NYC businesses sue Mamdani over city-run grocery store plan, citing 'unfair competition'

A group of New York City businesses filed a lawsuit Monday morning against Mayor Zohran Mamdani’s city-run grocery store initiative, alleging that the supermarkets will cause “unfair competition” with local vendors.

The plaintiffs, an organization called the Multicultural Business Coalition, are calling for a halt to all city-run grocery store rollout activity until the administration has “undertaken the necessary land use review, study and analysis” needed to “protect Petitioner’s members,” including many small grocers and bodegas.

Mark Jaffe, a founder of the MBC, told Business Insider last week that “the challenges that bodegas face, they’re overcoming that — they have for generations.” City-backed stores are “a new challenge, an unfair challenge.” He did not immediately respond with additional comment on the lawsuit, but previously said his organization “may have to file some paperwork” to get the Mamdani’s attention. “We want to sit down with the mayor,” Jaffee said. “We want to show him a better way.” The suit says the Mamdani administration’s five planned stores — set to open by 2029 — will not “meaningfully regulate affordability” and that the city’s site selection for the stores is “arbitrary” without consideration of neighborhood needs.

The East Harlem La Marqueta location, for example, is surrounded by a “considerable number of successful Hispanic and Korean-owned supermarkets, with whom La Marqueta will be in competition,” according to the suit.

Plaintiffs said these smaller stores will not be able to match Mamdani’s planned 30% discount on core goods in the city-run stores, especially because the city supermarkets will also have rent subsidized by the Economic Development Corporation.

Leaders from the EDC — the quasi-public arm of NYC’s government that manages city-owned property — said the city is using a combination of factors to choose city-run store locations, such as existing city-owned property, transit access, local income levels, and population density, but did not share specific criteria.

EDC leaders added they are considering offering subsidies to some local NYC grocers to alleviate their fears about competition from the new city-run stores, but none have been announced.

At an August 24 press conference, Mamdani told reporters that “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,” and “I’m confident in both the legality of this — that it will stand up in court — and the importance of delivering it.” Various small business owners Business Insider spoke with said they appreciate that the Mamdani administration is addressing food insecurity in the five boroughs, especially because food costs in US cities have jumped 25% in the past five years, but they oppose the city-run supermarket initiative.

Mamdani has pledged $70 million to cover the costs of opening the five stores, with the first Bronx location set to open in 2027. “The overwhelming consensus, regardless of class or party affiliation, is that affordable food is an excellent idea,” the lawsuit says.

As Jaffe put it to Business Insider, “Our argument, and we’ve spoken to many people in the legal field, is that this is not a well-planned way to feed people.”