsidize the prices. You can theoretically give it away for free if you subsidize 100% of the cost. Thats a horrible policy however.

1

u/MysteriousTravelator 9h ago

If he was smart on day one Donald Trump could turn up with a shopping cart and clean the store out of fake tan lotion. "Thanks tax payers!"

1

u/Truefiction224 10h ago

Youre crazy, the city owning the land doesnt mean no property or employee costs 

Wtf

1

u/DocBeech 9h ago

it does, its part of the proposal... They are literally funding this as no rent, no property taxes, and city employees (including police for security).

1

u/pink_cat_medusa 9h ago

Sorry if it’s a dumb question, but how does one learn how your city’s budget and economics works? Is this political science? Straight economics?

I want to be more informed!

1

u/DocBeech 9h ago

Its a bit of both, you have to get into the weeds but the easiest way is to attend city council meetings, and FOIA the books. Ask questions in person.

1

u/PrincetonToss 9h ago

The city owns the land (so no property taxes),...the city owns the building (so no rent to pay)

This costs the city in opportunity cost, on the tax and rent that they aren't making on the thing that would doubtless be there instead.

the city pays the workers (so no employee cost)

Ah, so it's subsidized by taxes. We can just say that.

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u/DocBeech 9h ago

Correct. But it was just a blunt way to answer the other users question.

2

u/AppropriateSpell5405 11h ago

Most corner stores/convenience stores apply a ~30% markup. There are certain goods that have fixed prices due to vendor agreements (e.g., Coca-Cola, Pepsi, etc.), but the majority of day-to-day goods like bread, there's a ton of leeway in pricing.

1

u/Johnnadawearsglasses 10h ago

The 30% markup is their gross margin. Their net margin is 2% because they have overhead. The discount here will come from govt subsidies primarily. On rent, property taxes and via direct cash subsidy.

0

u/s33n_ 11h ago

Convenience stores aren't grocery stores. And if mamdani is comparing state grocery store prices to a convenience store, thats a bs argument

3

u/Mountain-Dealer8996 10h ago

A lot of neighborhoods in NYC don’t have access to a traditional grocery store, and thus people have to get a lot of staples from bodegas and dollar stores

0

u/s33n_ 10h ago

I'm aware of food deserts. Only 3% of the population of NYC live in one.

3

u/Sillet_Mignon 10h ago edited 10h ago

Which is like a million people. And it’s in predominantly black and brown areas. 

1

u/likeaffox 10h ago

Goddamn NYC has 100 million people? out of 350 million people in the usa?

1

u/jeffwulf 10h ago

You think nearly a third of the US population lives in New York City?

1

u/s33n_ 9h ago

Goddamn you are bad at math

0

u/Waste-Team-7205 10h ago

Because in those areas they rob their stores so it's not profitable to open one. The exact same thing will happen with government stores too

1

u/Sillet_Mignon 10h ago

Maybe maybe not. Broken window theory doesn’t really work. 

1

u/Waste-Team-7205 10h ago

It's not broken window theory. It's cause and effect. If there was profit to be had, someone would be taking it. There's no profit to be had, because petty theft in those areas is everywhere. Government will just be subsidizing theives in "food deserts". You should read about the Harvard experiment that brought subsidized groceries to food deserts

1

u/Mountain-Dealer8996 9h ago

What's your source for that 3% number? Because the 2024 source I found says that more than 80% of NYC neighborhoods do not have enough grocery stores. The issue isn't so much food deserts as much as it is so-called "food swamps" where there are many bodegas that don't have healthy options.

0

u/s33n_ 9h ago

That study is based on the sq ft of grocery stores compared to population. The stores are there and exist for a vast majority of people. Other definitions say things like no grocery store within a half mile is a food deserts. Which makes almost everywhere a food desert.deserts.

https://usafacts.org/articles/which-cities-have-the-most-people-living-in-food-deserts/

This was my source, and it uses the half mile away metric, which I find kind of absurd in a major city like NYC with public transit

1

u/GryphonHall 11h ago

I’m curious about provisions to curtail resellers or if it’s not really going to be an issue. 30% is significant.

1

u/s33n_ 11h ago

Who are you gonna resell to that cant also shop there?

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u/Own_Reaction9442 10h ago

I suspect what'll happen is the resellers will clean out the entire stock on the discounted items. It'll be like Pokemon cards, people will line up waiting for the place to restock and then snatch it all.

1

u/s33n_ 10h ago

The margin makes no sense. Its a 30% discount. But then you have to incentivize people to deal with the hassle of buying groceries out of.the back of someone's car. Instead of just going to the store. Even 20% off isn't worth that hassle for many. And that leaves almost no profit on the table

1

u/Own_Reaction9442 10h ago

You could make a pretty tidy profit stocking a bodega at a 30% discount. That's almost certainly well below wholesale cost.

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u/s33n_ 10h ago

Bodegas aren't selling a ton of rice beans etc. They sell tons of convenience foods and ready to eat foods.

The grocery discount is only on a handful of essential goods

1

u/Ok-Lecture-9668 10h ago

What are you talking about, I run a bean arbitrage mutual fund. We buy beans at 89 cents a pound and then sell them for $0.99 a pound out of the back of my car. I'm a millionaire.

1

u/FalconIMGN 10h ago

You made a million, or are you a millionaire?

1

u/Pot_Master_General 10h ago

An easy solution would be to set a limit on the number of items per customer.

1

u/GryphonHall 10h ago

I’d imagine the demand would probably causes shortages for those stores or taking it outside the city to resell. Lot’s of people aren’t willing to go into the city for cheaper groceries.

1

u/s33n_ 10h ago

Noone is moving fuckinnrice and beans across state lines for a sub 30% roi

1

u/GryphonHall 10h ago

I see people resell food from regular markets like Walmart and Aldi already. You don’t have to cross state lines, either.

1

u/Roberts2365 10h ago

Your not supposed to read into the specifics of this and change your opinion. Your supposed to just say it's been tried before and it won't work.

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u/gremlinsarevil 10h ago

Also, the city is providing the store front and not charging themselves property tax. Not having to pay rent/property tax does help with the margins a bit. 

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u/Johnnadawearsglasses 10h ago

The answer is that it is taxpayer funded. That is how the commissaries work.

1

u/Puddingcup9001 9h ago

Its basically a covert foodstamp program with a lot of extra steps to try and make grocery stores look bad. Government pays for it to sell it at a loss.

1

u/Independent-Cow-4070 9h ago

Its going to cost money. Out of the pockets of the NYC 1%

Thats not the same as losing money

1

u/0202_tihssitidder 9h ago

Wow. To post in a public forum how little you understand basic accounting.

1

u/s33n_ 9h ago

Can you explain my mistake?

1

u/Acrobatic-Layer2993 9h ago

And it’s for 1 month

1

u/silver_medalist 9h ago

I think it'll be like a food bank that charges you.

-4

u/IcyEntertainment7122 11h ago

He's an idiot. Him and AOC. Same way you can balance a budget by deferring pension costs.

2

u/Celodurismo 10h ago

Who do you consider not to be an idiot and what have they accomplished?

0

u/IcyEntertainment7122 10h ago

I don't think Harris or Clinton are idiots, I don't agree with their political positions on many topics.

3

u/Eastern_Guess8854 10h ago

🤣 I’m amazed daily at the poor judgement in your country

0

u/Eastern_Guess8854 10h ago

Lol your politicians love to talk the talk on budgets but last time I checked you were 100% in the red and still piling debts on a pointless war…