NYC NOW - The Lawsuit Against Mayor Mamdani’s Grocery Store Plan Raises a Bigger Question: Can It Work?

Episode Date: August 31, 2026

A coalition representing hundreds of independent grocers is suing New York City over Mayor Zohran Mamdani’s plan to open five city owned grocery stores, arguing the taxpayer backed stores could put neighborhood businesses at a disadvantage. WNYC and Gothamist reporter Karen Yi looks at what the lawsuits challenge, how the city is defending the plan and whether the experiment could ultimately help lower costs for both shoppers and small grocers. Got any questions, comments or story ideas? Send us a message at [e-mail]. Photo by Kendall Rodriguez/Newsday RM via Getty Images Additional Notes: Mamdani’s plan for cheaper groceries could hurt minority grocers, lawsuit says⁠ TikTok is the new 311: New Yorkers tag Mayor Mamdani on social media for help⁠ Late start to school year puts NYC parents in a childcare crunch⁠ NJ, NY cosmetology schools to teach twists and turns of Black hair, to root out bias⁠   Hosted by Simplecast, an AdsWizz company. See pcm.adswizz.com for information about our collection and use of personal data for advertising.

From WNYC, this is NYC now. I'm Jene Pierre. We're not afraid of competition, Mr. Mayor. We're afraid of unfair competition. Let's do something that makes sense, that's feasible, something that's going to help the small businesses flourish while assisting the needy family. Some small grocery store owners aren't too happy with Mayor Mumdani's plan

to offer cheaper groceries at city-owned stores across the five boroughs. On today's show, we discuss a recent lawsuit which, alleges the plan will hurt independent grocers the most. But before we get into that, here's a few headlines we're watching. New York and New Jersey are hoping to root out bias when it comes to black hair. And for some hairstylists, that'll start in the classroom. Cosmetology schools in the two states now have to train students on how to work with textured hair. That includes lessons on braiding, locking, and weaving natural hair. The new legislation comes after both states expanded their definitions of race discrimination. If you've got a friend who's a parent,

be a good pal and check in on them soon. Some parents are scrambling for child care this week, thanks to the extra long summer break caused by this year's late Labor Day. Schools in many other areas across the country have already started, and some New York City parents say it's time to move the city's first day earlier. What are your thoughts on that? Should New York City students go back to school before or after Labor Day? Send us an email at NYCNow at WNYC.org. And another question for you. Is TikTok the new 311 for New Yorkers?

Several New York City residents are asking Mayor Zoramamam Dhani to help with everything, from potholes and leaky subway stations to even finding love. Now, I'm not sure how much of a love doctor the mayor is, but the social media callout seemed to work for several people, including an eight-year-old who wanted his local playground to open in Bay Ridge, Brooklyn. Yep, it actually worked. A spokesperson for the mayor says the Mamdani administration takes the concerns of New Yorkers seriously, whether it's through 311 or social media. Those are just a few interesting headlines that caught our attention. For more on those

stories and the latest happening in New York City, visit our news site got the missed. Now to today's topic. Mayor Zora Mamdani's plan for city-owned grocery stores is getting pushback from the businesses it would compete with. One of the mayor's signature affordability promises is that he will open five grocery stores owned by the city, one in each borough, selling staple items like meat, seafood, and produce, about 30% less than average retail prices. Stores where prices are fair, where workers are treated with dignity, and where New Yorkers can actually afford to shop. The first of these stores is supposed to open next year in Hont's Point, But independent grocers say those lower prices are really going to squeeze them.

A coalition representing hundreds of businesses sued last week arguing city-backed stores would pull away customers and force some neighborhood supermarkets and bodegas to close. They want a judge to stop the plan before the first store opens in the Bronx next year. So can the city make groceries cheaper without hurting the small businesses already selling them? WNYC's Karen Ye has been looking at. into that very question. Hey, Karen, welcome back to the show. Hey, Janay. So what are these businesses actually challenging here? There was actually a pair of lawsuits filed by this group called the Multicultural Business Coalition. They say they're a national group. They represent several chambers

of commerce and they started four months ago. And one of the lawsuits is the class action complaint. And they're saying, look, the city's plan to open these municipal grocery stores is discriminating and primarily going to impact minority and immigrant-owned businesses, take away their customers, and put them out of business. This violates the Equal Protection Clause of the state constitution. The second lawsuit that they filed is really contesting the city's legal authority to even open a city-funded municipal grocery store. And they're saying the city never even did a study before it came up with this plan and the sites that they've chosen so far for the grocery stores, they picked them arbitrarily. And we really really,

only know where two of the five stores are going to open. The first one being in Hunt's Point, like you said, in the Bronx, which will open late next year, and the second one is going to open in East Harlem. Tell me about the press conference that happened. So a few days after the Multicultural Business Coalition filed their lawsuit, a bunch of them gathered in East Harlem across from where the city wants to open its second municipal grocery store. And that's where we heard from Haido Guzman. He's the president of the Mexican Chamber of Commerce for the state of New York. We're very concerned of the fact that many have not been asked what impact or what effect

these supermarkets will have on them. We're playing with the livelihood of our community members. And the important thing here is to make sure that we should not be taken away from our own businesses to support something that may not work. He says that the city should really work with existing grocery stores and bodegas instead of creating new competition. Grocery stores really operate on pretty thin margins. They sell on volume.

That's how they make their profit. They got to sell milk and their products quickly. And if you're opening up a competitor, that's going to evaporate your very, very thin margin and potentially force you to close. I spoke to Josefina Aguirre. She owns Little Mexico Meat Grocery in East Harlem about her concerns. We don't have a liquor license.

We don't sell liquor. We don't have a cigarette license. We don't even do the lottery. So we are making our money from meat, produce, and grocery items. So you sell fresh fruits, vegetables, and so are you mostly butcher shop? That's right. Okay. With a little bit of a...

With a little bit of a... Yeah. So that's exactly what they're going to offer. That's exactly what he's going to open up. So it hits us directly. She says, you know, her store already took a hit. When Costco opened Denise Harlem a few years ago, she says that a lot of local stores actually had to close their doors, and some other stores had to reduce person.

or reduce their hours just to be able to survive. And she's worried that that's going to happen again when the city comes and opens their store in East Harlem. I understand the point being made here, Karen, but the city-owned grocery stores are a lot different than the big old Costco's, right? Like, people actually travel to shop at Costco. Do we really think that people are going to travel to go to the city-owned grocery stores? It's only five of them.

Yeah, I think that's a good question about whether they'll be. be able to draw in customers and from where those customers will be. Will you really be wanting to jump on the subway for two hours to go trek up to Hunt's point to get a couple of items that are potentially 30% cheaper and then bring that back to where you live maybe in Brooklyn or Queens because this is going to be a slow ramp up. The mayor has said the five stores are going to open in his first term in office. We're not even going to see the first store until late next year. And so I think the intention is really for these stores to benefit the communities that they're in. We know that they're going to be in Hunts Point and in East Harlem. These are two

neighborhoods that, where there's high rates of people receiving SNAP benefits, you know, people really struggle to afford groceries there. And I think the point will be to service and sort of move the needle on food budgets for those specific communities. You know, Karen, New York City has famously never had a Walmart, right? And a lot of the opposition to Walmart actually coming into the city has been about protecting small businesses from those big competitors that can undercut them on price. So this is kind of ironic. I mean, what's the difference here? Yeah, actually, the multicultural business coalition cited this exact point in their lawsuit. They said, look, the city has fought to keep Walmart away, and now they're doing what Walmart

would be doing, which is offering these cheaper groceries on a larger scale. What is interesting about New York City's food industry is that it's different from other states in that in other states, Walmart or another operator kind of owns the majority of the market share. In New York, no operator owns more than 10% of the market. That means it's a very diverse, it's a very competitive industry where you do have smaller independent grocers who are able to thrive and make a living. But the difference with Walmart is Walmart is private and they're for profit. The city, their ultimate goal is to lower prices to bring down grocery costs for consumers. There are also more than 1,000 grocery stores in the city. But Carlos Goyado, he owns a couple of grocery stores in the Bronx.

And he says they're used to the competition. But when the city gets into the game promising to subsidize stores, that's not a fair competition anymore. We're not afraid of competition, Mr. Mayor. We're afraid of unfair competition. And the fact that this is going to become a money pit for the taxpayer, The taxpayer should be the ones here very concerned about what this will cost. So don't pick on us. Let's do something that makes sense that's feasible.

Not that's going to drain the taxpayer, but something that's going to help the small businesses flourish while assisting the needy families that I understand we need these subsidies. You're listening to NYC now. And we're talking with WNYC and Gothamist reporter Karen Yee about a lawsuit from independent grocers challenging Mayor Zohramamam Dhani's plan for five city-owned grocery stores. After the break, we'll look at how far the city wants to take the plan and whether small grocers could benefit too. We're back with WNYC and Gothamist reporter Karen Yee, and we're talking about the lawsuit from

independent grocers challenging Mayor Zoranam Dani's plan to open five city-owned grocery stores. Before the break, Bronx grocer Carlos Colliato said he isn't afraid of competition, but he is afraid of what he considers unfair competition and the potential costs to taxpayers. We had also been talking about Walmart because the grocers themselves raised it as a comparison. New York City has long resisted the retailer over concerns that its lower prices could hurt small businesses. So Karen, we know what Walmart's long-term plan looks like when it enters a market, right? But what's the long-term goal here for the city? I mean, are we talking about five stores and done? Or something that could eventually, you know, grow much bigger.

That's a good point. And I think the other question to ask is how long the city wants to subsidize this. We know it's going to be a lot of money to subsidize the operating cost of these stores. For how many stores they're going to want to do that? And for how long, I think it will depend on the success of this really smaller scale experiment that's just five stores across the city that not everybody is going to be counting on or relying on for their, you know, weekly budgets and weekly meals, will the city find a way to scale that, whether it's more stores or whether it's in other ways, or will it kind of just leave it at that and find other ways to address food affordability for many more New Yorkers than just the ones in these five communities?

For a longer period of time. Exactly. You know, I keep thinking of Ms. Josefina, who you spoke to in East Harlem. Did she talk any more about how much this could hurt her store? She said that she makes about a 5% profit. And because she's a small store, her store is multi-generational. Her parents started it. She now runs it with her two sisters.

They wake up early and they go to the meat market in Hunt's Point. And they try and source where they can find quality items for cheap. And that is their business model. And I think where the city can work with these local stores and be different than Walmart is whether they can scale their distributor contracts. right? And let me explain that. Okay. The city, when they're doing these city, these municipal stores, this is going to be a private public partnership. The city's going to pay taxes, and they're going to pay the rent,

and they're going to bring on a private operator to actually run the day-to-day operations of stocking the shelves, determining what products to sell, hiring the employees, maybe even setting the music, I don't know. And they're going to use that operator's existing contracts, so the contracts they maybe have with driscolls for produce or manufacturers to be able to bring in food. into the city because the city is not in this business. They don't know probably the first thing of how to even get a contract for organic strawberries. Sure.

And what I've heard from food experts and what Josefina and others seem to really align on as well is, can the city find a way to scale this, not necessarily by opening more stores, but by leveraging these existing contracts that the operator is going to have and bringing in more of these smaller operators in these smaller stores so that they can increase their purchasing power. If Josefina is one store, she can't necessarily negotiate with Driscoll's for a really good contract because she's not buying that much. But if it's Josefina plus 10 more stores in New Harlem that are now a collective, they have much more buying power to get better deals. They get better deals on food. They can then pass those savings onto their customers.

And so that is another way to scale this experiment, right, to kind of broaden who can benefit from this, not just on the consumer side, but potentially on the small business side. What has Mayor Mamdani had to say about these legal challenges? The mayor responded to the lawsuit at an unrelated press conference, and he says that he believes that the plan is legally sound and will stand up in court. I continue to be fully confident in both the legality and the importance of our initiative to deliver five city-run grocery stores, one in each borough, to the people of our city. We are talking about a reflection of a cost of living crisis that has seen grocery prices increased by about 30% over the last few years. And we're also talking about delivering five city-run grocery stores in a city of 8.5 million people that has more than 1,000 grocery stores. His response has been, you know, these municipal stores will not sell what tend to be the revenue drivers for bodegas, think cigarettes, lotto tickets, hot food. They're not going to sell these items.

And so bodegas can still make a profit on these things. Karen, I wonder how true is what Mayor Mumdani saying here, that the market is big enough for small markets and bodegas and city-owned grocery stores. I did speak to a couple of food experts who said, in the grand scheme of things, five stores, it's a good scale to sort of try this out. In many ways, this is an experiment. We have seen other municipal grocery stores open in Kansas City, Missouri, in Kansas State, and Florida that have failed. But that's not quite New York City.

New York City is very dense. It's very unique. There are multiple people that are passing by. For this to work, you need customers. Like I said, grocery stores operate on volume. If you do not have people in the store shopping for your products, it will not succeed. And so the best comparison that, you know, food experts have told me is the defense commissary system. This is run by the Department of Defense.

And there's actually one here in New York, Fort Hamilton, Brooklyn. It is just for military personnel and their families. It is just for civilians and their families. But it's a government subsidized supermarket. And it has been running successfully for many years. It gives 25, on average, 25 percent discounts on all the items. And so I think that's the model that the city is trying to emmyrd. emulate here. And in terms of scale, in terms of impact, I do think that probably the hardest felt

impact is going to be in those specific communities. I think on the market as a whole, you know, probably not. Stores are opening and it is a competitive, thriving market space. What about people eager to shop? What are you hearing from potential shoppers? So right after this press conference by the grocers in East Harlem, I actually walked over to the subway station. And I tried to talk to people on the street and ask them what they think, or that they're concerned about their local businesses going out of business or what they think of the concept of a municipal grocery stores. And overwhelmingly, I think everyone I spoke to was like, yes, we need this. Where is it going to be? When's it coming? When can I go? I think there is,

people cannot afford to buy groceries. I think everyone, regardless of your income level, you've felt the prices of food going up. The city says food prices have increased 30 percent since And what's interesting about some of the shoppers that I spoke to in East Harlem is they told me that they don't even go to their local grocery store. They go to Aldi. And Aldi is in the same plaza where Costco is. And that's where they get their cheap grocery stores. And some of them rely on a food pantry. So they're not really shopping locally.

I didn't find, frankly, much sympathy for local grocers and local food stores. I spoke to Katie and Critchlow. And he said that if stores want to stay in business, then they should lower their prices. I think it's great or good. Everybody could afford it. Why not? You know, if other businesses are not able to compete,

either raise down your profit or I don't know, maybe look to go somewhere else. So I think it is an interesting tension here of what these stores will do to each sort of ecosystem in these communities. Will it help consumers but potentially harm small businesses? Are there ways that small businesses could also benefit from them?

this. And ultimately, I think we have to think about how will the city determine whether this bold experiment has actually been successful. That's WNYC's Karen. Karen, thanks a lot. I know you do a lot of reporting on grocery stores. I spend a lot of time inside grocery stores for personal and professional reasons, yes. And thank you for listening to NYC now. I'm Jene Pierre. See you next time.