Market Shifts, New York’s Uniqueness Mean Mamdani’s Grocery Plan Could Work

New York Mayor Zohran Mamdani wants to get the city into the subsidized grocery business. 

As his administration seeks a seasoned partner this fall to run its planned quintet of government-supported grocery stores, strong opposition means it won’t sail through the express checkout lane. Plus, a pair of new lawsuits could stop the scheme faster than you can cancel an Instacart order, and many critics decry the initiative as the first step in a descent into socialism. 

Yet, commercial real estate and grocery pros say the idea could work, though key business and financial details remain to be settled.  

The suits were filed weeks after the administration opened up bidding for a private-sector operator to run five planned stores, one in each borough, and seasoned grocery industry veterans may be in the mix to be part of one of the most high-profile measures in the mayor’s agenda to possibly make life in New York less expensive.

Mamdani announced the initiative early in his term, later specifying that city stores would discount prices by 30 percent on essentials such as produce, meat and seafood, and by 20 percent on items including milk and bread. The stores won’t sell alcohol, tobacco or nicotine, but will stock halal, kosher, diabetic-friendly and gluten-free products. Mamdani says this will cut the average New Yorker’s grocery bill by about $90 a month — roughly $1,000 a year.

“In the wealthiest city, in the wealthiest country in the history of the world, no New Yorker should have to worry about being able to afford to feed their family,” Mamdani said in a July 27 press conference announcing the request for proposals by the New York City Economic Development Corporation (NYCEDC). 

Prospective operators of the five planned stores can submit plans until Oct. 16, the agency said.

Two sites were already public as of the end of August: La Marqueta, a roughly 9,000-square-foot Manhattan location in East Harlem, and a planned 20,000-square-foot store at the Peninsula, a mixed-use development in Hunts Point built over a former juvenile detention center in the Bronx. Store locations for Queens, Brooklyn and Staten Island haven’t been announced.

NYCEDC records show grocery operators including City Acres Market, FreshDirect, Fine Fare, Man-Dell Food Stores and Save A Lot attended a briefing on RFP criteria in August. NYCEDC said it couldn’t comment on actual responses since the procurement process remains open, and noted more than one bidder could be chosen. 

Observers say the success of budget chains like Trader Joe’s, Aldi and Lidl could draw interest from an operator with experience running 10,000- to 25,000-square-foot stores.

The household-level numbers are small, and the city’s $70 million commitment to cover construction, rent and other costs to launch all five stores by 2029 is less than 1 percent of New York’s total $124.5 billion budget. Still, the municipal oversight and price-setting aspects of the plan make it a lightning rod for the mayor’s numerous critics.

A pair of lawsuits filed Aug. 24 by the Multicultural Business Coalition, a group acting on behalf of mostly immigrant owners of independent bodegas and small grocery stores, hopes to put the brakes on the plan.

It’s a long trip down the aisle before anyone takes home dinner ingredients from one of the new stores. Beyond media criticism and litigation, though, real estate and industry watchers said the numbers behind the initiative are less controversial than its basic concept. Some of that data explains why voters embraced Mamdani’s focus on making life in New York even a little more affordable. 

Food for thought

New Yorkers have abundant food-shopping options but face steadily rising prices — and fewer people are filling their grocery baskets. As for the food vendors, they face stiff and prolific competition that’s in turn rewarded by slim profit margins. 

Data from foot traffic tracker Placer.ai shows grocery foot traffic in the New York metro area fell 0.3 percent in the first half of 2026 versus 2023, 0.9 percent versus 2024, and 2.1 percent versus the first half of 2025. National foot traffic rose 3.9 percent, 2.8 percent and 1.1 percent over the same comparisons, respectively. The decline in the city, then, is sharper and faster than in the rest of the country recently.

The state Comptroller’s Office publishes an annual “Cost of Living in New York City: Food” report, which shows a 23.1 percent price hike from 2019 to 2024, and more recent federal consumer price index figures chart a 3.3 percent bump this year through the end of July.

The price comparison tool Grocery Chop said that its representative basket of groceries cost 7.4 percent more in New York city than the national average. That long-standing discrepancy happens in part because suppliers must rely on more expensive truck-only shipping in the densely settled metropolis, as well as high labor expenses and real estate costs that major brokerages such as Cushman & Wakefield place at the top of the national price range, particularly in Manhattan. 

Even the Multicultural Business Coalition, the plaintiff in the suit against the city’s plan, acknowledges the underlying need to address grocery costs.

The Mayor’s Office of Food Policy counts about 1,000 full-service food stores citywide, while estimates from StreetEasy, National Retail Solutions and the United Bodegas of America put the bodega count around 13,000. Department of City Planning data shows roughly nine bodegas for every one supermarket in Manhattan and 20 per supermarket in Brooklyn, though some neighborhoods, like Bedford-Stuyvesant, see ratios as high as 57 to 1. The Bronx varies sharply by neighborhood, from 37 to 1 in Belmont-East Tremont to 20 to 1 in Fordham-University Heights. 

NYCEDC says the city has roughly 1.5 square feet of grocery space per resident, versus a national range of 5 to 10 square feet.

John Catisimatidis, the billionaire owner of the 31-store Gristede’s grocery chain, is no fan of the mayor. Still, Catisimatidis also says that some unique aspects of the city’s geography and economy make an already tough business even more difficult. Average national grocery chain margins range from 1 to 4 percent, and Catsimatidis, a prominent supporter of Republican candidates and policies, has said Gristede’s sometimes operates at a loss because the chain stays in New York.

“It is now much worse than it was, especially in the inner city,” he said in e-mailed responses to Commercial Observer. “Because of horrible traffic delays and congestion pricing, none of the vendors want to deliver to NYC.”  

Evan Schuckman, an executive vice president at Ripco Real Estate who represented the landlord for Whole Foods’ first Queens store, which opened in Ridgewood this year, said the market’s cramped, irregularly shaped spaces pose a unique challenge, too.

City grocery operators must customize spaces that don’t fit the typical giant rectangular spaces more typical of suburban supermarkets. “Call it ‘niche-maxxing,’” Schuckman said.

He believed the market could accommodate five city-supported stores without serious market disruption, paying current market rates of between $25 and $35 a square foot. Ideally, landlords with commercial property strips of about 45,000 square feet could position a municipal grocery store as an anchor tenant, and attract secondary tenants that would benefit from food shopper foot traffic.

“There have been some lower-priced Aldi or Lidl markets that have entered New York City, but in terms of the 2 million-plus people in Brooklyn and the 2 million-plus people in Queens alone, you could support significantly more discount or value grocers,” Schuckman said.

R.J. Hottovy, head of analytical research for Placer.ai, highlighted a New York trend that mirrors national retail grocery industry developments. In an economy where many people are feeling the bite from ongoing inflation, smaller markets that often rely on traffic from budget-conscious consumers often draw more affluent shoppers as well.

“We’ve also seen the rise of the value-oriented grocery chain, like Aldi or Lidl or like a private label focused chain, like Trader Joe’s, which have all continued to expand,” he said.

New Yorkers like these budget-friendly stores so much so that Trader Joe’s has 18 stores in the city, while Aldi has 15, and Lidl has 16.

“The last couple of years, we’re seeing that people are starting to go outside the traditional grocery channel for food purchases,” and finding more food choices at convenience stores, warehouse clubs and even dollar stores, Hottovy said. “I think that there’s a lot of competition for grocery and food retail right now.”

So the question arises: In a city with at least 14,000 grocery options, where even established operators sometimes struggle to hit the national average profit range of 1 to 4 percent, what impact will five new stores have in a market where many neighborhoods usually have a shopping option every couple of blocks?

The L word 

Critics say the plan’s major problem comes down to the age-old retail adage: location, location, location.

The Multicultural Business Coalition’s litigation claims the city is violating civil rights laws and the state constitution. It argues that smaller immigrant- and minority-owned grocers nearby are unfairly denied the same subsidized pricing power as the planned municipal stores. 

A second suit challenges the city’s authority to create the stores at all. It warns that La Marqueta, set to open in East Harlem in 2027, would compete directly with the area’s “successfully run predominately Hispanic- and Korean-owned supermarkets” and could put minority-owned businesses “out of business.”

Other critics use arguments more grounded in fundamental economic philosophy. Headlines like “Basic economics show why Mamdani’s socialist grocery stores in NYC are destined to fail” and like “Mamdani’s grocery-store specs show the idea is even crazier than we thought” frame the plan as a dire step toward socialism. The Manhattan Institute, a conservative think tank, suggested in a recent Substack post the plan was a form of rationing and price controls.

Chris Lomuto, an associate vice president in the commercial brokerage Northmarq’s San Francisco office, is a veteran leasing agent with extensive experience in negotiating triple-net leases for convenience stores. He said the concept of government-supported stores undermines the very concept of a free market, although he says the New York market’s unique density would likely affect customers’ motivations to travel to any municipal stores.

“The new entrant is, by definition, meaningfully, consistently undercutting everyone else,” Lomuto said in an e-mail. “So let’s say this was a gas station that was undercutting everyone by $20 to 30 per fill-up. How far will people go for that $20 to $30 per week?  We don’t know. But, if you’re anywhere near it, why would you go anywhere else? And I see no reason that these grocery stores will be any different. Anyone looking to save money on groceries, which is pretty much everyone, will go there.”

Despite the criticism and the lawsuits, the administration isn’t slowing down. “I am confident both in the legality of this, that it will stand up in court, and the importance of delivering it,” Mamdani said during an Aug. 24 press conference.

Schuckman said the plan’s thin details make it hard to predict the city stores’ odds of success, but that the model itself shouldn’t be dismissed. “There is a real opportunity here if the city can do it well,” he said.