The Grocery Store Government Cannot Save

There is a particular way government tends to approach a disappearing grocery store. A supermarket announces that it is closing, elected officials call the closure unacceptable, residents are told they are about to live in a “food desert,” and almost immediately the conversation turns toward subsidies, grants, tax breaks, public financing, nonprofit operators, or increasingly, having government operate the grocery store itself.

What receives considerably less attention is the question that should come before all of those discussions: Why is the grocery store closing? That question matters because grocery stores do not generally close profitable locations simply because executives have developed some philosophical objection to selling food in a particular neighborhood. Individual companies can make bad decisions, leases can fall apart, corporate strategies change and poorly managed firms fail. But when one grocer after another leaves an area, when replacement operators cannot be found, when government has to pay businesses to locate there, and when even subsidized stores cannot survive, something much larger is being communicated.

The market is giving us information. Government keeps trying to pay enough money to make that information go away. And taxpayers are increasingly paying for it.

A “Food Desert” Describes Geography. It Does Not Explain Economics.

The term food desert has become so embedded in political discussion that it often functions as an explanation rather than a description. A neighborhood does not have a nearby full-service supermarket, therefore the absence of the supermarket itself becomes the problem to be corrected.

Even the federal government's terminology is more careful than the rhetoric surrounding it. The USDA now generally speaks in terms of low-income, low-foodstore-access areas rather than treating “food desert” as a complete economic diagnosis. Its Food Access Research Atlas measures things such as income, vehicle availability and distance from supermarkets. Under one commonly used measure, an urban tract can qualify when at least 500 people or 33% of its population live more than one mile from a supermarket, supercenter or large grocery store. Economic Research Service ¹

That tells us something useful about accessibility. It tells us very little about why a supermarket does not operate there. There is an enormous difference between these two claims:

“People living here have difficulty reaching a supermarket.” “There is enough commercially viable demand here to support a supermarket, but private businesses irrationally refuse to serve it.”

The first proposition can be measured geographically. The second requires an examination of revenue, customer traffic, purchasing power, competition, transportation patterns, labor, shrink, crime, insurance, logistics, occupancy costs and expected return on capital. Those are precisely the variables that tend to disappear once the political discussion becomes “We have a food desert, so we need a grocery store.”

Grocery Stores Are Not Public Parks

This sounds obvious, but much of the policy surrounding these projects behaves as though supermarkets are pieces of infrastructure. Build the store. Install refrigeration.

Fill the shelves. Put a sign outside. Problem solved.

That is not how grocery retail works. A road does not have to sell enough pavement every Tuesday to keep existing. A public park does not have thousands of products expiring inside it. A fire station does not compete every week with Walmart, Aldi, Costco, Amazon, Dollar General and the supermarket three miles away for the same household's spending.

A supermarket is an extraordinarily complicated logistics operation operating on remarkably thin margins. FMI, the food-industry association, reported that food retailer profit margins fell to approximately 1.6% in 2023. fmi.org ²

That means a grocery store generating $20 million in annual sales at a 1.6% net margin would clear approximately $320,000 after expenses. That sounds substantial until we consider what can erase it.

An unexpected increase in insurance premiums can eat into it. A security contract can eat into it. Excessive theft can eat into it. Higher labor costs can eat into it. Refrigeration repairs can eat into it. Excessive spoilage can eat into it. A few hundred regular customers deciding to shop elsewhere can eat into it. The supermarket business has very little room for romanticism. Government intervention does not repeal that arithmetic.

Government Usually Starts by Subsidizing the Building

The first stage is rarely outright municipal ownership. Government usually begins with something that sounds considerably more moderate. A development grant.

A tax credit. A subsidized loan. Free or discounted municipal property.

A redevelopment agreement. A tax increment financing arrangement. A grant for refrigeration.

An equipment subsidy. The justification is that private capital will not enter the neighborhood without assistance. That should immediately raise a second question: Why not?

There are circumstances where there is an identifiable one-time capital obstacle. Perhaps a viable supermarket site requires unusual environmental remediation. Perhaps demolition or infrastructure costs make an otherwise commercially sound project impossible.

That is at least a coherent economic proposition. Government pays $3 million to eliminate an unusual one-time obstacle, after which a supermarket producing positive operating cash flow can function normally.

The problem is that government increasingly applies the same tool when the underlying problem is not capital at all. It is operations. A store lacking $5 million to renovate a building is fundamentally different from a store that loses $800,000 every year after the renovation is complete.

The first has a capital gap. The second has a business-model problem. Giving both of them grants does not make them equivalent.

Chicago: $13.5 Million Does Not Manufacture Grocery Economics

Chicago's relationship with Yellow Banana and its Save A Lot stores is one of the better contemporary examples. The city committed $13.5 million through its Community Development Grant program toward the redevelopment of six Save A Lot locations on Chicago's South and West sides. The broader project included significant additional financing and was intended to renovate stores serving areas characterized as lacking adequate grocery access. KCUR ³

The proposition was straightforward: public money would help preserve and improve grocery access. But government was primarily fixing physical assets. Buildings could be renovated. Refrigeration could be replaced. Stores could be redesigned.

None of that guaranteed adequate recurring cash flow. Yellow Banana later encountered creditor disputes and serious financial difficulties. By July 2026, Save A Lot's relationship with the operator had broken down and seven Chicago stores were facing potential closure unless new operators could be found. Reporting on the dispute cited a 26% year-over-year decline in SNAP/EBT tender volume among the pressures affecting the locations. The US Sun ⁴

That is the distinction politicians continually miss. Chicago succeeded in spending money. Chicago succeeded in renovating stores.

Those are outputs. The desired outcome was a network of sustainable grocery businesses. Those are not the same thing.

The Building Is Not the Business

This distinction deserves considerably more attention because government is naturally attracted to the portion of economic development that it can photograph. A renovated supermarket is visible.

There are before-and-after pictures. A ribbon can be cut. A mayor can walk through the produce section.

A press release can announce how many millions of dollars were “invested.” But the actual economic experiment begins the morning after the photographers leave. Now the operator needs customers.

Not residents. Not census population. Not theoretical demand.

Customers. And it needs them repeatedly. Suppose 25,000 people live inside a supermarket's presumed trade area. A planner can multiply those people by an estimated annual grocery expenditure and produce a wonderfully large number.

But those 25,000 people are not captive customers. Some drive to Walmart. Some stop at Aldi on the way home from work.

Some use Costco. Some buy groceries near relatives. Some use Amazon or another delivery service.

Some shop at Dollar General. Some travel farther because another store offers better prices or selection. USDA research itself makes clear that food-shopping behavior cannot be reduced to the nearest store. Researchers have found that vehicle access and shopping patterns matter greatly, and USDA increasingly evaluates access to multiple competing stores rather than simply measuring distance from one. Economic Research Service ⁵

The supermarket therefore does not survive because people theoretically need groceries. Everybody needs groceries. It survives because enough people choose that store often enough and spend enough money there to cover its costs.

Cairo, Illinois: Perhaps the Clearest Example of Stated Need Versus Actual Demand

Cairo, Illinois provides a remarkable case study because the town had gone years without a supermarket before Rise Community Market opened in 2023. The opening was celebrated as the end of the community's food-desert status.

Then shoppers started behaving like shoppers. ProPublica and Capitol News Illinois found that, after initially strong sales, customers increasingly returned to their established routines. Some patronized nearby Dollar General stores. Others continued making long trips to Walmart and other supermarkets.

The result was devastating for Rise. The store needed roughly $70,000 per month in sales to break even. During the first half of 2024 it averaged less than half that amount. Researchers estimated Cairo residents collectively spent approximately $530,000 per month on groceries, but Rise was capturing only around 5% of that spending when it needed approximately 13%. ProPublica ⁶

That may be one of the most important numbers in this entire discussion. There was grocery spending. There were residents.

There was demand for food. There was a locally celebrated grocery store. Yet there was not enough demand for that particular grocery store.

Those are not contradictory statements. This is what economists mean by revealed preference. People can sincerely tell a reporter that their community needs a grocery store while simultaneously spending most of their grocery money somewhere else.

A politician hears the first statement. A grocery store's cash register records the second. Only one of them pays the electric bill.

Illinois Has Already Run a Larger Experiment

Cairo is not an isolated curiosity. Illinois previously backed grocery development through its Fresh Food Fund. In 2018, state officials highlighted six stores that had opened through a $13.5 million initiative.

By 2024, four of those six stores had closed. ProPublica ⁶ That is not a trivial failure rate. Nevertheless, Illinois has continued creating grocery-subsidy programs. Its current Grocery Initiative explicitly provides grants and other financial assistance for stores in designated food deserts, including independently owned businesses and certain government-operated grocery stores. The program can reimburse both capital and non-capital costs, and qualifying grantees may also be eligible for additional tax incentives. Illinois General Assembly ⁷

This is where the intervention cycle becomes difficult to ignore. Government subsidizes stores. Many fail.

The failure demonstrates that grocery access remains a problem. Government responds by creating another subsidy program. There seems to be considerably less institutional appetite for asking whether the previous failures were telling policymakers something about the strategy itself.

Kansas City Shows What Happens When a Subsidy Turns Into a Rescue Mission

The Kansas City Sun Fresh project takes this considerably further. Kansas City spent years and approximately $18 million in taxpayer investment trying to establish and preserve a supermarket at the Linwood Shopping Center on the city's East Side. The grocery opened in 2018. By August 2025, it had closed. KCUR ³

What happened between those two dates is far more important than the closure itself. Customer traffic reportedly collapsed from roughly 14,000 shoppers per week to about 4,000. The store lost approximately $885,000 in one year. Insurance costs rose sharply. Crime and disorder around the location were significant concerns. Shelves increasingly emptied as financial problems worsened. The Washington Post ⁸

Those numbers tell us exactly what policymakers should have been investigating. Where did 10,000 weekly customer visits go? Why did people stop coming?

What happened to basket size? What happened to shrink? What happened to insurance?

What happened to security expense? What happened to inventory turns? Those questions go directly to the viability of the enterprise.

Instead, government eventually did what governments often do once they have already committed millions of dollars to a project. It committed more. Kansas City approved another $750,000 in support while the operation was struggling, alongside additional relief associated with the property and operator. That is where economic development becomes bailout.

The Grocery Bailout Fallacy

A failing store eventually develops a cash shortage. Government observes the cash shortage and concludes that the store needs cash. That sounds perfectly logical until we ask why the store ran out of money.

Suppose a supermarket loses $100,000 every month. Government provides $1 million. The store has now been “saved.”

Except nothing was saved. Government purchased approximately ten months. Unless something changes in the underlying economics, the store arrives at exactly the same problem ten months later.

The subsidy changed: how much money was in the bank. It did not necessarily change: how much money the business was losing. Kansas City's experience is an almost absurdly clean illustration of that principle. Public money could replenish inventory and keep doors open for another period. It could not force thousands of former customers to return.

Eventually the underlying economics reappeared. The store closed anyway. The taxpayers did not get their money back because the mission failed. They simply absorbed the loss.

A Subsidy Can Delay Failure Without Preventing It

This distinction between survival and viability is essential. A company can survive for a long time without being economically viable if somebody else continuously covers the difference.

Government can keep virtually any grocery store open if there is no practical limit on how much taxpayers are required to contribute. That does not demonstrate that the grocery store works.

It demonstrates that taxation works. Suppose a municipal supermarket generates $10 million in annual revenue while costing $12 million to operate. Government can proudly report $10 million in sales.

It can employ workers. It can stock shelves. It can remain open.

But it is still destroying $2 million annually. That money does not disappear because the organization operating the checkout registers is called a city instead of a corporation.

The loss has simply been transferred. A private supermarket's loss belongs to its owners and investors. A government supermarket's loss belongs to people who may never have shopped there.

Then Government Discovers the Sunk-Cost Trap

Once taxpayers have $15 million invested in a politically important grocery store, the next $1 million becomes easier to justify, not harder. That is backwards economically.

The original $15 million is gone regardless of what happens next. The next appropriation should be judged entirely on whether it can produce a viable future result. Political incentives work differently.

Officials face the prospect of admitting: “We spent $15 million on this and the store is still closing.” That is unpleasant. So instead: “We need another $1 million to protect our original investment.”

Then the store needs another $750,000. Then rent is forgiven. Then utilities are subsidized.

Then a new operator is recruited with another incentive package. Government finds itself financing the continuation of a project partly because ending it would expose the failure of what it already financed.

This is not unique to grocery stores. It is classic escalation of commitment. Grocery stores simply make the process unusually visible because eventually the shelves go empty.

Cleveland Just Supplied Another Warning in 2026

Cleveland's New Eastside Market opened in 2019 in the Glenville neighborhood with the explicit goal of addressing grocery access. The property was city-owned, while the market was operated by Northeast Ohio Neighborhood Health Services.

In April 2026, Cleveland shut it down after the operator repeatedly failed to pay property taxes and utilities, once again leaving the neighborhood without the supermarket officials had worked to establish. Ideastream Public Media ⁹ This is another variation of exactly the same problem.

The public sector can secure a site. It can identify an operator. It can structure favorable arrangements.

It can announce the end of a food desert. It cannot make recurring operating obligations disappear. Eventually somebody has to pay the taxes.

Somebody has to pay the utilities. Somebody has to order inventory. Somebody has to generate enough sales to pay the bills. The business either produces the economic activity necessary to do those things or someone outside the business must continually make up the difference.

Baldwin Went All the Way to Municipal Grocery

Baldwin, Florida provides the next stage of the intervention ladder. After the town's privately operated grocery store closed and officials could not attract another operator, the municipality itself entered the grocery business. Baldwin Market opened as a city-owned operation in 2019.

Five years later, it closed. Residents were once again describing Baldwin as a food desert. Action News Jax ¹⁰ The importance of Baldwin is not that every municipal grocery store must fail on exactly the same timetable.

It is that municipal ownership does not resolve the economic condition that made private ownership unattractive. Changing the identity of the owner does not change how many gallons of milk residents buy.

It does not change how quickly lettuce spoils. It does not alter transportation patterns. It does not create household income.

It does not eliminate competition from Walmart. It does not magically create economies of scale. It does not make refrigeration cheaper. The primary thing municipal ownership changes is who is responsible when revenue fails to cover cost. Now it is the taxpayer.

This Is the Intervention Ladder

Once these cases are placed together, a pattern emerges. Government rarely leaps directly into running a supermarket. It moves incrementally.

First: Incentivize

“We just need to make this neighborhood more attractive to grocers.” Government offers tax concessions, infrastructure improvements or development assistance.

Then: Subsidize

“The economics are difficult, so the operator needs public assistance.” Now come grants, subsidized loans and public property.

Then: Rescue

“This grocery store is too important to allow it to close.” Operating support enters the picture.

Then: Replace

“The existing operator failed, but we need someone else in the building.” Government recruits another operator with another incentive package.

Finally: Municipalize

“No private company will do this, so government must.” At every step the amount of market discipline declines. Ironically, the continuing inability to attract unsubsidized businesses is then treated as evidence that markets have failed, rather than evidence that policymakers have never corrected the conditions making the location economically unattractive.

There Is a Critical Difference Between Market Demand and Social Need

This is where average citizens can understand the problem without needing an economics degree. Imagine a town of 5,000 people. Every single person needs shoes.

That does not mean the town can support a Nike store. Every single person needs furniture. That does not mean the town can support an IKEA.

Every single person needs food. That does not mean the town can support a 35,000-square-foot supermarket. Need does not automatically create a viable business.

A viable business requires sufficient spending flowing through a particular operation at prices that cover its costs. That distinction is routinely obscured in discussions of food deserts because food carries a moral dimension that televisions, furniture and shoes do not.

Nobody wants an elderly resident without a car to struggle to obtain groceries. But concern for that resident does not change the income statement of the supermarket. Public policy that refuses to acknowledge this eventually spends enormous sums pretending arithmetic does not apply.

Crime and Disorder Matter Because Grocery Margins Are Tiny

This part of the discussion is often treated as politically uncomfortable and therefore shuffled aside. That is analytically indefensible. If an ordinary grocery retailer earns approximately 1.6 cents of profit from every dollar of sales, costs that appear small in political discussions can completely destroy profitability. fmi.org ²

The relevant expense is not only merchandise physically stolen from shelves. Crime and disorder can create: security expenses, higher insurance premiums, employee turnover, injury exposure, property damage, additional loss-prevention equipment, reduced operating hours, customer avoidance, and ultimately lower transaction volume.

Kansas City is important precisely because the customer response became visible. The problem was not simply that theft subtracted merchandise. Customer traffic itself collapsed. The Washington Post ⁸

Once families with cars decide they would rather drive several miles than shop at the troubled store down the street, the supermarket loses the customers it most desperately needs. The people remaining may be precisely those with the fewest transportation options and lowest purchasing power.

The store becomes socially more important at exactly the moment it becomes economically less sustainable. That is a vicious cycle. A government check does not break it. Public safety might.

Population Decline Matters Too

Many communities described as food deserts are not simply poor. Some have been losing population and economic activity for decades. Cairo is a dramatic example. ProPublica described Alexander County as Illinois' poorest county and the fastest-shrinking county in the country in its examination of Rise Community Market. ProPublica ⁶

A supermarket cannot sell groceries to people who no longer live there. This sounds almost comically simple, yet government development policy regularly acts as though rebuilding a retail amenity can recreate the economic population that once supported it.

A neighborhood may have supported several supermarkets in 1975 because it had: more residents, more working households, more nearby employers, more daily foot traffic, and less retail competition outside the neighborhood. The buildings can remain long after that economy disappears. Putting another supermarket sign on the building does not restore 1975.

Transportation Changes the Market More Than the Food-Desert Map Suggests

The entire “one mile from a supermarket” concept is also less informative than it sounds. USDA found in earlier national work that while millions of Americans lived in lower-income areas more than a mile from a supermarket, only a much smaller share simultaneously lived more than a mile away and lacked a vehicle. USDA has also found that shopping behavior differs substantially according to transportation access. Economic Research Service ¹¹

That does not mean grocery access is irrelevant for households without automobiles. It means policymakers are frequently measuring the wrong market. The economically relevant question isn't:

“How many people live within one mile?” It is: “Where do these households actually spend their grocery money?” Cairo provided a nearly perfect illustration.

Residents were spending hundreds of thousands of dollars on groceries every month. They simply were not spending enough of it at Rise Community Market. ProPublica ⁶ No subsidy can permanently solve customer preference.

Government Subsidies Can Also Damage the Stores That Survived

This is an especially overlooked problem. Suppose an area currently supports two marginally profitable independent supermarkets. Government decides that access remains inadequate and spends millions establishing a third store.

The government-supported operation receives: cheap public property, development grants, tax concessions, subsidized equipment, or direct operating support. It can now survive at a return that would be unacceptable to the unsubsidized stores.

Customers shift among the three. The market itself has not grown. The same grocery spending is now divided among more square footage.

One of the private stores eventually becomes unprofitable and closes. Politicians then announce that another grocery store has abandoned the neighborhood. Government intervention can therefore contribute to the very condition subsequently cited as justification for more intervention. That possibility should be considered every time a city proposes to “bring competition” into a thin grocery market using taxpayer-financed competition.

A Government Store Does Not Have Lower Costs Simply Because It Does Not Seek Profit

One of the most persistent arguments for public grocery stores is that government can lower prices because it “doesn't have to make a profit.” Remember what the profit margin actually is.

Approximately 1.6% in FMI's 2023 figure. fmi.org ² Take a $100 grocery basket. Even if we unrealistically assume eliminating the retailer's entire profit translates directly into lower prices, we are talking about roughly $1.60.

Government still has to pay for the other $98.40 worth of costs. It still needs: food, employees, trucks, refrigeration, electricity, insurance, security, technology, warehouses, maintenance, inventory, management, real estate, and waste disposal.

Government cannot make those things disappear by declaring profit immoral. Indeed, if public operation is even slightly less efficient than a sophisticated private grocery chain, the 1.6% “savings” can disappear before the customer gets through the produce aisle.

New York City Is Now Preparing a $70 Million Experiment

This question is no longer hypothetical. New York City's current administration has allocated $70 million in capital funding to develop five municipal grocery-store sites, one in each borough. Two sites had been publicly identified by May 2026, including a planned 20,000-square-foot location at The Peninsula in Hunts Point. City officials explicitly say the program will use publicly owned property to lower overhead and subsidize a basket of staple goods. NYC Government ¹²

Mayor Zohran Mamdani has framed the project explicitly as government competition with private grocers, arguing that city stores will make staples such as eggs and bread cheaper. NYC Government ¹³ This will make for a fascinating accounting exercise.

Because the proper comparison will not be: City-store price of milk versus private-store price of milk. The proper comparison is: Total economic cost of putting that gallon of milk into the customer's hands.

If the city provides the real estate below market cost, taxpayers paid something. If construction is financed through $70 million in public capital, taxpayers paid something.

If staples are subsidized, taxpayers paid something. If operating losses are absorbed by the city, taxpayers paid something. The price printed on the shelf is therefore not necessarily the price of providing the product. It is simply the portion government chose to collect at checkout.

There Is No Such Thing as a Free $3 Gallon of Milk

Imagine a government grocery sells a product for $3. A private grocery sells the same item for $3.75. The politician points at the shelf and declares victory.

But suppose the government operation required $25 million in subsidized real estate and construction, receives taxpayer-funded operating assistance and loses another $2 million annually. That $3 price is not evidence that government found a more efficient way to sell food.

Part of the real price has been moved from: the shopper to: the taxpayer. The product hasn't become cheaper to provide. The bill has been split.

The distinction matters because some of the taxpayers subsidizing that grocery store may themselves own or work for competing private supermarkets. Government becomes regulator, landlord, tax collector, financier and competitor simultaneously. That is not an ordinary market.

The Public Store Can Always “Win” Until Someone Counts the Subsidy

This is what makes municipal grocery competition fundamentally dishonest if the accounting is not complete. Imagine an independent grocer paying: $500,000 in rent, $150,000 in property taxes, $250,000 in financing costs, and $100,000 toward building maintenance.

Now imagine the municipal grocery receives city-owned property, pays no conventional property tax and has its building constructed with taxpayer capital. The government store begins the race several laps ahead.

It lowers shelf prices and announces: “See? Public grocery is more affordable.” Of course it is.

Somebody else paid part of the bill before the customer entered the store. A serious analysis of these programs must therefore include what economists call the full economic cost, not merely the store's internal operating statement.

Land has value even if government already owns it. Capital has a cost even if government raises it through bonds. Forgone property taxes are costs.

Subsidies are costs. Operating deficits are costs. Taxpayers deserve all of those numbers.

The Grocery Business Also Has a Knowledge Problem Government Cannot Appropriate Away

Modern supermarkets are extraordinary information-processing systems. A store needs to know how many bananas to order before they turn brown, how much milk will sell before expiration, how weather will affect demand, what products customers substitute when prices move, when to discount meat, which products deserve shelf space and when promotions actually increase total sales rather than merely shifting purchasing forward.

FMI reports widespread adoption of AI and other technologies in assortment planning, replenishment and supply-chain logistics. fmi.org ² Recent research involving roughly 24,000 grocery SKUs illustrates just how important inventory accuracy can be. Perishable products and frequent restocking create particular difficulties, and inventory audits in the study were associated with measurable sales improvements where inventory records had become inaccurate. arXiv ¹⁴

Walmart, Kroger, Aldi and Costco have spent decades developing this expertise. They operate distribution networks involving hundreds or thousands of stores. Their purchasing departments negotiate enormous contracts.

Their software sees purchasing patterns that a five-store municipal grocery system never will. Their private labels generate scale. Their logistics operations spread fixed costs across huge networks. A city starting five supermarkets does not acquire those capabilities because the city council approves funding.

Government Then Adds Political Objectives to an Already Difficult Business

The private supermarket has a brutally simple feedback mechanism. Customers buy enough products at sufficient margins, or eventually the store closes. Government operations acquire additional objectives.

The store may be expected to: pay politically determined wages, hire according to geographic requirements, source from preferred vendors, stock politically preferred products, maintain locations regardless of performance, keep prices below economic cost, avoid layoffs, maintain long operating hours, and satisfy multiple constituencies whose objectives may conflict. New York's current plan, for example, combines subsidized staple prices with union-level labor standards and municipal real-estate advantages. NYC Government ¹⁵

Each political objective carries a cost. There is nothing mysterious about that. The danger is that the cost eventually gets buried inside municipal budgeting rather than appearing on a grocery receipt.

When the Government Store Loses Money, It Doesn't Necessarily Close

Advocates sometimes treat this as an advantage. I see it as precisely the danger. If an independent grocery consistently loses money, the owners eventually stop funding it.

That is painful, but it forces resources to be reconsidered. A government grocery can continue indefinitely because elected officials possess a funding source unavailable to private competitors: compulsory taxation.

The absence of a bankruptcy constraint does not make the operation more efficient. It simply allows inefficiency to persist longer. The public supermarket can lose $3 million this year and $4 million next year and remain “successful” according to its political mission because it kept the doors open. At that point we are no longer asking whether the grocery store works. We are asking whether taxpayers will continue paying for one that doesn't.

The Correct Question Is Opportunity Cost

Every dollar spent preserving an uneconomic grocery store is a dollar that cannot be spent elsewhere. This is where the discussion gets especially important. Suppose a city spends $20 million establishing a supermarket and then another $2 million each year keeping it operating.

What else could that money have done? Perhaps transportation assistance could connect elderly and carless residents directly to existing supermarkets. Perhaps police resources could address the commercial disorder causing customers to leave.

Perhaps commercial tax relief could improve the economics for every neighborhood retailer instead of one politically selected operator. Perhaps abandoned buildings could be demolished.

Perhaps road access or lighting could be improved. Perhaps the city could remove permitting barriers preventing smaller grocery formats from entering. Perhaps direct food assistance could reach households far more efficiently.

A supermarket is a means of obtaining groceries. It is not the policy objective itself. The objective should be making food accessible. Once politicians become emotionally committed to preserving a particular supermarket building, they frequently confuse the means with the end.

Before Spending One Dollar, Perform the Autopsy

There is a much more serious approach government could take when a grocery store announces its closure. Do not begin with a grant announcement. Begin with the numbers. For the preceding several years, policymakers should demand to understand: weekly customer transactions; average basket size; sales per square foot; gross margin; labor costs; shrink; security expenses; insurance costs; utilities; spoilage; inventory turns; customer ZIP codes; SNAP transaction trends; population change; household income; vehicle ownership; nearby competition; crime trends; employee turnover; occupancy expense; supplier terms; store-level operating income. Then ask the simplest question in the entire process:

Why is this store losing money?

Without that answer, a subsidy is not economic development. It is guessing with somebody else's money.

There Are Very Different Kinds of “Help”

This is where government policy needs intellectual discipline. Suppose a supermarket would be viable except that opening the building requires $2 million in remediation because of contamination left from an old industrial use.

Removing that one-time obstacle may reveal a perfectly healthy underlying market. Now consider a supermarket that loses $1 million every year because customer traffic is inadequate.

Giving that operation $5 million does not create economic viability. It buys approximately five years of losses. Calling both expenditures “grocery investment” conceals the difference.

The first addresses an unusual barrier to entry. The second socializes an operating deficit. That distinction should determine whether taxpayers become involved at all.

Fix the Neighborhood Economics Instead of Subsidizing Around Them

A government serious about restoring private grocery investment should attack the conditions making grocery investment unattractive. If theft is excessive, reduce theft. If customers fear the commercial corridor, restore public order.

If permitting costs are excessive, reduce them. If commercial property taxes are punitive, lower them. If abandoned buildings surround the shopping center, address the blight.

If roads and parking make access difficult, improve them. If population has collapsed, focus on housing, employment and broader redevelopment. If regulations make small-format groceries unnecessarily expensive, remove the barriers.

If transportation is the actual access problem, solve transportation. Those interventions improve the environment for every business. A subsidy selects one firm and attempts to compensate it for operating inside a dysfunctional environment. Those are fundamentally different strategies.

The Best Evidence That the Problem Has Been Fixed Is That Government No Longer Needs to Pay Anyone to Sell Groceries There

This should be the benchmark. Not ribbon cuttings. Not grant announcements.

Not square footage renovated. Not how many millions of taxpayer dollars were “invested.” A commercially healthy neighborhood eventually produces something much less exciting:

Businesses voluntarily risk their own money because they believe customers will reward them for doing so. Competition then emerges. One grocer sees Aldi doing well and wants part of the market.

A local operator sees Walmart's traffic and opens a specialty market nearby. Property owners compete for tenants. Capital arrives because there is money to be made.

Politicians often speak about profit as though it is something government must remove from essential goods. In this situation, profit is exactly the signal we should want.

Profit tells us the store is creating enough value for customers that they voluntarily support its continued existence. A permanently subsidized supermarket tells us almost the opposite.

Government Can Suppress a Market Signal. It Cannot Repeal It.

Chicago spent millions helping renovate grocery stores that once again face closure. Illinois spent millions opening stores, many of which later closed. Cairo built a celebrated community market only to discover that residents continued spending most of their grocery money elsewhere.

Kansas City poured nearly $18 million into a grocery project, injected additional rescue funding and still watched the store close. Cleveland placed a grocery operation into city-owned property and closed it after unresolved financial obligations.

Baldwin went further and ran the grocery store itself. Five years later, that closed too. ProPublica ⁶ Different cities.

Different operators. Different models. The recurring lesson is remarkably similar.

Government can provide the capital. Government can own the building. Government can waive rent.

Government can subsidize equipment. Government can replenish the shelves. Government can even become the grocer.

What government cannot do by appropriation is manufacture sufficient sustainable demand at a location whose underlying economics do not support the operation. It can only absorb the difference.

A Food Desert Is Often the Last Symptom, Not the First Problem

This is where I ultimately come down on the entire premise. When a supermarket disappears, government sees the empty building. I want to know what emptied it.

Was it declining population? Customer flight? Crime?

Shrink? Low household purchasing power? Competition elsewhere?

Poor management? High insurance costs? Excessive regulation?

A bad store format? A deteriorating commercial corridor? Some combination of all of them?

Until those questions are answered, placing another grocery store inside the same environment is not a solution. It is a replacement. And paying that replacement with taxpayer money is not necessarily investment. It may simply be subsidizing another trip through the same cycle.

The Mission Becomes Doomed When Government Decides the Store Must Exist Regardless of the Economics

This is the fundamental flaw in government-run and perpetually subsidized grocery stores. Private businesses are ultimately forced to ask: “Does this work?” Government programs too often begin with a different premise:

“This must exist.” Once “must exist” becomes the governing assumption, there is no natural stopping point. If $5 million fails, spend $10 million.

If the private operator fails, find another. If another operator cannot be found, use a nonprofit. If the nonprofit fails, operate it municipally.

If the municipal store loses money, subsidize the losses because the neighborhood cannot be allowed to become a food desert again. Under that framework, failure itself becomes evidence that additional intervention is required.

The proposition becomes almost impossible to falsify. When the subsidy works temporarily, intervention is credited. When the subsidy fails, inadequate intervention is blamed. Taxpayers can lose either way.

The Grocery Store Was Never the Root Problem

There are Americans for whom grocery access is genuinely difficult, especially elderly, disabled and low-income households without reliable transportation. Pretending otherwise would be unserious.

But seriousness requires distinguishing a food-access problem from a supermarket-profitability problem. They are not interchangeable. A city can have residents who badly need easier access to food while simultaneously lacking enough commercially viable demand to support the type of supermarket politicians want to put there.

That is not a contradiction. It is the problem. Government cannot solve it simply by deciding that the income statement does not matter.

Eventually the milk still has to be purchased. The truck driver still has to be paid. The lights still have to remain on.

The refrigeration equipment still needs electricity. The produce still spoils. The employee still expects a paycheck.

The insurer still sends a bill. And somebody ultimately has to cover the difference between what customers spend and what all of that costs. In a functioning private grocery store, customers cover it voluntarily.

In a failing government grocery store, taxpayers do. That is not a new economic model. It is a bailout with a checkout counter. And before another city spends tens of millions of taxpayer dollars “solving” a food desert, perhaps the first question should finally be the one that should have been asked before any of this began: Why did the grocery stores leave in the first place?