New York City's administration is moving forward with a proposed $75 million contract for an online grocery delivery platform, Mercato, even as the company reportedly owes local supermarkets at least $1 million in unpaid bills. The proposed six-year contract was recently awarded by the city's Department of Health and Mental Hygiene, according to public filings.

The deal, which was slated to begin in July, is currently held up by the City Comptroller's Office, which has outstanding questions for the health department, a spokesperson for Comptroller Mark Levine confirmed. The city's previous $30.4 million contract with Mercato, a vendor since 2023, expired on June 30.

Mercato operates a city program called "Groceries to Go," which allows eligible New Yorkers to purchase discounted fresh produce from local grocery stores. However, dozens of independent supermarkets, including C-Town, Bravo, and Key Food, claim Mercato has failed to pay for produce delivered months ago. Store owners estimate they are collectively owed more than $1 million.

"The impact on our business is huge," said Jorge Guillen, who owns two Cherry Valley Marketplace stores in Queens and the Bronx, stating Mercato owes his businesses $36,000. "It affects my ability to purchase goods and pay my bills, so we had to find new financing. We took on debt."

Anthony Diaz, manager of a C-Town in Williamsburg, Brooklyn, reported Mercato owes him $4,500 out of an initial $10,000 he was owed. "I had to hunt them down and basically beg them for $10,000," Diaz said.

Aris Duran, owner of Key Food locations, stated he was owed $45,000 for his College Point store in February. After threatening legal action, Mercato paid him in full with a $23,000 check, though Duran said he plans to cease working with the company. He also noted Mercato charged him a $99 monthly service fee even when it was not paying for delivered groceries.

A spokesperson for the Department of Health and Mental Hygiene stated that the agency is "unaware of delays in payments to supermarkets." The department also indicated that based on a review of fiscal year 2026 data, all invoices from Mercato have been paid on time. The "Groceries to Go" program has been temporarily paused since July 1, with the department exploring options to relaunch it.

Anthony Peña, president of the National Supermarket Association, which represents approximately 450 independent grocers in New York City, expressed concern about the situation. "We don’t know why our members are not being paid," Peña said. "But at the end of the day the city is not properly vetting a company that it is funding."

Mercato, founded in 2015 by Brooklyn native Bobby Brannigan, previously helped independent grocers expand into online sales and delivery. The company, which moved its headquarters from New York to San Diego in 2019, has also operated in other major cities. Mercato did not respond to multiple requests for comment.

Guillen mentioned that Mercato's chief executive, Bobby Brannigan, claimed during a recent call that payment delays were due to the city withholding reimbursements to Mercato. However, the Department of Health stated that invoices have been paid on time. Mercato typically deposited funds within 48 to 72 hours, according to Guillen, but has not paid some members since February.