Should Cities Open Their Own Grocery Stores?

By now, most people are familiar with the concept of food deserts — areas where residents lack ready access to fresh foods. Should local governments step in to operate grocery stores in neighborhoods that don’t have them? Aside from ideological questions over whether governments should get involved with operating retail establishments, there are a number of practical hurdles that are difficult to overcome.

Zohran Mamdani, a member of the state Assembly who is running for mayor of New York, calls for a network of city-owned grocery stores. He promises to bring such stores to every one of the city’s five boroughs. “Without having to pay rent or property taxes, they reduce overhead and pass on savings to shoppers,” according to a campaign statement.

In Chicago, Mayor Brandon Johnson has been exploring a similar idea, following multiple grocery closures in historically underserved neighborhoods. A disproportionate share of Chicago’s Black and Latino residents are food insecure. “All Chicagoans deserve to live near convenient, affordable, healthy grocery options,” Johnson said. “We know access to grocery stores is already a challenge for many residents.”

This is an idea that has already been put into play in a handful of rural communities that have lost their last grocers. Having a local store not only improves food access but makes residents more likely to stay or move there. But getting such businesses off the ground and sustaining them has not been easy. The city-owned store in Erie, Kan., simply didn’t attract enough customers — or, at least, not enough customers willing to do most of their shopping there. Last year, Mayor Butch Klingenberg said the grocery store would break even if each customer spent an average of $50 per month — but customers were only averaging $14.

Last fall, the city revised its approach: It began leasing out the building to a private operator that would take over operations and management, while the city retained ownership. “When you're a municipality and you own a business like that, there's a lot of overhead. And so it was costing the city quite a bit of money and the city funds," Erie City Clerk Jamie Janssen said in September.  "And so we started to look at different avenues of what we could do to alleviate that, but still keep a grocery store in town.”

Given the clear need for better food access, many jurisdictions are exploring their options. Not all governments go as far as opening their own stores. Some instead look to other tools like tax incentives and grants to encourage private operators. Pennsylvania, for example, offers funding to help supermarkets open in underserved communities. Washington, D.C., and Prince George’s County, Md., both offer tax incentives for grocery stores sited in communities in need. Jacksonville, Fla., launched a free shuttle program to bring residents from food deserts to grocery stores outside their neighborhoods.

The Case for Municipal Groceries

Running independent groceries isn't an easy business for anybody. A 2010-2019 study found that when Dollar Tree and Dollar General stores opened in a neighborhood, independent grocery stores were more likely to close and residents were more likely to be left without fresh produce options. Dollar stores often carry shelf-stable, nonperishable items — the goods that grocery stores make their highest profits on — making this competition especially difficult, says Kennedy Smith, senior researcher with the Institute for Local Self-Reliance (ILSR), a progressive advocacy and research group.

Groceries are about 20 percent more expensive than they were pre-pandemic, with prices driven up by everything from droughts to bird flu to market dominance by just a handful of grocers, meatpackers and seed producers. Prices on imported foods such as coffee and fruits are expected to rise further, should President-elect Donald Trump carry through on promises to impose tariffs on major trading partners. Domestically produced food could also become more expensive due to Trump’s mass deportation plans, because the agricultural sector depends on immigrant workers.

According to ILSR, ever since the 1980s, the government has declined to enforce an antitrust law that had put independent grocers and major chains on equal footing when negotiating prices from food suppliers. Without this enforcement, chains are able to demand preferential pricing and treatment from suppliers.

Still, proponents of city-owned groceries argue that governments can open stores in areas that private supermarkets deem economically unfeasible. After all, governments are trying to serve residents, not turn a big profit. Plus, a grocery store can bolster a neighborhood economy by providing jobs, spurring other commercial activities and allowing residents to reinvest in their communities by spending locally. In 2024, a consulting firm studying Chicago’s proposal concluded that a city-owned supermarket is “necessary, feasible and implementable.” Yet the Johnson administration has passed on applying for support from the state’s $20 million grocery initiative.

Although Chicago and New York City are just now considering government-owned stores, a handful of rural cities and towns have already launched their own, but with mixed results. When the city of Erie, Kan., polled residents on whether it should buy the store, most said “yes.” The city hired an experienced manager to run it and considered slightly raising residents’ utility bills, if needed, to pay for any increases in store operating costs. But, as noted earlier, the city was unable to make a go of it. “The city can play a very important role in catalyzing the development of supermarkets, but it has a lot of options about how to do that, and some pose more risks and challenges,” said Andrew Lamas, an urban studies professor at the University of Pennsylvania.

The town-owned grocery store in Baldwin, Fla., ran into similar challenges. The 1,400-person town opened its market in 2019, after the local for-profit grocer closed. It was truly not-for-profit — the market often operated at a loss. Because it was a single store, Baldwin Market couldn’t buy wholesale, making it hard to sell groceries at competitive prices. The store closed last March.

But not every municipal grocery is doomed to failure. Not far from Erie, St. Paul, Kan., a city of 600 people, acquired its own store in 2013. The impetus for the project began decades earlier. The city lost its grocery store in 1985, leaving residents at the time with just a café and convenience store, or a 34-mile roundtrip journey to the nearest grocery. That changed in the mid-2000s, when the city, local community development corporation and rural electric cooperative collaborated to build a grocery store.

Initially, the city owned just the property and building and recruited a husband-and-wife duo to purchase the inventory and manage the store. When that couple decided to retire in 2013, the city bought out other partners, making the supermarket fully government-owned, and hired new managers to run it. Six years later, the St. Paul Supermarket was bringing in a profit slightly above average for a rural grocery store.