Can government-owned grocery stores help solve America’s food-desert problem?

A novel solution to give Americans better access to fresh food is picking up steam across the country: government-owned, government-operated grocery stores. Such stores are touted by proponents as a way to provide groceries to so-called food deserts, communities that have been abandoned by for-profit stores that decided it wasn’t worth the investment. But to succeed they have to find ways to compete with the big chains that dominate the industry, keeping costs and prices low.

The problem these stores are meant to address is massive: According to the U.S. Department of Agriculture, 53.6 million people, or 17.4 percent of the population, live in low-income areas with low access to grocery stores—defined as a half mile in urban communities and 10 miles in rural communities. As consolidation continues to shrink the grocery sector, the number of people without easy access to a store is likely to increase.

Now the idea of public grocery stores has entered the crowded race for New York City mayor. Zohran Mamdani, a socialist candidate and current state assemblyman, has said that if elected he would create a pilot program to put a city-owned grocery store in every borough.

Mamdani said in an interview that the stores can offer lower prices on staples at a time when food costs are rising due to inflation, bird flu, climate change, and other shocks.  Prices could rise further with President Trump’s tariffs. And low-income Americans will struggle even more if Republicans follow through on plans to cut benefits like food stamps.

At least 3 million New York City residents live in neighborhoods without easy access to fresh food. In one of the neighborhoods Mamdani represents in Queens, he said, constituents tell him there are several fast food restaurants but no grocery stores. “That speaks to the fact that New Yorkers have been failed by a market-only approach and there is a desperate need for a public option for produce,” he said.

Mamdani isn’t the only lawmaker embracing this approach to cheaper and more accessible groceries. This year, Madison, Wisconsin, is opening a city-owned grocery store in a food desert of its own. Atlanta is set to open two publicly run grocery stores, while Chicago is opening a city-run market. It’s not an entirely new concept. Erie, Kansas, has owned Stub’s Market since mid-2020, buying it when it was at risk of closing, which would have left the city without any grocery stores; city-owned grocery stores exist in two other Kansas towns, including the St. Paul Market, which manages to turn a small profit that is reinvested in store operations. 

With corporate consolidation leading to fewer grocery store options as food prices soar, “people are clamoring for solutions, and that’s leading to creative thinking on what might work,” said Ganesh Sitaraman, director of the Vanderbilt Policy Accelerator, which recently published a report on public grocery stores.

Residents of food deserts are forced to spend more time and money traveling to get fresh food or rely instead on highly processed and fast food. “If you don’t have a grocery store nearby, it is a daily hardship and an indignity,” said Stacy Mitchell, the co-executive director of the nonprofit Institute for Local Self-Reliance, which is focused on corporate concentration and local policymaking. Low-income residents of food deserts are more likely to suffer from diet-related diseases like diabetes and cardiovascular disease.

Without the need to make a profit, publicly owned stores may be able to open in less densely populated rural areas, or urban neighborhoods that have suffered from a lack of investment.

They might also survive where others fail. While supermarkets can get away with operating margins of 1-3 percent given how much volume they sell, smaller stores need margins of 3-5 percent or more, and it takes years just to get to that 3 percent level for most. “The biggest hurdle to getting a grocery store up and running is those first three to four years,” said Erion Malasi, the Illinois policy and advocacy director for the Economic Security Project. That’ll be a challenge for public grocery stores as well, but a government can afford to be more patient, allowing stores the years they need to start making money and, eventually, cover their own costs. 

“As long as a city is willing to support the operation and potentially backfill losses for the first few years, it could be a lot cheaper than trying to entice a business to come to the community with large tax breaks,” Malasi said. Chicago, for example, spent $10 million on a tax break to entice a Whole Foods to open in the underserved South Side under former Mayor Rahm Emanuel, only to have it close after just six years. With a state-owned store, Malasi said, “you might be able to break even and your community will be all the better for it.”

Public grocery stores can also put pressure on existing food sources, like corner stores and dollar stores, to offer better options and lower prices. They might even attract other businesses with their heavy foot traffic, creating more economic activity.

That is, of course, if they can survive going up against corporate behemoths like Kroger and Walmart. The biggest problem public groceries face is whether they can buy food from suppliers at the same low prices as big box stores. A significant portion of all grocery sales are hoovered up by just four brands: Walmart, Kroger, Costco, and Albertsons. It’s not just a matter of volume; huge retailers have spent decades using their market dominance to extract deals from suppliers that publicly owned grocery stores won’t be able to command. If public stores raise prices too high, residents may decide it’s worth it to travel further to go to a big box store with cheaper goods. Price problems sank Baldwin Market in Florida, a town-owned grocery store that opened in 2019 and closed last year: Even though it was only trying to break even, it struggled to compete with the prices at places like Walmart. 

Mamdani argues that New York City stores will buy at wholesale prices and use centralized warehousing to bring down costs. But even if they can’t get the same prices as huge chains, his proposal would utilize vacant properties—or build new ones if there isn’t anything readily available—and the stores wouldn’t have to pay any rent or property taxes. That should give them an edge, he says. Malasi agreed: If a grocery store doesn’t have to pay property taxes, it could increase margins by 1 to 3 percent, he said. “That’s a difference between a grocery store staying open and closing up shop.”

Meanwhile, grocery stores have recently been accused of using inflation to keep prices high and pad profits. A city-owned store doesn’t have a profit motive and therefore no incentive to jack up prices. “This is an opportunity to show what the price could actually be if we were being honest about supply chain issues, honest about the impact of profits as part of this equation,” Mamdani said.

If elected—he’s been lagging in polls, although raking in donations—Mamdani plans to redirect the $140 million the city spends on tax breaks and other incentives for private grocery stores to get his public-grocery project up and running. He estimates, based on a feasibility study in Chicago that he updated for the higher costs of New York City, that it would cost a total of $60 million to launch a store in each of the five boroughs. “It’s not a question of fiscal possibility, it’s a question of political possibility,” he argued.

The city-owned stores shouldn’t just be seen as a safety net for people who earn the least, he said. “It must be seen as the most obvious choice for New Yorkers of each and all class backgrounds,” he said. If the pilot succeeded, the plan would be to build more and eventually “ensure every New Yorker can afford the groceries that they need.”

The politics of the issue aren’t without pitfalls. Chicago was supposed to lead the way by becoming the first big city in the country to open a publicly owned store this year, applying for money from a $20 million fund Illinois recently created to help start new grocery stores. Last August, a feasibility study found that it would cost the city just $2.7 million to build a new store on city-owned land and partner with an outside operator, and that such a store could earn an operating profit, albeit a small one. But in February the city pivoted, saying it would instead open a public market that will sell staples and house spaces for local retailers and farmers to sell their products. The city wasn’t able to find an experienced operator for the store to qualify for state funding, so it didn’t apply, according to Mayor Brandon Johnson’s team; feedback from a working group composed of local business owners, government agencies, and community members pushed the city toward the market idea instead.

Chicago’s stumble “doesn’t affect my thinking,” Mamdani said. He promises to start working on his plan on day one if elected mayor.

Even if these stores succeed in opening, there are larger problems they can’t solve. The “root cause” of food deserts, Mitchell argued, is the lack of enforcement of a law that’s been on the books for nearly a century: the Robinson-Patman Act. The country used to be dotted with independent grocers in virtually every community. But then large chains started using their market power to demand that their food suppliers give them discounts and charge other customers more to make up the difference—or risk losing their business altogether.

Robinson-Patman was supposed to fix that. It made it illegal for stores to make such demands and for suppliers to only give some retailers a discount without offering them to everyone. It was enforced “vigorously” until the 1980s, and then it got thrown out with most antitrust enforcement in Ronald Reagan’s deregulatory push, Mitchell said. Independent grocers were no longer able to compete, particularly in low-income communities that were less able to swallow higher costs. Chains closed stores in low-volume communities, knowing people would have no choice but to travel for their food.

There are some early signs that Robinson-Patman could make a comeback. The Federal Trade Commission filed two cases under President Biden enforcing the law, and while the Republican commissioners dissented, they also expressed some support for the law. At the state level, Maine, Minnesota, and Rhode Island are considering legislation that would not just mirror Robinson-Patman but go further to prevent big grocery chains from dominating the market.

A change in legal doctrine will take time, however. Public grocery stores could help bridge the gap. Even if Mamdani loses to any of his eleven rivals, his idea could still come to fruition. He said he’s had “quite a bit of interest” in the idea from lawmakers at both the city and state level. “There is an appetite for exploring this through legislation,” he said.

In the face of increasing corporate concentration, public grocery stores offer a way for local governments to “play a role to provide goods and services that monopolies have taken away from our communities,” Malasi said. “Not just asking big business to come in and solve their problems, but taking matters into their own hands.”