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The idea of government-run grocery stores is facing renewed scrutiny as Chicago abandons plans for a municipal supermarket, raising questions about whether taxpayer-funded markets can survive.
“Chicago’s city-run grocery stores are on the brink of collapse after a Save A Lot terminated its licensing agreement with stores operated by Yellow Banana,” Bryce Hill, director of Fiscal and Economic Analysis at Illinois Policy, told Fox News Digital on Tuesday.
“So the city spent $13.5 million on these stores, but now they’re on the brink of closing. They were meant to address food security and availability in what the city deems food desks, but this outcome should really come as no surprise,” Hill said.
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Rob Karr, president & CEO of the Illinois Retail Merchants Association, told Fox News Digital Monday that the experiment is failing in multiple areas.
“So what we’re seeing, particularly in New York and Seattle, are proposals to having the government actually artificially lowering prices by using their general revenue funds to make those groceries ‘more affordable,’ The state looked at that here in Illinois and dismissed it because it’s inherently flawed,” Karr said. “It has failed everywhere it has worked because it doesn’t recognize the realities of the marketplace.”
Chicago officials ultimately shifted away from opening a city-owned grocery store, opting instead to support privately operated neighborhood markets.
The Center Square reported Sunday that the closure of seven Save A Lot stores on Chicago’s South and West sides has reignited questions about whether taxpayer-funded grocery initiatives can improve food access in low-income communities.
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In the article, Nicole Huyer, a free-market policy analyst, said the closures underscore the shortcomings of government-backed solutions.
The outlet also reported that the stores, managed by retail platform Yellow Banana, closed after Save A Lot terminated its operating agreement with the company, pointing to financial challenges that included a significant decrease in SNAP purchases.
The Whole Foods in Chicago’s Englewood neighborhood, which closed in 2022, received a significant government subsidy, relying on an $11 million Tax Increment Financing (TIF) subsidy from the City of Chicago.
When it closed, local outlet WTTW reported that State Rep. Sonya Harper, D-CH, said in a statement that she was disappointed in the development, as the store had said its intention in opening to open was not about making a profit but about ensuring access to healthy food.
“I was proud to work with Whole Foods to bring a new location to Englewood because they claimed their decision was not based on profitability, but rather a desire to help provide access to healthy groceries for residents,” Harper said in the statement.
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Hill told Fox News Digital that the areas where government grocery stores are failing tend to not be friendly to business.
“Illinois and Chicago specifically is one of the toughest places to do business. So, Illinois has the second-highest property taxes in the nation,” Hill said. “They’re even higher in Chicago. Commercial property here is taxed at 250% more than residential property, which makes it tougher for businesses to operate.”
“So, property taxes are out of control, which affect business margins as well,” Hill added. “But on top of that, for consumers and for businesses, Chicago’s total sales tax, which also applies to groceries, was just at an increase on August 1st. So the total sales rate in the city is now 10.5 percent. It’s the second highest of any city in the nation. If the city’s serious about helping businesses and residents in need, it should start there rather than wasting millions of dollars on projects that we know are going to fail.”
Karr told Fox News Digital that cities should look at practical ways to make it easier for grocery stores to operate.
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“Instead of trying to use gimmicks, look at the real reasons why grocery stores are having a hard time staying open,” Karr said.
“And frankly, the same applies to pharmacies,” he added. “Although it’s a little different because there’s also pharmacy reimbursement at stake there. But when you look at grocery stores, what are your permitting processes? What are your licensing processes? What are your labor mandates? What’s going on in your property tax? When you look at the city of Chicago and Cook County, we have the classification system where commercial and industrial carry two-thirds of the burden. That’s a problem. You can’t continue to pile those on and expect something to change.”
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Fox News Digital reached out to Yellow Banana and Whole Foods for comment.
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