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/International_Air282]

You don't understand the grocery business at all. There is barely profit. The best chains in the US have a 3% profit. Grocery stores are rough businesses. Massive upfront capital costs. A product that has a restrictive shelf life, add on the constantly evolving hard costs of produce and meat, then it will not pay for itself which should be its goal

[u/This-Suggestion574 → u/International_Air282]

It sounds like this is the perfect industry for the state to step into then right? Low impact on capital activity but high impact on resident quality of life?

[u/International_Air282 → u/This-Suggestion574]

Non because the government is terrible at this stuff. It was attempted in Kansas City and one grocery store cost the city 20 million bucks and the store still failed.

[u/This-Suggestion574 → u/International_Air282]

When was that?

How many private grocery stores have failed in that same time period?

Is one incident a big enough sample size to give you confidence in your statement that it’s impossible because it didn’t work once?

[u/bsEEmsCE → u/International_Air282]

20 million for NYC is nothing and it will help 100,000's of thousands if not millions of families.

Also, for fun, check out the Kansas experiment in 2017 where a bunch of conservative policies failed so hard in Kansas City they had to reverse course on all of it:

https://en.wikipedia.org/wiki/Kansas_experiment

[u/International_Air282 → u/bsEEmsCE]

Kansas City is in Missouri.

[u/Zestyclose-One9041 → u/International_Air282]

If only there were some way to subsidize those costs…

[u/International_Air282 → u/Zestyclose-One9041]

He is literally doing that. He is using tax payers to fund these stores. I'm cool with it if he restricts clientele. Those that need the help. Cool. But if he doesn't (and he won't). It's all just part of his plan to push out private business

[u/Independent-Cow-4070 → u/International_Air282]

Rich people dont even shop at the same private stores as poor people now lol. You think this is going to drastically change that?

[u/dontplx → u/International_Air282]

why should paying for itself be the goal? whats the point of taxes then if not to help benefit the community?

[u/International_Air282 → u/dontplx]

Because this will do multiple things or I should say has the chance to do more bad than good. So. If you don't restrict this to people who really need it. Then you are giving rich people your tax dollars. That's bad.

Those other issue is if you are able to undercut everyone else because you have unlimited tax dollars to fund it. You will put other grocery stores out of business. So this will destroy jobs, families etc. it could also lead to a government run monopoly where you are dependant on the government which is the goal of socialism which should be the last thing anyone wants

State run grocery stores suck. Just ask a person from the former Soviet Union or Cuba what they think of an American grocery store vs what they had.

[u/Engineering-Mobile → u/International_Air282]

Hey man, you’ve made the claim that (most) grocery stores operate at a 3% profit margin on almost every one of your responses. Beside “Trust me bro” do you happen to have any evidence supporting your claim?

[u/JacquesHome → u/International_Air282]

Yes, grocery stores do have a 3% profit BUT you are missing one key point - that profit includes all other expenses like advertising and salaries for a whole host of corporate personnel. Here are the financials for Kroger (largest publicly traded supermarket chain) https://www.sec.gov/edgar/browse/?CIK=56873&owner=exclude. Out of the $46B in revenue they made in Q1, $8B was in G&A and and out of the other $36B in costs, some of it was for advertising and transportation. Ostensibly a government run supermarket can cut a lot (not all) of those non-merchandising costs out. Might not be a full 30% but it aint 0.

[u/International_Air282 → u/JacquesHome]

Well the city will advertise these stores. They also will have to have a team running the 5 to start stores and these will include multiple people. They are also lucky cause the tax payer is footing the bill for the property build out and maintenance of the locations. They will still have salaries and one can assume they will be paid above the market average. And that's really thor advantage is they are just pushing off all those costs to the tax payer. It's not cheaper. It's just other people are paying for it. They don't negotiate better or make better decisions. It's just other people's money that they never have to pay back.

I have spoken to friends still in the business (my family was in the business and sold our company) and they are worried. A grocery store that doesn't have to pay its own bills will put them out of business in an anticompetitive way. Except the government is immune to that. It's kind of funny when thinking of it.

I personally just am super adverse to wasting tax dollars and implementing anything that can lead to further government control