Kevin O’Leary Says Mamdani’s Grocery Plan Would Leave Taxpayers Paying the Bill

Zohran Mamdani's proposal to create city-owned grocery stores has become one of the most talked-about economic ideas in New York politics. Supporters say it could make food more affordable by selling groceries at prices below those of private supermarkets.

But "Shark Tank" investor Kevin O'Leary argues the plan would ultimately shift the cost from shoppers to taxpayers. His criticism raises a broader question for families trying to save money on groceries: if groceries are sold below market prices, who pays the difference?

What Mamdani is proposing

Mayor Mamdani has proposed creating a network of municipally owned grocery stores across New York City, particularly in neighborhoods with limited access to affordable food.

"At our five-borough municipal grocery stores, New Yorkers will get a 30% discount on eggs, milk, chicken, fresh produce and other everyday essentials," Mamdani said.

Unlike traditional supermarkets, the stores would operate on a nonprofit basis. According to Mamdani, private operators would not bear the usual rent and property-tax costs because the city would provide the storefronts and cover those expenses, while the operators would not be required to generate profits for shareholders.

Why Kevin O'Leary says taxpayers would pay

O'Leary argues that the economics of the proposal simply do not add up. O'Leary argued on X that grocery margins are only 2% to 3% and that selling products 30% below market prices would produce losses.

"Reducing selling prices by 30% across the board will guarantee that the stores will lose money on every sale. Who will pay for those losses? You, the NYC taxpayers," he wrote.

O'Leary's post claimed the 30% reduction would apply "across the board," although the city's plan limits the discount to a selected basket of essential products. His criticism captures the potential taxpayer exposure, although the administration's discount applies to a selected basket of essentials rather than every item sold.

While shoppers may pay less at checkout, any gap between sales revenue and the cost of operating the stores would still have to be covered.

How the program would be funded

Mamdani has said the stores would be financed through public investment rather than private capital, with the administration having allocated $70 million in capital funding to develop the five locations.

Supporters argue that removing costs such as commercial rent, property taxes, and shareholder profits could significantly reduce operating expenses. They also point to city purchasing power and centralized logistics as potential ways to lower costs.

However, even with those savings, running grocery stores still involves substantial ongoing expenses. The city would need to cover employee wages and benefits, utilities, refrigeration, transportation, distribution, inventory losses, building maintenance, and equipment.

Could groceries really be 30% cheaper?

Whether prices could consistently remain 30% below private competitors is one of the biggest unanswered questions.

Traditional supermarkets often operate on thin profit margins, frequently around 1% to 3%; the average profit rate among food retailers was just 2.1% in 2025. That means a large portion of grocery prices reflects wholesale food costs, labor, transportation, and other unavoidable operating expenses rather than profits.

Supporters argue that eliminating some overhead could narrow prices. Critics counter that those savings alone are unlikely to offset a permanent 30% discount, meaning continued taxpayer subsidies could be necessary.

What New York City shoppers could save

If the proposal works as advertised, some households could see meaningful savings. For example, the administration estimates that participating households could save roughly $90 per month, or about $1,000 per year.

Actual savings would depend on how much of a family's shopping basket consists of the discounted essential items and how the city defines "typical retail prices." The question is whether those savings would ultimately be financed through higher taxes or reduced spending elsewhere in the city budget.

The real cost behind discounted groceries

The disagreement reflects two very different views of the government's role in providing essential goods. Supporters see municipal grocery stores as comparable to public libraries, parks, or public transit, services that governments subsidize because they provide broad public benefits.

Critics warn that subsidized stores could put pressure on nearby bodegas and independent grocers, while budget watchdogs have called for a fuller public analysis of the program's cost and impact on unsubsidized businesses.

Whether the stores ultimately save or cost money depends on factors that remain uncertain, including customer demand, operating efficiency, and the level of public funding required.

What this means for New York City taxpayers

Any operating shortfall would have to be absorbed somewhere in the city budget, although it is too early to know whether that would lead to higher taxes, reduced spending elsewhere, or another funding approach.

Even if shoppers save money at checkout, city finances could face additional pressure if municipal stores consistently operate at a loss. Without detailed operating budgets, it remains difficult to estimate the program's long-term cost.

Bottom line

Kevin O'Leary argues that selling groceries below market prices would not eliminate costs; it would shift them from shoppers to taxpayers.

The real question for New York City residents is not just how much you might save at checkout, but whether those savings show up elsewhere through higher taxes or reduced public spending. That trade-off matters for anyone hoping to save more on everyday essentials, because the real cost could depend on how much public support the stores require.

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