Inside New Yorkers' hopes and fears over Mamdani's city-run grocery stores — Business Insider

RESOLVING THE LEDGER

Inside New Yorkers' hopes and fears over Mamdani's city-run grocery stores — Business Insider | AIPROPX

New York Mayor Zohran Mamdani's five city-run grocery stores are set to open by 2029. Paola Chapdelaine for BI

Phillip Grant is feeling optimistic. He thinks he's the best man to operate Mayor Zohran Mamdani's city-run supermarkets . Along with being a former city economic development executive and construction entrepreneur, he's a New Yorker who's shocked that an orange costs $2 at his local gas station.

We're walking the perimeter of a vacant city-owned lot in East Harlem. It's the future spot for La Marqueta, one of five planned stores set to open by the end of Mamdani's first term — all of which will offer a 30% discount on core goods like fruit, vegetables, and dairy. It's also the most expensive location, accounting for $30 million of the $70 million the mayor has set aside to launch the initiative.

The administration is looking for established grocers who know the food business and can take on day-to-day store management. If he were to be named operator, Grant said he "would be looking for a really strategic partner" in the city, "that could knock on those doors that we can't get to and have an ear to the street."

Phillip Grant, a former NYC economic development executive who now runs a construction firm, told me he's applying to operate the city-run supermarkets. Paola Chapdelaine for BI

Engaging with the public will be key. Over the past few weeks, I've had dozens of conversations about Mamdani's city-run stores — one of his buzziest promises aimed at lowering the cost of living in one of the most expensive cities in the world. Some New Yorkers welcome a solution for high food prices, while others are concerned nearby mom-and-pop shops will lose customers in an already profit-poor industry. A few hopeful operators, like Grant, said they know the highs and lows of the grocery industry and want to be part of Mamdani's solution .

The East Harlem lot is flanked by a slew of small shops: Meat markets, produce stands, grocers, and convenience stores. It's a block-and-a-half north of the existing La Marqueta municipal market, a city-owned building where local vendors sell everything from embroidered clothing to pastries and benefit from government-subsidized rent .

Yesi Morillo has run a gift shop and bookstore in that municipal market for nearly two years. "It's been a struggle," she told me, and she rarely turns a profit. Morillo hopes that traffic from the city-run store will boost her customer base, but she feels that she and other vendors have received very little communication from government leaders about how their businesses will be affected.

Existing vendors in the area "have been neglected," she said. It's frustrating to think that, "'Oh, you're going to spend all this money on building this new infrastructure and the basic things that we have been asking for don't get done,'" Morillo said, adding, "If I had an opportunity to sit with Mamdani, I would say do not do a supermarket that's going to be lower cost for people. There are supermarkets here that have been here for decades that have been serving the community and where the community feels comfortable shopping."

Local businesses worry about competition, saying they can't compete with stores that can offer a 30% discount on the city's dime. Paola Chapdelaine for BI

Economic Development Corporation leaders told me that vendors like Morillo will not be moved into the new grocery store space, and the municipal market and public grocery store will remain two separate entities.

The surrounding neighborhood is densely built and near major transit lines, with an average weekly foot traffic of 4,300 people . The EDC said it chose East Harlem for the Manhattan location for a combination of reasons, like existing city-owned property, transit access, local income levels, and population density, but did not share criteria specifics. The second location for the stores — opening early next year — will be at La Peninsula, a building in the Bronx. The other three will be in Queens, Brooklyn, and Staten Island.

In late July, the EDC — the quasi-public arm of NYC's government that manages city-owned property — started taking applications from potential operators for the stores. The EDC will offer them rent-free store space, while the city will set branding and pricing standards. Qiana Mickie, executive director of the Mayor's Office of Urban Agriculture, told me her team will also work with the stores to shorten supply chains and lean on locally grown produce, which she hopes will help lower food prices.

Some private grocers are skeptical. Mark Jaffe, a founder of the Multicultural Business Coalition, which represents local grocery chains, bodegas, and other vendors, worries about how this will impact his network. "The policy of feeding the hungry is good, the cost of living in New York is high. Low-wage earners could use some help," he said. "Our argument, and we've spoken to many people in the legal field, is that this is not a well-planned way to feed people."

Food costs in US cities have jumped in recent years, especially in New York. Mamdani's camp hopes their stores will help make groceries more affordable. Paola Chapdelaine for BI

It's a sentiment I've heard from several small business groups and industry analysts. Food is a tough business: Profit margins for grocery stores are typically between 1% and 3%. Some vendors say they won't be able to compete with a big store that can offer customers a discount on the city's dime.

"One lucky person will get the winning bid to run all five of these grocery stores," Jaffee said. "It's gotta be a pretty nice position."

So far, operator applicants have a lot of questions. Based on public filings , the group is asking city leaders how the Mamdani administration will deliver the 30% discount — and whether they will need to shoulder the cost of lowering food prices for customers, especially if inflation worsens. Other queries focus on how much operators are...