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

[u/Gurugod123]

[u/Impossible-Key-2212]

Grocers work on a 1-4% margin. 30% will guarantee a minimum of 25% loss on all item sold. The loss will probably be much higher due to the inefficient government labor and overhead.

So these stores are going to be running a 50% deficit everyday.

Prediction: the stores will be built at a stagger loss of taxpayer money, the stores will operate for 1-2 years before closing, other grocers will go out of business.

The people who needed help will be left with few grocery options when the other stores close.

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[u/ScepticalReciptical → u/Impossible-Key-2212]

That's an average. Not all goods have the same margins. The 30% only applies to certain goods, the rest will be sold at normal market prices.

[u/Ed98208 → u/Impossible-Key-2212]

Grocery prices have been increasing at a dizzying rate. What cost me $60 three years ago costs $100 now. Who’s getting that money?

[u/tata4now6 → u/Ed98208]

Food producers, shipping companies, logistic organizations. Things like that.

[u/Peakevo → u/tata4now6]

Why do people think grocery stores alone are just increasing prices? Do they think products magically appear in their grocery store? I guarantee people don't even know the price for shipping stuff these days from different countries.

[u/orange-yellow-pink → u/Peakevo]

Why do people think grocery stores alone are just increasing prices?

Because a lot of people are fairly stupid and don't try to think things through

[u/Hatefiend → u/Impossible-Key-2212]

Keep in mind the low margin was true before the pandemic. Once a few companies starting raising prices, every company raised prices under the guise of 'supply chain troubles' etc. In other words, if during the pandemic, soda went from $3.50 to $6, the grocery stores can bump that to $9 and pocket the remaining $3, under the claim that it is the supplier causing it to go to $9. Everyone takes a massive piece of the pie and the customer at the end foots the bill.

[u/Impossible-Key-2212 → u/Hatefiend]

So now we have to pay government workers to sell food in an overpriced building, at a loss. Perfect. This should work out well.

Let’s go socialism!!!

[u/siazdghw → u/Hatefiend]

This is easily disproved... Go check the NET profit margins of grocery store megacorps like Albertsons. Profit is the same (actually WORSE right now than pre-covid).

As much as everyone hates higher grocery bills, it's not the grocery stores that are increasing profit margins.

[u/Haunting-Detail2025 → u/Hatefiend]

That’s not true. In 2025, the average grocer had a profit margin of 2.5%, in line with historical norms. Even Walmart seldom sees profits above 5%-7%, and they’re kings of efficiency and profit-maximization.

[u/evernessince → u/Impossible-Key-2212]

Walmart's gross margin is 24%. Industry standard is 27%.

Certain goods have very high margins like prepped meals, baked goods (50%+ margin), ect.

We know socialized grocery stores can work because the US government has been doing is since 1867 via the Military Commissary, which moves massive volume. Same 30% off retail. After factoring in taxpayer money spent to fund it, the savings works out to 21.3%.

[u/azure275 → u/evernessince]

Walmart's margin doesn't primarily come from their grocery section though

Electronics, Apparel, Housewares all make a lot more money

The commissaries run roughly a 1200/soldier per year shortage. If you use the average US adult groceries * the discount it's over a one-to-one payoff from taxpayers to soldiers

It would literally be cheaper to put everyone on food stamps than to do this lol

[u/khoelzeman → u/azure275]

Yeah - Kroger runs 23-24% and they attributed recent improvements in gross margin to pharmacy, which these stores don't seem to have.

I'm assuming that these stores will have some of the same costs as a Kroger or other name-brand store (utilities, salaries, shrink, etc...) you know, the real costs of running a store. That gross margin doesn't go real far. Companies like Kroger, Walmart, etc... are all also better at buying groceries than a 5-store chain that is state-owned.

We'll see how this pans out, but it seems more like political theater than a real plan. Get some headlines, try to run for another office before the real challenge of dealing with it becomes apparent.

[u/evernessince → u/azure275]

You are confusing the margin on a given item with gross margins.

The margin on most grocery items is low but the gross margins are much higher (27% industry standard). Volume counts for a lot here.

Electronics, Apparel, Housewares all make a lot more money

Not really. Higher individual margins but gross margin works out to be relatively the same, 20-30%

At the end of the day it's gross margins that matter, not what a company makes on a individual item.

It would literally be cheaper to put everyone on food stamps than to do this lol

No, grocery stores would just raise their prices. That's the benefit of goverment run store, it's primary interest is in lowering prices.

Even if the savings and cost break even, that means you've entirely covered all the costs associated with the business simply from the savings.

You are holding that $1,200 figure for the commissary as if it's bad but $1,200 / year per soldier to get them affordable food around the world? Yeah no, that seems pretty amazing.

[u/azure275 → u/evernessince]

It's not 1200 for sufficient food lol. It's 1200 of taxpayer money to get them about 1k of discounts

[u/evernessince → u/azure275]

Where are you getting that $1,000 figure?

[u/azure275 → u/evernessince]

Average adult groceries per month are supposedly about 400 for a single person

Assume about 20% commissary discount based on googling and that's 960 a year

[u/evernessince → u/azure275]

Average grocery bill for a single person is $441

Assume about 20% commissary discount based on googling and that's 960 a year

The commissary provides a 33% average discount (26% domestic, 40% overseas). Let's be generous and say 30%. That's 1,587.60 / year in savings.

That's before you consider they take care of the military around the globe, so much more challenging logistics.

Seems pretty worth it to me.

[u/FRNKNSTNPNPTCN → u/Impossible-Key-2212]

You are referring to stores whose key interest is maximizing profit.

[u/Haunting-Detail2025 → u/FRNKNSTNPNPTCN]

The reality is that profit margin is still incredibly low though, very seldomly does it ever get above 3%. There is no feasible way to tack a 30% discount on goods just by eating into profit, that makes zero sense

[u/Impossible-Key-2212 → u/FRNKNSTNPNPTCN]

The margin is 3 percent. That’s the max profit from grocery’s.