A plan by New York City Mayor Zohran Mamdani to establish city-owned grocery stores could cost upwards of $206 million in its initial years, according to an analysis by Republican State Comptroller candidate Joseph Hernandez.
Hernandez's analysis breaks down the projected expenses into three primary categories: approximately $70 million for construction, $106 million for operating costs, and an estimated $30 million in lost revenue from nearby existing businesses over three years. This total estimate ranges from $116 million to $279 million, depending on various program functions.
"We know City Hall is spending $70 million just to build these stores. What happens in year one, year two and year three? Who keeps paying for the subsidies? And what happens to the small businesses forced to compete against their own government?," Hernandez stated at a press conference held outside a Manhattan bodega. He was joined by members of the Multicultural Business Coalition, who have filed a lawsuit challenging the grocery store initiative over concerns of unfair competition to local stores.
The city has acknowledged the $70 million construction cost. However, the report did not estimate potential revenue from the new city stores or the potential savings for consumers. Hernandez's analysis suggests that around 450 local bodegas and grocery stores could experience an average annual revenue loss of $22,250, impacting their profit margins, which are typically between $30,000 and $40,000.
Hernandez, a former Wall Street executive and the son of Cuban refugees, warned that approximately 67 local stores could face closure due to competition from subsidized government-run businesses. He drew a parallel to his family's experience with communism, suggesting a belief that government can run businesses more effectively than private entrepreneurs can lead to negative outcomes.
An independent consultant with experience in the New York City supermarket industry, Avi Kaner, stated that Hernandez's cost estimates appear reasonable and potentially conservative, suggesting that the harm to private operators could be even greater.
Regarding the rollout of the stores, only two of the five planned locations have finalized sites. The first store in Hunt's Point is not expected to open until at least 2027. The Manhattan location, which is not slated to open until 2029, has already utilized $30 million of the $70 million allocated for construction. Hernandez is running against incumbent Democratic Comptroller Thomas DiNapoli in the upcoming general election.