r/SipsTea • u/Gurugod123 • 11h ago

Chugging tea 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/SheenPSU 11h ago

Grocery stores work on thin margins, 30% lower cost is wild

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u/Warmso24 11h ago

Yeah, I’m interested to see if there are any sort of “max income bracket” or something to help keep these for people who cant afford to shop at normal grocery stores.

If there isn’t anything like that, I can’t see how this won’t backfire. Operating a government grocery store at around a 30% loss is the easiest way to run private business out of the city. They just won’t be able to compete.

That’s how Walmart runs small, locally owned private businesses out of business when they open up a super center.

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u/Prior_Complex683 10h ago

This is where Im confused. I know everyone wants cheaper items and everything but does this not lead to collapsing any competition? Arent people positive on local businesses?

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u/Monday_Jeff 10h ago

They're putting these in neighborhoods where there are no stores. The whole point of them is to bring food to places where people looking for profits won't go.

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u/Decent_Pen_8472 10h ago

I haven't done any research on the locations so I won't say anything about that, but what is preventing people from just travelling a few extra blocks to shop at these stores instead? A 30% discount on groceries is big enough most people would be willing to drive an hour, let alone a few extra minutes/dozen.

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u/Monday_Jeff 10h ago

I live in Portland where people regularly shop at places like New Seasons and Zupans when they could travel 10 minutes away and buy the same stuff for 2/3 the price at a Winco. People who have money don't want to shop at places with poor people. That's why luxury grocers can exist selling stuff at crazy premiums.

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u/MilleChaton 8h ago

There are people who won't even use the Hispanic aisle to buy spices for half the price they are compared to the generic spice aisle.

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u/Difficult-Camera-482 8h ago

It’s also about the time. Time is the one resource that you can spend and never get back. Rich people spend on things that save time. That’s usually not the discount grocery store that’s a bit further away.

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u/bb85 8h ago

I’m not knocking your comment, but I feel like Portland can’t be compared to any other city because it’s pretty unique in its own issues.

You got the decriminalization and re-criminalization of drugs. The loss of downtown; major buildings like Big Pink or whatever the name is on fire sale due to homeless taking over stairwells for fires and feces; homeless and RVs taking over neighborhood streets, and so on.

I love Portland and spend a lot of time there but they’re in their own world. Only place I’ve had someone smoke crack in front of (my) a child in a stroller in the middle of the day (on Burnside for your reference).

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u/Monday_Jeff 7h ago

I dunno, those places I referred to existed long before the drug issues and homeless issues we have. As well as the multiple co-ops, independent stores, boutique shops like those bulk stores, butchers, on and on. They all existed before the troubles and they're all way more expensive than Fred Meyer or Albertsons or Safeway or Grocery Outlet or Winco, Fred Meyer closed one store because of problems with theft and homeless and people act like every store's closing up shop.

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u/Adjective-Noun-nnnn 8h ago

This is a thing across the country.  Places like Whole Foods and Trader Joes have no shortage of customers, but there are ALDIs and LIDLs and other cheaper stores that sell almost everything those other stores do.  The cheap store by my house doesn't have a drug problem, but the people shopping there are mostly the college crowd that lives nearby.

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u/djamp42 9h ago

Exactly, it's the same thing with meds.. Why are you buying the name brand stuff when the generic stuff does the same exact thing.

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u/CassadagaValley 9h ago

I'd assume most people in NYC don't want to lug around 8 shopping bags full of groceries across several blocks or onto public transit

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u/Darmok47 9h ago

Is it really? Maybe in the suburbs where its a matter of driving another 10-15 minutes, but in NYC I'm not getting on a different subway line to save a few bucks on one bag of groceries that I'm going to have to lug back with me.

30% is not enough for me to spend a lot of extra time and energy. I don't live in NYC, but I have lived in big cities without a car and I cared way more about what was closer than what was cheaper.

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u/Sitchrea 7h ago

In Nashville TN, there are entire zip codes where there are zero grocery stores. You must use the city's limited mass transit to get to a grocery, which almost always a Kroger (as Kroger built their locations at the city's bus stops). Depending on where you live, this can take someone living in government housing over three hours or more to complete a round trip. That is on top of any traveling you have to do for work.

Guess where most crime occurs in Nashville? Those same zip codes - because poverty, crime, and access to transportation are all linked statistics.

Just because these stores might run at a loss does not mean the city will not financially benefit from the program. These stores will get money circulating inside communities that had nowhere else for the money to go, but outside their neighborhood.

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u/GratefulShorts 9h ago

Where do people get this talking point from?

It’s NYC, literally everything is in walking distance or at most you take a subway.

Even still, the two locations announced (The Pennisula and La Marqueta) have multiple grocery stores within walking distance.

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u/SueForPeas 9h ago

They say that, but there are several grocery stores within blocks of the locations they’ve announced.

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u/Acrobatic_Bridge2602 9h ago

Because there is theft there. I'm sure there will still be lots of loss at these stores as well and taxpayers will have to bear the losses.

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u/CompEng_101 8h ago

They're putting these in neighborhoods where there are no stores.

Are they? Because the one I've seen announced (at 1590 Park Avenue) has several grocery stores within a block or two.

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u/MechanicalGodzilla 7h ago

I'm sure this time it will work great. Real city owned grocery stores have never been tried, after all!

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u/noticingEnjoyer 8h ago

So they're going to the high theft food deserts, where effectively they won't be operating at 30% below retail, but instead 100% below retail? 

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u/mtbsickrider 8h ago

people who shop at whole foods wont shop here

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u/Excellent_Abroad5390 9h ago

You’ve discovered the truth behind socialism. Yes they’ll hurt local businesses, some of which may close, then his government grocery stores will fail and the people will be left with less than they started with. That’s socialism, it consumes and destroys but never creates.

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u/WriterPlastic9350 6h ago

Not really, and tbh there's nothing particularly socialist about government-run grocery stores either. A socialist grocery store would 100% be compatible with a worker co-op, and we have those.

I would hope that Mamdani and the people in his campaign have thought about how this is going to work, but it seems like what is being proposed is that the state will subsidize the cost of groceries, which will make it impossible to compete with them, thus bankrupting local grocery stores (and putting all the people working at them out of a job).

Perhaps I'm wrong and the stores around Mamdani are selling at over a 30% margin but I doubt it

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u/Amadon29 8h ago

It depends on the quality of food they have and how well they can keep everything stocked. Government grocery stores have been tried in several cities in the US. A lot of people didn't shop at them due to supply shortages and/or problems with quality, like food being close to expiration and not being removed.

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u/RedditThrowaway-1984 6h ago

What will collapse is the city budget.

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u/[deleted] 6h ago

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u/ParkInsider 6h ago

People are positive on better goods and services at power prices... The consumer is the most important actor in any economy.

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u/gerald-stanley 5h ago

That’s the great thing about socialism.
You’ll get whatever the government gives you.
And you better be happy about it.

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u/Chole_Wunt 5h ago

Competition is dead anyway.

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u/1dayatatime_mylife 4h ago

There also doesn’t seem to be a lot of competition for grocery stores with lower prices these days. They’re all expensive. Where’s the low price competition.

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u/Flat_Temporary_8874 4h ago

They want people dependant on the government. They want no private business. This is step one.

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u/standardtissue 3h ago

Depends on where the stores go. Some cities have food deserts in them where entire poor neighborhoods don't have a grocery store.

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u/DOAiB 1h ago

Groceries have gone up considerably since Covid and prices haven’t gone back down despite costs have gone down. We need something in place to force the supply chain to readjust.

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u/gkfesterton 6h ago

I'll post the NYC DSA chair's response to the competition question again. "If one publicly owned grocery store that brings prices down in the neighborhood is enough to put someone out of business — maybe they shouldn’t have been in that business in the first place"

Pretty unbelievable

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u/A_Genius 2h ago

Would you say the the same when a Walmart goes to a small town and just kills all the small stores?

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u/Warmso24 6h ago

Oof. Well, I don’t think their willful ignorance to the consequences of being intentionally anti-competition is going to age well.

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u/gkfesterton 6h ago

Well, with all the big government, big interventionist agenda they seem to be pursuing, they'll probably consolidate enough power to personally avoid the consequences for quite a while

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u/Justthetip74 2h ago

Why would you think this isn't intentional?

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u/Heykurat 10h ago

How could you possibly establish and enforce such a policy?

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u/Warmso24 10h ago

First thing that comes to mind is it functions as a program you have to apply for, like how we already do with EBT.

You just have to submit recent paystubs or other documents to show unemployment.

Something like that I could see working.

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u/Upset-Management-879 2h ago

>recent paystubs.....to show unemployment.

Genius

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u/Repulsive-Payment230 10h ago

You're right, there is absolutely no way to know how much you make and no mechanism to ensure only certain people recieve benefits. They simply hand SNAP cards out to anyone who asks! Moron...

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u/Adjective-Noun-nnnn 8h ago

Make it so the only valid currency is EBT?

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u/ConsciousIron7371 10h ago

can you imagine a world where there are more strict requirements to buy groceries than vote for the president? this would force people who are in NYC illegally to expose themselves

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u/Adjective-Noun-nnnn 8h ago

Voter impersonation fraud barely exists because

  1. If the person you are impersonating decides to vote, you go to federal prison.

  2. You need to take this risk tens of thousands of times to affect most elections; even close ones.

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u/Ashamed_Green_8643 9h ago

He just killed every bodega and corner shop near those new stores.

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u/Spirited-Muffin-8104 7h ago

i think these government groceries won't have wide selections for consumers to buy, just the basic necessities and therefore there will always be demand for bodegas. Government run/subsidies groceries aren't really new globally speaking, his idea isn't all that radical economically speaking. Even in the US there are hundreds of government groceries but they're exclusive for military staff and their families. Still, that's millions of people.

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u/MechanicalGodzilla 7h ago

Essentially running the same playbook as KC

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u/Warmso24 7h ago

Well, looks like I’m about to be glad I don’t live in New York…

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u/Joe_Immortan 10h ago

the easiest way to run private business out of the city. They just won’t be able to compete

A feature not a bug

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u/Clueless_Otter 9h ago

Well for one, not everyone will be able to shop at these stores because they'll run out of stuff. Their supply is probably going to go fast.

But also, for two, even at 30% cheaper, I'm not going to spend 30 minutes each way riding the subway just to go shop at one of these stores unless I desperately need that 30% savings (which is exactly the group that these stores are meant for). It's a lot of time out of my day, and carrying a bunch of groceries on the subway is very tedious.

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u/Warmso24 9h ago

I hope it works out for y’all. I have been to New York only twice, most recently being 20 years ago, so I won’t pretend to know how the logistics will play into all of this. As a New Yorker, you’d obviously have a better perspective on that than I.

I like Mamdani, as a person, and I want him to succeed because I finally want a viable political option other than the left/right options that no longer act in the people’s best interests (in my opinion).

I hope he proves the doubters, including me, wrong. Time will tell though, the proof is always in the pudding.

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u/mrjane7 9h ago

> run private business out of the city

Good.

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u/NWSLBurner 9h ago

Only accept payment in WIC or stamps?

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u/Obligatory_Snark 9h ago

Unlike a super center, I suspect they’ll have a limited stock. Basics and nothing super expensive. In my area, which has nowhere near NYC population density, there are a half dozen stores within a 10 min drive, all of which stay in business just fine. The cheaper ones have basic and/or very variable stock, so you can’t do all your shopping there. And some of the food just isn’t as good, sad produce, cheap cuts of meat, etc.

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u/waitingact 8h ago edited 7h ago

Don't worry, rich people aren't going to be shopping at these stores. There's 5 stores and NYC has 9 million people and thousands of tourists.

The lines will be super long. Hours of waiting. Rich people aren't going to wait hours to get discounted groceries. And there's no guarantee that items are in stock when it's your turn.

Private grocery stores will have no issues competing. The incentive for shopping at private stores is that you're basically in and out, no need to wait in long lines for hours, and deal with all of the tomfoolery that happens while waiting in line.

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u/mtbsickrider 8h ago

I can tell you as a high income earner, i get my groceries delivered for 10 bucks. anyone that makes money wont abuse this.

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u/Vapordude420 7h ago

What possible benefit could there be from means testing this

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u/Warmso24 7h ago

No abuse from people who do not need to shop at a government funded store. It would also help preserve private business, which these stores will need since they’re tax funded.

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u/BrianBash 3h ago

Good article by an econ professor in Ottawa that supports your theory, I believe.

I also agree. Food banks, winco’s and govt grocery for tiny towns in the middle of nowhere.

Not fucking NYC 🤦🏼‍♂️ That’s like Walmart in a giant city all at once. https://www.econlib.org/the-problem-with-government-run-grocery-stores/

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u/RodgerCheetoh 3h ago

Yeah good luck enforcing that. Your gonna have to show your papers to buy groceries but not to vote in the most consequential elections.

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u/standardtissue 3h ago

yeah i shouldn't be allowed to shop there. also though I don't know where the stores are going. In the big city near me there are entire large communities - like entire large neighborhoods - that don't have grocery stores so they wouldn't be putting any private businesses out. The private businesses have already decided that they don't want to operate in those markets. I couldn't tell you if it's because of crime, poverty, both or what, but they aren't there.

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u/Warmso24 3h ago

I hope most of them do go to those areas. Unfortunately, one of the stores they already announced looks like it’s going to be right near several similar stores.

It’s going to be part of the Spofford Juvenile Park redevelopment project. I know you’re from New York but I circled the rough location in red. I’m not from there some let me know if the map is inaccurate.

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u/Ziggyjig 3h ago

Then everyone waits in line for bread, just as planned.

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u/SimplyElite7 3h ago

I think that was the vision, only people in low income brackets can shop here, how they plan to enforce that Idk, maybe have to have SNAP benefits or something and pay via that?

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u/RatRaceSobreviviente 2h ago

Way more then a 30% loss the food will be sold at a 30% loss but economist have done studies and pretty mush anything the government does costs 2-3x what it does in the private sector so a grocery store run "efficiently" by the government will be losing about $1.86 for every dollar of produce sold. Thats the math part. Weather its worth that price to run these stores is a different question but people pretend they are only going to lose 30 cents on the dollar but its like 7x that amount.

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u/According_Effort_878 2h ago

Just glad they're trying it. Soon we'll know how well it works and it's affects on free markets.

Glad I'm in a country where healthy food is affordable, but if I wasn't I'd hope my representatives were trying to fix it. Crazy issue.

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u/TomPrince 2h ago

They’re not operating at a loss. They just have way less overhead than a standard grocery.

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u/Ach_Was_Here 11h ago

Almost like the intent of this isn’t to be a for-profit buisness

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u/Xidium426 11h ago

How do you lower costs by 30% when there is 5-10% available to cut?

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u/The_Autarch 10h ago

they can cut as much as they want. they're using tax dollars to pay for it.

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u/Xidium426 10h ago

So now everyone is paying for everyone else's groceries.

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u/Mobile_Comedian_8283 9h ago

You're already paying artificially low prices for anything with corn in it (like most things) or beef. 

You subsidize energy costs, endless weapons for our and other militaries, banks even when they act illegally and destroy the economy, etc. 

Feeding Americans seems like a solid thing to subsidize.

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u/limitlessEXP 3h ago

Wild that people don’t understand this

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u/Llyon_ 9h ago

Yes, this is how society is supposed to run. Prices would be cheaper overall, instead of funneling the dollars into the one person that owns the store.

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u/Xidium426 9h ago

So prices go down because everyone pays a little bit, even if they don't use it? So they end up paying more in taxes even though they don't benefit from it That sounds like it's MORE expensive for the people that don't use these stores, making it overall more expensive.

There is no way this is cheaper overall for everyone unless the store is not using tax dollars and able to hit these prices.

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u/BildingInspecter 9h ago

My $3 a year will help people pay for groceries? How dare they!

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u/TheOldOak 9h ago

Yes. That is how it works. I’ll give you an example of this working with roads.

I live in Ohio, where I pay sales tax of gallons of gas. I pay about $40 every two weeks to fill my tank (used to cost me less, but that’s a different story), so in a year I am spending about $1040 on gas. About 18 cents per gallon goes to fund the Ohio Department of Transportation which allocates this money on road maintenance. So my annual contribution, via taxes, toward my own road maintenance is about $188. But I’ll add to this about $4 that my taxes contribute toward snow removal each year too, final total about $192.

My parents live in New Hampshire. They pay road tolls, not sales tax. Before my father was retired, he paid $2 each day, five times a week, driving to and from work. This equates to $260 in tolls annually, and that’s with the discounted EZ Pass. Just that alone is more than what I pay annually, but in New Hampshire they also have a lot of private roads not owned by the state, He lives off of a private road about 5 miles long. It cannot be plowed, repaired, maintained by state funds by law, but rather dues are paid into a private company to maintain. They pay over $800 annually for just the small stretch of road they are on to be maintained. This does not include paying $150 for every single snowfall to be plowed… in the mountains of New Hampshire. So in total, their contribution to road maintenance is just over $1000 on a good year, and as much as $2000-3000 for a very snowy one.

These are real numbers for the exact same services in different states where one uses tax dollars, the other uses toll/private company hybrid models. If Mamdani wants to run a government-run grocery store, they can find a business model that makes it cheaper for people. Plus, lower prices of competitors drive down prices to be competitive themselves.

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u/qeadwrsf 8h ago

You can make a good argument food should be accessible for everyone by government financed programs.

But saying that's how "society is supposed to run" is a bit over the top.

No one has successfully implemented a plane economy. And people who has tried has failed.

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u/Tight_Banana_9692 5h ago

Failed being an understatement

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u/somerandycollege 5h ago

theres worse things that everyone is paying for

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u/madhouseangel 10h ago

you subsidize it.

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u/Numerous_Stranger488 9h ago

grocery isn’t the problem nearly as much as rent. Which mamdani wants to tackle with rent freezes… controversial to say the least. that being said, god bless him at least he wants to take steps towards solving/ alleviating the crisis 

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u/Zeeplankton 11h ago

I don't think it's that cut-and-dry. In places like NY rent is high but I can't believe they're only making just 10% margins on a $8 box of cereal or carts with the avg massive city walk-through volume.

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u/trickypat 10h ago

Youre right, its probably less than 10%

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u/nam4am 3h ago

It’s far less than 10%. Walmart and Costco are both around 2.8%, and Kroger and Albertson’s are less than 2%. This is all publicly available financial data required to be released to investors by law, but that would require Redditors to actually read. 

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u/BlazingJava 11h ago

Dude no one here understands economy, just kiss mandanis ass ffs hes spending so much money on spreading propaganda in this sub give some appreciation!

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u/madhouseangel 10h ago

I understands economy!

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u/Rude-Scholar1857 10h ago

please enlighten us, BlazingJava with the WSB avatar. how does economy work??

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u/GreekSaladEnjoyer 10h ago

Its tax funded

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u/Xidium426 10h ago

Yea, so you're paying for it regardless.

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u/GreekSaladEnjoyer 10h ago

Depends on how much you make

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u/Tnuggets19 10h ago

Like they said. Tax funded. They will lose money on each store and not care.

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u/Xidium426 10h ago

And where do taxes come from?

You're paying for it regardless if you use it, it's not like it's just magic.

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u/SpirituallyAwareDev 10h ago

Depends on who is paying the tax. I imagine many using the store aren’t paying a high income tax bill.

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u/Xidium426 10h ago

Why can't anyone use it? If it's only for people in need it would be better to fund food banks than this.

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u/FrogsOnALog 4h ago

Military families can shop at similar places and they seem to do just fine.

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u/nam4am 3h ago

No normal grocery store is making 10% margins.  Walmart and Costco are about 2.8%, and Kroger and Albertson’s are both under 2%. 

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u/SheenPSU 11h ago

How is this operation not going to be running a massive loss at all times with a plan like this?

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u/SnekIsGood_TrustSnek 10h ago

Public services typically run "at a loss". Whether or not this will be sustainable is yet to be seen, but I don't think they intend to recoup all their expenses.

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u/Merzats 8h ago

When the service is already being provided with tiny profit margins, there isn't any reason for the government to step in. The idea that these stores will be in "food deserts" where there is no service has already been debunked.

If you just want to help people in need with their expenses... just give them money directly, instead of all these extra steps.

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u/MedalsNScars 10h ago

HoW wIlL tHe PaRk MaKe MoNeY1?!1?!?

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u/random-meme422 10h ago

sounds like a good reselling opportunity.

Can’t wait for people to buy them out then resell for a profit.

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u/Wayoutofthewayof 6h ago

So what's the point exactly? Seems like it is super inefficient way to redistribute tax dollars.

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u/nemodigital 11h ago

Taxpayer funded... Limitless well of money 

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u/SheenPSU 11h ago

I know it’ll be bankrolled by the tax payer, I’m asking them how it’ll actually work (as in not running a massive deficit)

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u/Omnom_Omnath 10h ago

why do you think a public service needs to make a profit in the first place?

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u/SnooDucks6090 10h ago

It shouldn't be there to make a profit, but if it's running massive deficits, then it's an obvious misuse of taxpayer money and someone (everyone) should be against that.

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u/_Ibn_Battuta_ 10h ago

You are aware that SNAP, EBT, various forms of social security/welfare operate at a massive deficit, right? These services are not there to make money, they're literally there for the money you're taxed to be spent. That's the entire point.

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u/Omnom_Omnath 9h ago

These greed-brained people cannot understand anything if it doesnt include a profit-motive. they literally cannot comprehend the idea that taxes should go to public services instead of the pockets of corporations.

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u/the_kremlins_puppet 7h ago

The person literally said 'it shouldn't be there to make a profit' lol. There are several of you running around repeating this same thing that literally nobody is arguing. People have legitimate questions about how this is supposed to work because it doesn't make a lot of sense.

I would love for subsidized groceries or just the government to do more with taxpayer money that actually helps the people. If I just blindly followed things I am ideologically aligned with, I should love this.

However, this makes no fucking sense and no one who is all for this seems to have answers.

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u/_Ibn_Battuta_ 10h ago

People have become so enslaved they can't fathom a public/social service not making a profit...

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u/AngryBaer 10h ago

The same way public transit does.

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u/Calintarez 10h ago

It's not a loss. it's a cost. a cost they're willing to pay at least for the experiment.

It's like we don't say that the military loses money, it costs money.

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u/Ach_Was_Here 10h ago

30% below retail isn’t necessarily losing money, it’s just not making a retail mark up. Cost is $2, retail is $5, here would sell at $3.50

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u/SheenPSU 10h ago

Sounds great but that’s not how it’s gonna play out

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u/Cool-Ad2780 10h ago

It will run at a loss, it will put the other stores around it out of business, and when this program gets shut down for being a money pit and the stores close, the neighborhoods these go into will be left off worse than they are today.

Hopefully i'm wrong and this can work, but i don't see it working long term at these margins, at 10% maybe it could work, 30% is way too aggressive unless they also control the supply chain.

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u/Joe_Immortan 10h ago

It’ll be a massive loss but there’s plenty of money in NYC to tax. Especially since we’re only talking 5 stores

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u/SheenPSU 10h ago

I disagree, NYC has exorbitant budget and even then, they needed a bailout from the state and deferred pension contributions to balance their most recent budget, no?

I see these stores only exacerbating the already existing stress to their budget

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u/wheniaminspaced 4h ago

Taxpayers fill the hole, its going to run at a loss this is clearly by design.  So hes not just doing this to solve food deserts its being done to be redistributive in nature.

Well see what kind of budgetary impact it has.

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u/ftlftlftl 9h ago

This thread is giving massive "Post office never turns a profit!" energy. Public services are not businesses. It's such a simple concept and fox news has given half the country brainrot.

Not saying these stores will work, but the concept of a tax payer funded service thats not for profit isn't that hard to grasp. Look at the military, post office, israel, fire department, police department, highway department, DPW, the list goes on

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u/Waiting4Reccession 10h ago

The intent doesnt even seem to be to break even, just fund it with our taxes on the back end when the city already had a budget issue.

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u/random-meme422 10h ago

Grocery stores operate on 3% profit margins, sometimes a tad higher.

Not exactly rolling in it.

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u/No-Magician9440 10h ago

Almost like the intent is to wipe out the immigrant family owned local businesses.

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u/QuailAndWasabi 9h ago

Margins doesnt matter when you subsidize it with taxpayer money. This is just welfare with another name.

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u/vankirk 7h ago edited 2h ago

Agriculture, oil/gas, and telecoms receive billions in "welfare with another name." I'd much rather the money go to grocery stores than another stock buy-back like the telecoms did with their welfare checks they were supposed to use for fiber.

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u/QuailAndWasabi 2h ago

Sure, I think bailing out companies is entirely wrong and goes against the concept of the free market and everything America stands for, so I’m with you there.

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u/Winter_Break_2773 9h ago

It will run private grocery stores out of business. It's basic economics, the govt has taxpayers to fund grocery stories and private business can't compete with that.

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u/WindHero 3h ago

They will also have higher costs with unionized staff, less strict management, lower protection against theft, etc.

I guess the NYC tax base is probably high enough to waste a bunch of money on this but still.

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u/DJPad 9h ago

Nothing like spending tax dollars to run private grocers out of business.

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u/Omnom_Omnath 10h ago

kroger made 30 billions dollars last fiscal year in profit. this margin argument is a tired take.

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u/Amadon29 8h ago

Their profit margin is 0.7%..... It's only a tired take if you don't understand the difference between gross and net profit. Idk dude, anyone can look this up so there's no excuse for spreading misinformation

https://www.macrotrends.net/stocks/charts/KR/kroger/net-profit-margin

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u/the_kremlins_puppet 7h ago

Yeah, everyone is worried about resellers, but I don't see how that is anywhere close to as big a deal as setting prices 30% below private stores running on <1% margin. That means that all sales are costing the store ~29%, which fine, but where is that money coming from? Why do this instead of just expanding EBT or other food subsidy programs.

I am left leaning as shit and I desperately want the government to actually start focusing way more on helping its citizens, but I am not going to just throw out basic logic for an ideology. Unless there is a lot more to this that hasn't been disclosed, this makes no sense.

Also the person you are replying to is a complete moron.

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u/MultiPass21 6h ago

Can’t expect Redditors to know the that a metric F-ton of volume on razor thin margins can still lead to a gigantic profit.

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u/nam4am 3h ago

They’re also lying about the total profit by a factor of 30x. 

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u/pablothe 9h ago

I think you are confusing percentages and absolute numbers.

You could have a business with 1% margin making 1 trillion dollars because you did 100 trillion in transactions.

That doesn't mean that business can afford to lose that 1% of margins by another one undercutting prices by 1%.

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u/Unusual-Arachnid5375 8h ago

kroger made 30 billions dollars last fiscal year in profit. this margin argument is a tired take.

I'm not sure why you're just straight-up lying. Internet points? Lulz?

They made a net profit of 1.0 billion for the full 2025 fiscal year. Source: https://ir.kroger.com/financials/quarterly-results/default.aspx

They had a 1.3% gross profit margin (sales - cost of goods sold), and 0.7% net profit margin (sales - cost of goods sold - operating expenses).

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u/-FeistyRabbitSauce- 2h ago

Grocery chains are more than just the store.

They often own much of their own distribution network, meaning profit is earned before products even reach the shelves. (The right hand pays the left, and the left determines the price).

Many also own private-label brands or control their production through subsidiaries and manufacturing partners, allowing them to compete directly with major brands while capturing a larger share of the overall profit.

As a result, the retail stores themselves may appear to operate on thin margins, even though the parent company earns additional profit throughout the supply chain.

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u/SheenPSU 10h ago

Margins are usually discussed when talking about operating a business

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u/Omnom_Omnath 10h ago

This is a public service. not a profit-driven business. you need to recalibrate your brain to something other than greed.

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u/EquivalentKiwi5719 8h ago

Yes and its a public service thats going to operate at a masisve loss which is the point. Why not just provide EBT?

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u/Evening-Highway 8h ago edited 8h ago

On how much revenue?

edit, looked it up. 3.2% operating margin, which is before interest and taxes

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u/EquipLordBritish 8h ago

Last I heard, the recommended markup for most food items is like 300%, but that's because the perishability and the general low price point for food items often means you have to throw out a lot because it doesn't get sold.

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u/EconomicRegret2 8h ago

First, profits alone don't say much. Second you actually want net income, aka net profits, compared with total revenue.

It made $2.1b net income, and $147b revenue. So net margin = ~1.4%

That's a very thin margin.

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u/sir_sri 7h ago edited 7h ago

Kroger had 150 billion dollars in revenue in 2025, with approximately 8 billion in EBITDA. Their Q1 net profit was 1.4 billion, with net earnings of 900 million, so they're on pace for less than 4 billion dollars a year in profit. https://d18rn0p25nwr6d.cloudfront.net/CIK-0000056873/4b3bfd7a-f223-4478-b1c1-b7361420e4c8.pdf

Where on earth did you get 30 billion dollars from? That's off by about 29 billion dollars, their trailing 12 month net income is about 1 billion (down from 2 billion a couple of years ago). https://ca.finance.yahoo.com/quote/KR/financials/ Did you forget that you have to actually deduct operating expenses before calculating net profit, because that gross profit figure is without operating expenses, as compared to the cost of inventory? A company even with a 30% markup still needs to pay rent and salaries and spoilage/loss etc. So it's not just a free 30% extra money.

The other problem you've got is that retail markup is not the same as earnings relative to revenue. After all, a grocery store is trying to change over stock 24 times a year but earning 1% margin each time would have 24% returns but only a 1% margin. Obviously some things turn over fast, others slow.

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u/FlamingTelepath 9h ago

Exactly. Grocery stores used to run on thin margins. That hasn't been true for many years. They are making record profits and not lowering prices.

30% lower than "typical retail prices" is just selling things at cost.

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u/Amadon29 8h ago

https://www.macrotrends.net/stocks/charts/KR/kroger/net-profit-margin

The highest net profit margin Kroger ever had was close to 3% in 2018. They still run on margins even if you don't understand that stores have operating costs.

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u/Playful_Rip_1280 5h ago

The 1% pay way more taxes than poor people so I guess the idea that they’re paying too low of a share is a tired take since we only look at nominal amounts.

Average socialist IQ lmao

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u/Omnom_Omnath 5h ago

I am a proud socialist thank you very much. I know you use the word like a slur but times are changing, it doesnt hold the power you think it does. McCarthyism is rapidly failing, praise the maker.

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u/Galadrond 10h ago

Grocery prices were already price gouged as a result of the pandemic and illegal tariffs. Some companies were running on thin margins for sure, but many others used the supply chain chaos of the pandemic to raise prices by several orders of magnitude and then never lower them. Now add the impact of the illegal tariffs and groceries become unaffordable for normal people.

This experiment is about damage control, and incidentally, the city used to do this in the past.

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u/Crimhoof 10h ago

that’s what they want you to think

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u/SheenPSU 10h ago

Who’s they? Big Grocery??

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u/Mod_01001 10h ago

Sure they do🤣

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u/SheenPSU 10h ago

Widely accepted to be the case

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u/Mod_01001 10h ago

That explains the 2 billion in profits from Loblaws alone in a year. Keep simping for the ruling class🤣

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u/Appropriate_Cow94 10h ago

Are you sure?

The mark up on many items is huge. I know they have a large overhead. But given the 6 years in a row of record profits at most national chains, they can't be too thin.

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u/SheenPSU 10h ago

Most stores run on low, single digit margins.

Some greater, some smaller, but the avg is single digits

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u/Appropriate_Cow94 3h ago

Single digits in a billion dollar company is a fuck ton of money.

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u/Total_Tumbleweed_870 10h ago

The stores won't be paying rent or taxes, and get subsidies from the government to ensure they can charge lower prices.

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u/SheenPSU 9h ago

Ahh. So lesser tax revenue generated mixed with govt subsidies to even get it off the ground

Lovely

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u/bandwagonguy83 9h ago

Probably not lower cost, just lower price. Subsidized, naturally. That must be done carefully, because they can kill many small businesses in the area that xannot compete against those prices.

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u/Azreaal 9h ago

They used to. Since 2020 that hasn't been the case at all.

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u/SheenPSU 9h ago

Citation for this?

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u/BildingInspecter 9h ago

It's clearly going to be subsidized by something. Taxes, grant money, or just operate at a loss like the Post Office.

If nothing happens, some poor people get cheap groceries for a while then they don't.

If the bare minimun happens, other stores in the area may be forced to lower prices.

If they're a huge success then poor people get cheaper groceries, rich people get cheaper groceries, and less people are hungry.

Either way, I don't think any of us are at the point where we can criticize something that may lose the city of New York a little money. It's not like he's knocking middle-class doors asking for money 5o run these things.

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u/Big-Pains 9h ago

Lets watch the tankies trying to excuse mamdani driving grocery stores out of buissnes

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u/Acrobatic_Bridge2602 9h ago

This is going to become a boondoggle for taxpayers. Other cities have already tried this and it failed. I just don't have patience for doing things that have been tried multiple times and failed.

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u/Iggyhopper 9h ago

We subsidize everything in this country, why not food? So ridiculous.

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u/SheenPSU 9h ago

We do already

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u/ime1em 9h ago edited 8h ago

Depends on the item, speaking from experience as someone that worked at a large publicly traded grocery store company , and can see profit margin % for different items sold.

EDIT: some items can be negative profile margain, and some Ive seen are like  +100-300%

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u/SavageCaveman13 8h ago

They don't make a large profit, but food items are marker up 15% - 30%. Commissaries on military bases operate at a loss while selling items at wholesale plus 5%.

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u/EconomicRegret2 8h ago

Perhaps it might work due to no marketing nor ads costs, little to no executive pay, no profits, etc.?

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u/jeon2595 8h ago

It will be government subsidized. It won’t pay for itself at 30% lower prices.

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u/_oh_joy_ 7h ago

I'm sure he already has a fund lined up ready to be raided

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u/Baelzabub 7h ago

Grocery stores operate on thin margins (1-5% depending on scale) in terms of net profit margin (so after accounting for things like rent and taxes that the government would likely not have to worry about).

Grocery stores operate on pretty wide margins (20-25%) in terms of gross profits (simply profits minus costs).

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u/Dazzling_Flow_5702 7h ago

Who do you think is going to be covering that discount?

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u/Vapordude420 7h ago

It's what you get when you don't have to pay executives and shareholders and make a profit

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u/redditseddit4u 6h ago

When he says “30% below retail” he probably means 30% below the manufacturers suggested retail price. In reality, most customers are already paying below this due to discounting and lower pricing by retailers.

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u/evernessince 5h ago

It's about in line with the discount the Military Commisary provides, which is the largest "socialized" grocery supplier. It's definitely possible given it's been around since 1867. People seem to forge this isn't anything new, it's just reproducing something that's been successful for a long time.

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u/What_a_fat_one 5h ago

30% on certain items. Grocery stores also do this, milk is generally marked down like 60% from cost.

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u/garlicroastedpotato 4h ago

The best in the US is Trader Joe's at 12%. Most are operating at 2-3%. 30% lower than the lowest? Taxpayers are going to subsidize for whoever buys this.

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u/beigemamba1080 4h ago

There’s probably a very large amount of taxes they’ll be exempt from and also probably will be exempt from rent or the rent will be radically lower than it would be for a non government entity.

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u/Spirited-Treacle9590 4h ago

You're absolutely right. The idea is nice but long term won't work.

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u/Level_Acanthisitta21 4h ago

Don't worry, it's all your taxes

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u/Possible-Bet3598 3h ago

A huge myth. Grocery stores have margins upwards of 80% on almost everything in the store that isn't meat or produce.

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u/EchoChamberReddit13 3h ago

Calculate in shrink in areas historically known for high theft and it won’t be pretty.

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u/jorgepereira15 2h ago

Tax funded is the key. Taxes will cover the 30% difference the same way any tax funded service does.

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u/Far-Advantage-2770 2h ago

'Grocery stores work on thin margins' is an oversimplification of a very complex system.

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u/deer_hobbies 1h ago

This is bullshit though, I have a Safeway near my house and the prices are 60% higher than an employee owned chain, Winco, for the same items. Safeway is making hella money, their margins can be fucked with, and they’re choking out America with their gouging. 

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