By now, most Americans know that the Democratic Party candidate for Mayor of New York has included a proposal for opening five municipally-owned stores—one in each borough—as part of his 2025 mayoral campaign. Not surprisingly, the proposal meets with the approval of several of the more liberal Democrats, prompting Senator Elizabeth Warren to proclaim on CNBC, “It’s a new and fresh plan for New York City, but it’s been tried in other cities around the country and has had some real successes.”
That news surprised me, so I decided to look a little closer at the history of government-run grocery stores. Spoiler Alert: Senator Warren speaks with a forked tongue.
Though I searched, I cannot find any large American metropolitan area that has tried a government-run grocery store. Government-run grocery stores in the United States have been attempted in various forms, primarily in small towns and rural areas, with mixed results.
- Erie Market, (Erie, Kansas). When the town’s only grocery store threatened to close in 2020, due to Covid restrictions, the town stepped in and purchased the store. After four years of operating at a loss, the town leased the store to a private company.
- Baldwin Market, (Baldwin, Florida). A city-owned grocery store operated for five years but closed in 2024. Even though the store operated at a loss, the store faced declining patronage as customers found cheaper prices at private stores.
- Rise Community Market, (Cairo, Illinois). As one of six stores the state opened up in food deserts (defined as a rural community of at least 500 residents, located more that 10 miles from a retail store), Rise is still open, though local residents complain of high prices and empty shelves. Despite millions of dollars in subsidy, four of the state-run stores have closed.
- St. Paul Supermarket, (St. Paul, Kansas). The store, owned by the municipality, is considered a success due to strong community buy-in, motivated by the need to retain residents and attract new ones. The store generates a profit slightly above the average for rural grocery stores, which has been attributed to local support and effective management. Community engagement, local management, and the store’s role as a retention and recruitment strategy for the town are the keys to the store’s success. However, its small scale (serving a population of ~600) limits its applicability to larger urban settings.
The only other grocery stores that I could find that might be considered state-run were tribal stores on Native Reservations and military commissaries on military bases. Unless I missed something, that’s it. Note that all of these stores were attempted in rural areas—none were located in urban settings.
In 2023, Chicago Mayor Brandon Johnson announced a plan for municipally-owned and operated grocery stores to fight urban food deserts (with “food desert” defined as an urban area more than a mile from a grocery store). After completion of a feasibility study, the plan was abandoned.
Besides noting that no large urban city has successfully run a state-owned and operated grocery store, there are good economic reasons why such a store would be doomed to failure. Government-run stores disrupt the natural price signals and competition that drive the greatest efficiency in private markets. Unlike private grocers, who optimize supply chains and quickly respond to changing consumer demand, government entities often lack both the expertise and the incentives to operate efficiently, leading to higher costs and wasted resources.
Let me put that another way: Economists, like Milton Friedman or Friedrich Hayek, would argue that markets allocate resources better than centralized planning. Government stores risk misallocating resources by prioritizing political goals over economic viability. Misallocated resources lead to inefficiency, which leads to higher costs.
Government-owned stores also crowd out private investment. The best way to eliminate a food desert is to provide incentives for private investment. Subsidized stores can undercut prices, discouraging private investment in grocery retail, especially in underserved areas, in a business in which profit margins are already thin (1-3% in the industry). A government-owned store, though poorly run and losing money, may still attract sufficient customers to deter a private store from opening.
Government-run stores inevitably limit consumer choice by offering fewer products or by stocking lower quality goods due to bureaucratic constraints or budget limitations. (Remember back in 2012, when New York City wanted to ban soft drinks larger than 16 ounces?) Private grocers, driven by profit motives, are incentivized to cater to diverse consumer preferences or to innovate new services.
While we lack US examples of urban government grocery stores, there are ample international examples: Vietnam, Iran, Venezuela, and Cuba have all experimented with government grocery stores. All promised lower prices by eliminating profits. The bottom line, however, is that all either failed outright (Venezuela and Cuba) or depended on steadily increasing government financial support.
One last point about government-run grocery stores: For years, big box discount stores like Sam’s have tried to open stores in all of the five boroughs of NYC. Each time, the City has blocked such moves with prohibitive zoning or land use regulations. In each case, the reason for blocking the new stores was to protect existing small businesses, such as bodegas and neighborhood stores. So, if Walmart tries to compete with them, it’s “predatory capitalism”, but if a government agency does it with taxpayer money, it’s “enlightened socialism”?
There are currently over a thousand retail grocers in New York City, each of them competing for customers by offering different levels of services and prices. The idea that the city, with limited purchasing power, with no experience in the market, and with no profit incentive could really compete with lower prices sounds exactly like the kind of pie-in-the-sky idea a thirty-year-old candidate with no real work experience might propose.