Zohran Mamdani stormed into office brandishing the banner of "affordability," and almost singlehandedly pushed the issue to the center of today's political debate. Of the 34-year-old mayor's initiatives aimed at lowering living costs, the one that has drawn the most attention is his proposal to put New York City into the grocery business.

The city-owned food store plan looks especially radical, even for the avowed democratic socialist, because it would place the city in direct competition with a vast and entrenched private industry. On his other major "affordability" proposals — free bus service and a rent freeze on one million apartments — Mamdani is using the regulatory and budget powers that Democratic mayors have traditionally relied on to tighten price controls on housing and expand public benefits.

This plan is different. It is extraordinarily rare for a municipality to compete with local businesses by launching its own enterprises. The main example is city-backed broadband companies that challenge Verizon, Comcast and similar providers, and those efforts have either struggled or failed outright. Mamdani's predecessor Eric Adams shut down the $2 billion fiber-optic buildout started under Mayor Bill de Blasio. As for supermarkets, Chicago last year abandoned plans for a city-owned store as impractical. Kansas City, apparently the only major metro ever to open a taxpayer-funded supermarket, ended its failed effort in early 2025.

As a result, Mamdani's proposal could become the biggest push any city has ever made to launch its own business in a market dominated by private players. The mayor has identified a real problem. New Yorkers do face very high prices for items ranging from chicken to eggs to milk. The city also has many so-called food desert neighborhoods — areas the U.S. Department of Agriculture defines as low-income census tracts where a significant share of residents live far from a supermarket — where residents often find little beyond processed goods nearby and must travel 20 minutes or more to reach stores with a wider selection of fresh food at lower prices.

But the problem is largely self-inflicted. Contrary to Mamdani's claim that "the private market alone has not delivered affordable, full-service grocery options," the deeper issue is a web of antiquated regulations — especially one that effectively blocks large stores from opening where they are most needed. Those rules prevent major chains from deploying billions of dollars of private capital to open the kind of giant supermarkets, with long checkout lanes and wide aisles, that offer much lower prices in the suburbs just beyond New York City's borders.

In fact, the Mamdani solution could make matters worse by giving city stores generous subsidies that allow them to underprice private competitors in the same area, potentially driving them out of business. That outcome would widen food deserts as existing stores close and the survivors raise prices. What New York needs is not city-run stores that threaten already struggling merchants, but sweeping deregulation that encourages the entry of the larger supermarkets consumers want and that usually offer the best prices and the widest selection.

As Mitchell Korbey, chair of the zoning group at Herrick, Feinstein, LLP, who has represented many large chains seeking to open stores in New York, told Fortune, "Many new, large supermarkets would open if the city would lift the rules that have long outlived their usefulness." E.J. Antoni, an economist at the Heritage Foundation, added: "New York is really unaffordable by design, not as a natural outcome of the free market. Its zoning regulations create artificial monopolies that reduce competition and limit what would without those rules be far more and better places for people shop."

Mamdani plans five city-owned stores with deeply discounted essentials

The mayor's rationale is that grocery prices have risen 30% since the onset of the pandemic, so the city will offset that increase by allowing residents to buy a basic shopping cart of goods for 30% less. The plan calls for five city-owned supermarkets, one in each borough, at a total construction cost of $70 million — a modest sum relative to New York's overall city budget of roughly $115 billion. All would operate under the single brand "NYC Groceries."

The first two stores are already planned. One would be a 15,000-square-foot location in Hunts Point in the Bronx, a well-known food desert, and would open in 2027 in a former juvenile detention center. The second would be a 9,000-square-foot store in the La Marqueta district of East Harlem, another low-income area, and is slated for 2029.

The stores would carry the kinds of items usually found in a supermarket, but not cigarettes, beer or lottery tickets, which are major revenue sources at the city's more than 10,000 bodegas and delis. Their biggest distinction would be a standardized "core basket" of about 20 healthy products, including meat, seafood, milk, eggs and butter. Those items would be priced at an average of 30% below prevailing retail prices for the same goods across New York.

The city would not operate the stores directly. Instead, the Economic Development Corp. (EDC) has issued a 44-page request for proposals seeking private operators. Those operators would handle sourcing, hiring and merchandising, and would work with the EDC to set the 30% discounts. Prices for the core basket would stay fixed for a month and then be adjusted for the next month, a policy the administration says will protect shoppers from weekly fluctuations in private stores and help them, in the mayor's words, "to predict your monthly expenses."

The companies running the stores would receive annual "affordability payments" to fully compensate them for the losses associated with selling staples far below market prices. They would also pay no rent or property taxes. It is unclear whether that arrangement would allow them to earn outsized profits or even keep the stores operating, since they would likely be smaller operators and would not have the purchasing power of large chains that can buy in huge volume.

Mamdani says NYC Groceries will make access to fresh goods at reasonable prices "no longer an unsolvable equation" and "a blow for economic justice." He has said the program would save shoppers about $90 a month, or $1,000 a year.

New York already has more big supermarkets, but still needs many more

New York has already moved a long way from its long history of small, high-cost grocery stores toward the national and international chains that offer wider choices and lower prices. Until 1995, the city had virtually no big-box supermarkets. Most people shopped at local bodegas or at independent grocers operating under names such as Food Town, Food Emporium, Urban Market, Gristedes and D'Agostino, many of which belong to cooperatives. Key Food operates its own cooperative, allowing members to pool purchases from wholesalers.

Bodegas are usually only 1,000 to 4,000 square feet, while independents tend to range from 5,000 to 15,000 square feet. Because of their limited size, these stores often stock few inexpensive generic products and mainly carry pricier national brands. That dynamic led to a major turning point.

In the early 1990s, shoppers in Harlem complained about the lack of low-cost options and pressed for a large Fairway. Despite strong resistance from local merchants, the project won approval, and in 1995 a roughly 40,000-square-foot Fairway opened on 125th Street and the Hudson River. The store, which closed in 2020, helped open the door to a wave of big-box supermarkets from national chains.

Today, Amazon's Whole Foods has 16 locations in New York, including two stores of about 60,000 square feet, one at Columbus Circle. Trader Joe's has around 18 stores, including a 30,000-square-foot location on the Lower East Side. Stop & Shop has about two dozen stores; its Rockaway Beach, Queens, location covers 30,000 square feet. Wegmans also operates two locations.

International brands have arrived as well. Aldi of Germany, whose parent Aldi Nord also owns Trader Joe's, operates 26 low-cost supermarkets in the city. Lidl, owned by Aldi Süd and unaffiliated with Aldi Nord, has about eight locations, also concentrated in lower-income areas.

These larger stores generally offer better prices and more variety than independents. While cooperative membership helps smaller stores buy in bulk, they still cannot match the purchasing power of a Whole Foods or Stop & Shop, which operate 537 and 656 stores across the U.S., respectively.

What is still missing, despite the arrival of these larger chains, is that — with the exception of Aldi and Lidl — they tend to cluster in higher-income neighborhoods such as Manhattan's West Chelsea, Midtown and the Upper East and Upper West Sides, as well as trendier parts of Queens and Brooklyn. That leaves many food deserts in places such as Central Harlem, the South Bronx, Central Brooklyn including Bed-Stuy and Brownsville, and the North Shore of Staten Island. In those areas, bodegas dominate, selling mostly processed food. Fresh chicken and fish may be a half-hour walk away. Even some wealthier neighborhoods, including Soho and Long Island City, still lack adequate options.

One reason New York has so many drugstore chains such as Walgreens and CVS, where so much floor space is devoted to food, is that those oversized stores fill the gap left by the shortage of full-service supermarkets. Shoppers can buy soda, chips, snacks and other packaged goods at these pharmacy-branded outlets, but not fresh food.

The reason large supermarkets operated by national and regional chains are so often excluded is an old zoning law that discourages competition and affordability — and that Mamdani, despite his emphasis on affordability, is doing nothing to change.

The zoning rule behind many of New York's food deserts

In the 1970s, New York City adopted a zoning regulation aimed at protecting its shrinking industrial base. Its stated purpose was to keep large retail stores out of manufacturing areas. The law drew strong support at the time and continues to be backed by local merchants. "It did nothing to prevent the fall of manufacturing," Korbey said. "It's outdated but it remains on the books." The City Council appears reluctant to repeal it.

Under the rule, any business that wants to build or open a retail store of more than 10,000 square feet in the city's extensive "M" zones — areas zoned for manufacturing — must get both a special permit from the City Planning Commission and approval from the 51-member City Council. That applies to all retail, including food stores.

Those M zones include Bedford Avenue in Brooklyn, Gowanus and the Red Hook waterfront in Brooklyn, sections of East New York, and unexpectedly large areas of Long Island City and most of Soho. Many of those locations have the open land, large spaces and parking that big-box grocery stores need. Yet approvals are rare, and simply reaching a city decision can be so expensive that it deters most applicants before they begin.

Urban policy analyst Stephen Smith noted in an article for the nonprofit think tank Vital City that Wegmans won approval for a store in the Brooklyn Navy Yard only after agreeing to build retail and office space that remains unoccupied. Whole Foods had to cover a parking lot with wind turbines and solar panels to win approval for its Gowanus location.

Getting permission for a grocery superstore can also be difficult, costly or impossible in commercial and residential districts, the other two main zoning categories. Walmart avoided the M zones when it tried to open in East New York, a blue-collar Brooklyn neighborhood with limited grocery access. But in 2012, opposition from small-business and labor groups killed the plan, and Walmart never returned. Many big stores instead go underground, where the 10,000-square-foot rule does not apply. One example is the Whole Foods store on Bedford Avenue, which occupies 40,000 square feet below ground.

The Mamdani plan leaves the rules intact and creates its own economic problems

Mamdani is doing little to promote what the city arguably needs most: allowing more private stores to enter the market and compete on price and selection. The NYC Groceries concept is essentially an attempt to fight market forces in a sector where the market is likely to win.

The most obvious problem is that the program does not save money for New Yorkers overall. It simply shifts the cost of a 30% grocery discount onto taxpayers. As Antoni notes, food retailers earn some of the lowest margins in any industry, about 2 cents on every dollar of sales. If the five NYC Groceries stores sell a large share of their products at 30% below market rates, they would pull customers away from nearby rivals, potentially forcing some to close.

Supermarkets that make an average 2% markup on items in the core basket would face a 28% loss on those products if they matched NYC Groceries' prices. Since large grocers are already scarce in those neighborhoods, the food deserts would likely grow rather than shrink.

There is also the question of resale. What would stop shoppers from buying large quantities of heavily discounted meat and fish and reselling them at a profit? Mamdani has not proposed a monitoring system to prevent abuse of that sort. That creates the prospect of a black market, with middlemen buying the discounted goods and reselling them to others at a higher price. It is a classic case in which price controls can reward people who game the system.

That risk is not theoretical. As seen in places like Cuba, heavily subsidized goods often disappear quickly, leaving latecomers with nothing to buy. The NYC Groceries stores would be under intense pressure to keep shelves stocked when many items are priced almost a third below competitors. More likely, the milk, eggs and seafood sections would be emptied quickly.

New York City has many Cuban immigrants who have seen similar stores before. The promise is always the same: low prices and plenty of goods. The reality is often long lines and empty shelves.

Around the world, government stores tend to make the same grand promises of abundance at bargain prices, yet customers often find little more than bare shelves. Whether this experiment can defy that history remains to be seen, but it will have to overcome something more basic than theory: the market, which has usually won.

This story was originally featured on Fortune.com