Democratic New York City mayoral candidate Zohran Mamdani’s $65 million plan to establish five city-run grocery stores, one in each borough, is not a novel idea. It has been done before, replicated in America by well-meaning visionaries, yet has repeatedly yielded disastrous results.
The historical failures surrounding state-owned supermarkets harken back to Soviet-era socialist systems.
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In communist-controlled Russia, such nationalized food distribution, premised on the promise of universal access to affordable food, failed to fulfill basic consumer needs.
Venezuela, still dabbling in Soviet-style grocery stores, has government warehouses lined with spoiled stock, which has been left undelivered due to bureaucratic incompetence and corruption.
In the United States, however, more modern-day case studies of government grocers offer cautionary tales and may portend the fate of Mamdani’s grocery gamble, if implemented.
Erie Market
Past government-run groceries, especially in small-town America, were easily edged out of the private sector by big-box competitors.
In rural Kansas, the city of Erie faced the threat of a food desert during the COVID-19 pandemic. The area’s lone grocery store, Stub’s Market, was already on the brink of shuttering permanently.
Then, the tiny town’s municipal government decided to take over the property in hopes of providing for its 1,047 residents.
At the time, there were no other options for fresh food in Erie, also known as “Beantown,” where the main tourist attraction was an annual “Free Bean Feed” consisting of cooking beans in cast-iron kettles over an open fire. Shopping-wise, the residents, many of whom lived on fixed incomes and were without cars, relied mostly on cheap canned goods and frozen dinners from the nearby Dollar General.
Feedback from the city residents was resoundingly positive at first. Prior to the store’s purchase in 2021, the Erie City Council commissioned a citywide poll to see whether residents wanted the municipality to step in and save Stub’s Market by buying it out.
With the sign-off, taxpayers weighed whether it was worth the risk should the city operation fail, since the financial burden would fall upon the townspeople to pick up the tab.
“We run it as a utility, like we do the electric bill and the water bill,” the city’s part-time treasurer, Cindy Schoenhofer, told The Hustle.
If the store’s operational expenses increased, Erie would add a fee — a little less than $5 per month, city officials explained — to each household’s utility charges to cover the costs.
As for the store’s price tag, the city’s Economic Development Committee struck an acquisition deal with Stub’s Market’s retiring co-owners, Shirlene and David “Stub” Mahurin. The deal would pay the couple $300,000 for the building and fixtures, plus inventory value (another $100,000) and 0.5% of gross sales over the next 10 years.
MAMDANI’S GOVERNMENT GROCERY STORES PLAN IS BASED ON AN ACCOUNTING ERROR
The contract, valued at half a million dollars, hinged on the city survey’s results. A vast majority, 68.5% of 311 total respondents, voted yes.
Despite widespread community support at the outset of the publicly funded venture, the business, rebranded as Erie Market, bled money every month.
Erie Market, nestled on the outskirts of the city’s 1.3 square miles, struggled to compete with the Dollar Store chain across the street and a distant Walmart about 15 miles away.
During a special Erie City Hall meeting to discuss the store’s finances, some citizens suggested providing the public with a price comparison visualizing the cost-saving benefits of buying from Erie Market compared to Walmart. “We need to get the public to understand that,” supporters told the Erie City Council, according to the meeting minutes. Others brought out their receipts showing how much they saved shopping at Dollar General instead.
Erie Market reportedly posted only one profitable month in 2022. Overall, the store annually sustained losses of $132,000. In 2023, the store manager, who ran Erie Market on the city’s behalf, told the Wall Street Journal that the “goal” was to lose just $100,000 that year.
Mayor Lester “Butch” Klingenberg, in a Hail Mary plea for more patrons, said customers have to buy at least $50 in merchandise a month to keep Erie Market afloat. Shoppers spent closer to $14 monthly on average.
An independent auditor who performed a financial analysis for the city recommended tacking on an additional $100 charge to everyone’s monthly utility bills “to break even eventually.” Otherwise, “there is really no other way to fund the store,” the accountant advised.
Following years of financial failure, the city called it quits on the grocery business and leased Erie Market to a private operator, River Grocery LLC, which manages multiple locations across Kansas and Nebraska.
“[C]ouncil members couldn’t be more pleased,” according to the Erie Record. “Despite numerous attempts and efforts, the Erie Market under city ownership was devouring city funds faster than Cookie Monster of Sesame Street fame with a plate of cookies in front of him.”
An anonymous donor pledged a monthly contribution of $4,444 to pay off the remaining debt during the rental arrangement. After a liquidation sale last year, Erie Market launched a grand reopening on Nov. 1 under the new management.
Baldwin Market
In deep-red Florida, the small town of Baldwin tried to open its own government-operated grocery store after the rural outpost’s only grocer, an IGA, closed in 2018.
Like Erie, the median income in Baldwin was well below the state average, and a conveniently placed Dollar General beckoned down the road. To get groceries not packaged in a box, Baldwin’s roughly 1,400 residents had to face 20 miles of freeway traffic through Jacksonville’s suburban sprawl or trek through farm country to neighboring Macclenny, about 10 miles west along the interstate. Senior citizens comprised a significant part of the population, so many locals in Baldwin no longer drove.
The conservative-majority community wrangled with the idea of a government takeover of a private enterprise. After all, a collectively-owned, government-run grocery is inherently a socialist concept.
Taking care of its residents is part of the government’s role, Mayor Sean Lynch, a Republican, argued. “We take the water out of the ground, and we pump it to your house and charge you,” Lynch told the Washington Post. “So what’s the difference with a grocery store?”
Initially, the town attempted to find another tenant to no avail, since the 10,000 square-foot lot where the IGA once stood was too small for a big-box retailer but too big for a mom-and-pop store.
Thus, Baldwin Market was born, retrofitted from the old IGA. The Baldwin City Council approved a $150,000 loan from a reserve fund to serve as seed money for this quasi-social experiment, and Baldwin Market opened its doors in 2019. All eight employees, including the butcher and the cashiers, were on the municipal payroll.
MIKE LAWLER INTRODUCES ‘MAMDANI’ ACT TO INVESTIGATE GOVERNMENT-RUN GROCERY STORES
Once again, the municipally-owned market couldn’t compete with grocery giants such as Walmart, leading to costly commodities, such as $3.99 for a gallon of reduced-fat milk or $1.99 for a 16-ounce diet Coca-Cola bottle. Online reviews questioned the shop’s affordability for low-income individuals and the elderly, who were Baldwin Market’s intended customers.
Within five years of its existence, Baldwin Market came to a close, too.
Baldwin Market’s lack of “buying power,” the ability to sustainably stock the shelves, proved to be its downfall.
According to economic researchers at Vanderbilt University who interviewed Lynch, he had sourced supplies locally mainly because Baldwin Market could not attract a large distributor like the one previously working with IGA, which required a minimum $20,000-per-week purchase order. Shut out by large-scale suppliers, Lynch lamented being unable to compete against retail chains that can bulk-buy products at far lower costs, meaning the city had to charge noticeably higher prices to recoup costs.
The town wasn’t worried about generating extra income for the city; rather, city officials sought to at least break even on their bold Baldwin Market bet.
In the first full fiscal year of operation, the town took in approximately $1.04 million in revenue and $1.1 million in expenses, resulting in a $61,000 operating loss, according to a Florida Times-Union review of the city’s financial records. The following fiscal year, sales revenue plummeted to about $826,000 while the city’s cost of running the store landed at over $1 million, amounting to a $178,000 shortfall, the statements showed. Figures looked just as grim in 2022.
Last year, the town turned over Baldwin Market to a new owner, who repeatedly advertised a grand reopening of the newly remodeled site, though the state of the store is unclear. Following weeks of delays, Baldwin Market’s public Facebook page stopped posting updates as of August 2024.
KC Sun Fresh
In Kansas City, Missouri, the city-funded supermarket, KC Sun Fresh, earned international infamy over recently captured images of its empty coolers and scantily stocked shelves.
On-the-scene footage from local KMBC-TV shows severe supply shortages at KC Sun Fresh and disappointed patrons, some disgusted by a pungent smell lingering at the door.
“It’s a rancid odor,” resident Jon Murphy remarked in the viral video. “I think something is dead or something’s gone bad.”
“There is nothing!” shopper Michaelle Randolph said of the little food left. “I walked in and I’m like, ‘OK, where is all the food?’” Randolph, a Sun Fresh regular, said she’s too scared to buy milk there, noting the expiration dates.
Coverage of KC Sun Fresh’s conditions reached foreign media, including attention from the Daily Mail, a British tabloid.
KC Sun Fresh opened in 2018 as part of a revitalization project to refurbish the city’s embattled east side. The 40,000-square-foot store reportedly received nearly $29 million in taxpayer investments via bonds, loans, ordinances, and subsidies. Approximately $15 million in public and private funding was poured into the revitalized retail space, a city-owned strip mall, to turn the once-ramshackle property into “a showcase” of resurgence.
On the first anniversary of Sun Fresh’s opening, the city unveiled a 16-foot-tall statue, “Phoenix Rising Out of the Ashes,” outside the shopping center to commemorate the community’s “emergence … into progress.”
Despite the presence of on-site police officers and private security at the store, residents told the Washington Post that they didn’t feel safe shopping there.
KC Sun Fresh is plagued by rampant open-air drug dealing, theft, and vagrancy both inside the store and in the vicinity. The store’s surveillance cameras caught several concerning incidents, including a naked woman waltzing through the store, a person urinating in the vestibule, and a couple having intercourse in broad daylight on the lawn of the library around the corner.
Notably, crime-ridden Kansas City has not had a jail since 2009, when the left-leaning city council closed the detention facility as a cost-cutting measure, a move which the Kansas City Star called “a $250 million mistake.”
In 2024, KC Sun Fresh lost $885,000 and currently only retains about 4,000 shoppers weekly, down from 14,000 a few years ago.
SOCIALIST GROCERY STORES WON’T STOP CHICAGO CRIME
The city similarly leased the site, and now a nonprofit organization, Community Builders of Kansas City, oversees operations. CBKC, an urban development organization, prioritizes “black-owned, woman-owned, and black-woman produced items.”
In spite of further city subsidies, KC Sun Fresh remains at risk of closure. A recent $750,000 cash infusion from the city is hardly helping. “We’re in a dire situation,” CBKC told the Washington Post.