Publicly owned grocery stores are a bad idea

New York City mayoral candidate Zohran Mamdani recently made headlines by proposing five government-owned grocery stores — one in each borough — as a kind of “public option” for food. His pitch echoes familiar progressive talking points: the stores wouldn’t pay rent or taxes, they wouldn’t aim for profit, and their mission would be to offer lower prices in a market supposedly dominated by greed.

But the idea of publicly owned grocery stores isn’t just flawed for New York City. It’s flawed everywhere. While Mamdani’s plan might be the most high-profile example, experiments with government-run food retail have taken place in rural towns and small cities across the country. They’ve all failed. The results are overwhelmingly clear: public grocery stores are inefficient, unsustainable, and ultimately counterproductive especially when the private sector is already doing the job.

Take Baldwin, Florida. When the town’s only grocery store shut down, the city stepped in to fill the gap with a government-run store. It was hailed as a bold solution to a food desert. But less than five years later, the store closed. The store was unable to break even despite being owned outright by the city and subsidized with public dollars.

Baldwin’s story isn’t unique. Erie, Kansas, tried something similar when it bought and operated its only grocery store. The town ran it at a loss for years before giving up and leasing it to a private operator. Little River, Kansas, also intervened  — but only owns the building and refrigeration system which they help maintain. However, day-to-day operations are run by the family who leases the property to the local government. Meaning that the grocery store is still privately run.

Proponents of public grocery stores often point to state-run liquor stores as a model. But the comparison falls apart on closer inspection. State liquor monopolies were designed to limit consumption, not improve convenience or affordability. Their purpose has always been public health and regulation rather than being a competitor against the private market. Unsurprisingly, they tend to be more expensive. One study found that 27 liquor brands were at least 10 percent more expensive in state-run stores than in private ones. Given the economics of food retail, transferring that model to groceries would be a recipe for disaster.

As of 2024, grocery stores averaged profit margins under 2 percent. That means even well-run private stores are just scraping by. A government-run store, freed from the constraints of profit and protected from normal costs like rent or taxes, doesn’t magically become more efficient. It simply shifts its losses onto taxpayers. In practice, these losses pile up fast, and without the discipline of the market, there’s no real incentive to improve.

Even worse, publicly funded grocery stores can distort the market in ways that hurt the very communities they claim to help. By undercutting private grocers who do pay rent and taxes and must compete on quality and service, a public store can drive out the very businesses that create long-term neighborhood stability. The end result is a publicly run monopoly propped up by taxpayer dollars, with less variety, less accountability, and no clear advantage for consumers.

Mamdani’s plan may be dressed up as a progressive innovation, but the fundamental issues aren’t about politics, they’re about basic economics. Grocery stores, like most retail businesses, work best when driven by consumer demand, price competition, and supply chain efficiency. Injecting politics into the checkout line won’t make food cheaper or more accessible. It will just make it more expensive for consumers and taxpayers and more risky for entrepreneurs.

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