A Republican congressman who grew up running a family grocery business says New York City Mayor Zohran Mamdani's $70 million government-run supermarket plan will hemorrhage money from day one, and a growing coalition of small business owners is raising millions to stop it.
Rep. Mike Rulli of Ohio, whose family built and still operates the two-location Rulli Brothers chain, laid out the math in blunt terms in an interview with Fox News Digital. Grocery stores run on razor-thin margins, he said, roughly 27 percent gross before expenses, and barely 1.25 to 1.5 percent net profit after the bills get paid. A government operation promising discounts 30 percent below retail on a basket of staple goods, he argued, is not a plan. It is a countdown to closure.
Rulli did not hold back about the timeline.
"And I would bet the farm there's no way these grocery stores last more than five years, they might not even last a year."
Mamdani, a self-described democratic socialist who won City Hall on a platform of government-led affordability, committed $70 million to build one city-owned grocery store in each of New York's five boroughs. He aims to open all five by the end of his term. At a recent news conference, the mayor described the discount structure directly.
"Once a month, our five city-run grocery stores will set prices for this core set of goods at 30% below typical retail prices."
The first location is slated for La Marqueta, a city-owned marketplace beneath elevated train tracks in East Harlem, a predominantly Latino neighborhood. That one store alone carries a $30 million construction price tag, nearly half the entire initiative's budget before a single register opens. Anthony Pena, president of the National Supermarket Association, told the Washington Free Beacon the figure defies industry reality.
"Even a high end, gourmet store in the middle of Manhattan wouldn't cost that much to build."
Industry experts peg the typical cost of building a supermarket from scratch at roughly one-third of what Mamdani plans to spend on the East Harlem location. And the operating costs look worse. Mamdani has estimated $12 million per year per store to keep the lights on. Food policy experts say union labor rates alone could push that figure past $20 million annually. Across five locations, the yearly tab could exceed $100 million, for stores that pledge to sell staples below market price.
Rulli framed the financial picture in a single sentence.
"That supermarket will just bleed red the entire time it's open, from the first time you turn the key until it closes."
Mamdani has pitched the stores as a remedy for food deserts, neighborhoods where affordable groceries are hard to find. But the Free Beacon reported that five grocery stores already operate within a two-block radius of the proposed East Harlem site, and a Costco sits just seven-tenths of a mile away. Investor Whitney Tilson calculated that for the amount the city plans to spend, it could hand out a million free Costco memberships instead, cutting grocery costs for far more New Yorkers without building a single wall.
The second announced location is in Hunts Point in the Bronx, National Review reported, with the city projecting it will open next year. The East Harlem store is not expected to open until 2029 at the earliest.
Mamdani has tried to preempt criticism that the stores will undercut neighborhood businesses. The city plans to exclude beer, cigarettes, and hot food from the stores' inventory, categories that bodegas and corner shops depend on. Private operators will bid for contracts to run each location, with the city covering construction costs, waiving property taxes, and subsidizing operations. At a separate appearance, Mamdani said the intent is not to compete with existing stores on survival but to "provide affordability that is guaranteed to New Yorkers."
Rulli called that distinction hollow. A government-backed store selling produce, meat, seafood, pasta, bread, yogurt, butter, rice, and beans at a 30 percent discount is competing with every grocer and bodega on the block, whether it stocks Marlboros or not.
"You will put hundreds of these small businesses out of business. And a lot of these businesses are owned by immigrants."
The administration's own budget chief confirmed what critics suspected. During a City Council hearing, Sherif Soliman, director of the Mayor's Office of Management and Budget, admitted that no formal study has been conducted on how city-owned grocery stores would affect local small businesses. Pressed on the gap, Soliman offered only that the administration is "attuned to those issues."
Business owners say the city has not even bothered to ask. Frank Garcia, chairman of the Multicultural Business Coalition, told the New York Post his group has received nothing from Mamdani's office despite repeated attempts to engage.
"We have not heard anything from the mayor. We've reached out, we've sent letters, we have not heard anything at all."
The coalition has raised $1 million to fight the initiative and has reportedly threatened legal action against the mayor. Garcia's group represents the very immigrant-owned businesses Rulli warned would bear the brunt of government competition, small operators with tight margins who cannot absorb the arrival of a taxpayer-subsidized rival selling the same staples at below-market rates.
Rulli, whose family built Rulli Brothers into a small but thriving chain in Ohio, said the mayor has created the worst possible situation for himself, alienating the entrepreneurs his city depends on while betting tens of millions of public dollars on a model the grocery industry considers unworkable.
"This is the biggest mistake the mayor has made."
Mamdani rolled out the first store announcement during his 100-day address, framing it as the fulfillment of a central campaign promise. Senator Bernie Sanders made a surprise appearance to endorse the plan. The Washington Examiner reported that Sanders called the concept straightforward: "Providing affordable food to working families, that's not radical. It's exactly the right thing to do."
Mamdani echoed the populist pitch at the same event, promising that "eggs will be cheaper" and "bread will be cheaper" at the city's stores. Progressive allies cheered. But the City Council signaled it would review the proposal's economic impacts, an acknowledgment that the political enthusiasm had outrun the policy homework.
Government-run grocery stores are not a new experiment. The Free Beacon noted that similar programs in Kansas City and Chicago failed, offering cautionary precedents that Mamdani's team has not publicly addressed. New York City is already carrying a $5.4 billion budget deficit. Adding a grocery chain projected to lose tens of millions a year, with no impact study, no small-business outreach, and construction costs three times the industry average, does not close that gap.
Rulli summed up the dilemma facing the mayor in terms any small business owner would recognize. The grocery business punishes inefficiency. It punishes overhead. And it punishes anyone who prices below cost without a plan to make it up somewhere else. A government store that does all three is not a public service. It is a line item that grows every year until someone pulls the plug.
When politicians who have never stocked a shelf or negotiated with a distributor decide they can run a grocery store better than the people who do it for a living, taxpayers always end up holding the receipt.
