New York City business leaders and bodega owners have filed two lawsuits challenging Mayor Zohran Mamdani's plan to open five government-run grocery stores, alleging the subsidized markets will unfairly compete with and potentially force existing local businesses to close.
The Multicultural Business Coalition, representing 50 chambers of commerce for multicultural businesses, filed the lawsuits in state court on Monday. They argue that the city's plan to offer a core basket of items at prices 30% below average retail prices constitutes a civil rights violation through the discriminatory use of government funds.
Leaders from the coalition gathered with bodega owners on Wednesday outside the American Deli Mini Market Corp. in Harlem, across from the planned site of the first city-run store at La Marqueta. They contend that the subsidized model, where the city owns the land and covers overhead costs like rent and construction, creates an insurmountable advantage over small businesses that must cover their own expenses.
"When you use government money discriminatorily, it could be a civil rights violation," said Mark Jaffe, president and CEO of the Greater New York Chamber of Commerce. "Shame on the [Mamdani] administration for not working with small businesses, but trying to hurt them and being heartless in their statements."
One lawsuit is a class-action complaint on behalf of "hundreds" of store owners. The second seeks to permanently block the stores' operation until necessary studies and analyses are completed, a process that has historically prevented large retailers from entering the city.
Under Mamdani's proposal, a private operator selected through a request for proposals will manage daily operations and be contractually required to pass savings on a core basket of goods to customers. However, Jaffe argued that tax dollars are effectively subsidizing the purchase of groceries at full price, which are then sold at a discount, questioning the sustainability and impact of the initiative.
"Our tax dollars are buying groceries at full price, so we can sell them at 30% off up the street — that’s not going to feed enough struggling people," Jaffe stated.
Mamdani's office defended the initiative, stating that the five stores, slated to open one in each borough by the end of the mayor's first term, will not significantly impact the city's existing 1,000-plus grocery stores and 10,000-plus bodegas. The administration highlighted that over 1.4 million New Yorkers struggle with food insecurity.
"The administration plans to open one city grocery store in each borough by the end of the Mayor's first term. There are more than 1,000 grocery stores and supermarkets and over 10,000 bodegas and corner stores across New York City. There are more than 1.4 million New Yorkers currently struggling with food insecurity. The five city grocery stores will not have a significant impact on the hundreds of grocery stores or the thousands of bodegas across the city," Mamdani's office said in a statement.
The city has established the NYC Groceries Task Force to guide implementation and the OPEN Task Force to reduce red tape and fines for small businesses. However, critics, including bodega owner Elvis, who operates the American Deli Mini Market Corp., expressed concerns about direct competition. "If [Mamdani opens this store] in front of [my] business, [I’m] going to go out of business," Elvis said through a translator. "[I] pay a lot of taxes and this is not fair."
Jaffe added that the plan is "doomed to fail" and suggested a task force focused on mitigating damage to local businesses could be a better approach to addressing food insecurity.