An economist explains what food really costs and why.
No promise of Mayor Zohran Mamdani’s campaign was more concrete than his promise to make groceries cheaper, and he’s moving fast to try to deliver. In April, the City named La Marqueta in East Harlem as the first site in what’s envisioned to be a network of five stores, one in each borough, and in May the administration added The Peninsula in Hunts Point. In July, it published a vision plan and issued a request for proposals for private operators. The way the mayor describes it, five City-owned stores, one per borough, will sell a core basket of fresh produce, meat and seafood, along with selected dairy, frozen and pantry goods, at an average of 30% below market prices. The City, which has committed $70 million in capital funding, estimates that it will save participating households roughly $90 a month. The Hunts Point store is scheduled to open late next year, followed by the La Marqueta store in 2029.
Two promises are bundled inside the plan, and they should be judged separately. One is about access. Putting a full-service store in neighborhoods that lack one means fresh produce and meat that were previously hard to get will become available, and the chosen sites — arguably in places insufficiently served by high-quality groceries — reflect that logic. On this, I have no qualms, though neither can I say these are the smartest sites.
The other promise is affordability, resting on that 30% discount. That one will determine what the program costs and whether it lasts. But it runs into something the City cannot fix, and it’s something I know a bit about as a food economist. The flaw is in the premise, not the execution: The forces that set grocery prices — herd sizes, harvests, climate, tariffs, fuel, labor — are national and global, and any single store, however well run, sits downstream of all of them.
Consider beef, which is doing more damage to New York grocery bills right now than almost anything else. Ground beef now averages nearly $7 a pound nationally, and can run well over $10 in some New York stores. It’s one of the cheapest beef products on the counter, and pretty much everything else goes up from that. Why? The American cattle herd is the smallest it has been in 75 years. Years of drought, high feed costs and herd liquidation have constrained cattle supplies, and rebuilding a herd takes years. A rancher in Nebraska who keeps a heifer this year rather than selling her is making a decision that reaches a butcher counter in New York City a few years from now. USDA expects retail beef prices to keep climbing, and no local purchasing agreement can reverse a national cattle shortage. The City can decide who pays for a steak in the Bronx. It cannot decide what that steak costs.
The wider pattern looks much the same. Grocery prices rose 11.4% nationally in 2022, part of the worst year for food inflation since 1979. The war in Ukraine, avian influenza and broad inflation arrived within months of each other, with drought tightening supplies behind them. Increases then slowed, but slowing is not falling. When economists say inflation has normalized, they mean prices are rising at a normal rate again, not that they are coming back down. The 2022 increases are the new baseline. That is why the data can say the crisis has passed while the receipt says it hasn't, and the political energy behind this plan lives in the gap between the two.
The forces pushing prices today come from different directions, none of which originates in the five boroughs. Some pressures are slow and biological. Herds rebuild over years, and a weak wheat or vegetable harvest takes a season or more to work through. No mayor can speed that up. Other pressures move fast and are driven by policymakers. Tariffs, trade disputes and uncertainty around farm labor can reprice a tomato within weeks, but those choices are made in Washington rather than at City Hall.
In fairness, some shocks also unwind. Egg prices are falling as flocks recover from avian flu, and grocery inflation is running a little above its 20-year average. That is uncomfortable, but hardly a catastrophe.
The mayor's rhetoric has suggested the City-run stores will be cheaper because they answer to the public good rather than to profit. The plan itself is more candid. It says holding these prices down will require sustained public investment; that the City will cover rent, property taxes and construction; and that this is not a standalone solution. That is more candor than most policy documents offer.
Still, let’s all be clear about what is being built. This is not a new model that finds a novel and sustainable way to deliver lower prices. This is a subsidy, delivered through a storefront. It will genuinely help households that live near one. But it does not make food cheaper. It pays part of the food bill on the shopper’s behalf, with tax dollars. What that means is that it has inherent limitations. It could work in a small network. It almost certainly cannot work at scale, not unless the City is prepared to treat groceries as a permanent public good, funded in the expense budget year after year the way schools and street repair are.
Nor is there hidden efficiency waiting to be unlocked by cutting out a middleman. Look again at eggs: Prices at the farm are falling faster than prices at the register. That gap is not, by itself, evidence of gouging. That gap reflects, in part, the cost of processing, trucking, refrigeration, packaging and labor, which do not necessarily fall when a commodity price drops. A City-owned store in Hunts Point pays those costs like every bodega in the borough.
This raises a question that is not being discussed enough: The City has committed $70 million in capital funding for store construction and fit-out, but it has not published the recurring affordability payment needed to maintain an average 30% discount on the core basket. Nor has it defined the benchmark. The omission follows a familiar pattern in public budgeting: The money to build the playground gets announced, the money for the grounds crew that keeps it open does not. To judge whether this experiment is worthwhile, the public needs to see what that adds up to.
A 30% discount is only meaningful against a stated comparison. The mayor has described it as 30% below typical retail prices, but the City has not said whose prices, or at what kind of store. Prices vary widely by store format and neighborhood, so 30% below a citywide average and 30% below what a given shopper actually pays are different promises, and the difference determines what families save and what taxpayers owe. The 30% target is an average across the core basket rather than a fixed markdown on every item, and the plan allows prices to be reset as markets move.
Nor should we forget: When beef and produce costs run high, the City’s obligation rises with them, so the program costs the most in exactly the years it matters most. A 30% discount on $7 ground beef costs the City $2.10 a pound; at $14, it costs $4.20. The shopper's savings double, and so does the taxpayer's bill. That is not a design flaw, and every pilot refines its cost estimates before opening. But everyone quotes the $70 million in capital. The number that will really determine whether this program survives the next year of high food prices is the annual affordability payment, which has not yet been published. The City is asking bidders to estimate it, which means it will know the figure when it picks operators. It must be public before the doors open.
Supporters often point to military commissaries, subsidized government groceries that have operated for generations. It is a fair comparison, and worth a close look. In 2022, the Government Accountability Office found that the Defense Commissary Agency ran 236 stores on roughly $1 billion dollars a year, targeting a 23.7% discount. It had shown neither that it hit that target nor that it was weaning itself off appropriations. The agency, GAO concluded, could not accurately estimate the discount its customers actually received. Commissaries serve a closed military population under a different mandate, so the analogy only goes so far.
The lesson worth borrowing is about measurement. Hundreds of stores and real purchasing power were not enough to answer the only question that matters, which is what shoppers save. New York proposes five stores.
Meanwhile, the City already benefits from a food-purchasing program reaching roughly 1.7 million residents, and it works at authorized retailers across the city. It is called SNAP, and it is shrinking. More than 22,000 New Yorkers lost benefits in June alone under new federal work rules, many of them in Brooklyn and the Bronx. The New York City Food Policy Center notes that most working-age recipients already work, which suggests many lost benefits over paperwork rather than eligibility.
City Hall cannot rewrite those federal rules, but it can reduce the friction, meaning the outreach, documentation and recertification that decide whether an eligible household stays enrolled. Improving enrollment and retention should be a central part of the City’s food-affordability strategy. SNAP does not solve this alone, and plenty of enrolled households still come up short. But it is among the City’s most scalable affordability levers, and it is losing ground.
In sum, grocery affordability in New York represents several problems, not one. The price of the food itself is set by herds, harvests and trade policy, all of it national, slow and beyond any mayor’s reach. The cost of getting that food onto a shelf is local, running through rent, permits and labor. The City’s own plan promises to reduce regulatory burdens and streamline permitting so more full-service stores can open. That may be the document’s most durable affordability idea, and it sits in a subordinate clause on page 14. Zoning, parking mandates and permitting delays raise costs at every store in the city, not just at the five City-run locations. A household’s ability to pay is more broadly reached by benefits that travel with the shopper rather than waiting at one address.
If Mayor Mamdani is going to build these stores, he should be clearer about the limitations of the experiment. And he should do what the Pentagon never managed to do: publish the affordability payment. Publish how the basket is priced and against what benchmark. Then let someone independent verify what shoppers actually save. Start before the day the doors open.
