By Catrina Barker
The Center Square contributor
(The Center Square) – The recent closure of seven Save A Lot grocery stores on Chicago’s South and West sides has sparked renewed discussion about whether government subsidies can successfully address food accessibility in underserved areas. A free-market policy expert suggests these closures underscore the limitations of public intervention.
The stores, managed by Yellow Banana, shut down after Save A Lot terminated its agreement with the company, citing financial difficulties, including a significant drop in SNAP purchases.
Chicago had allocated $13.5 million to refurbish six of the seven locations in an attempt to improve grocery access in areas often labeled as food deserts. Yellow Banana had committed to operating these stores for ten years, yet they are closing just two years following the city’s investment.
“What’s happening at the federal level is what’s causing the disruption at the local level,” Mayor Brandon Johnson commented on the closures. “You know, eliminating SNAP benefits has cost communities across Chicago.”
Conversely, Nicole Huyer, a researcher from the Heritage Foundation, described the closures as “the predictable outcome of bad policy.”
“Injecting millions into these stores without tackling the fundamental reasons for grocery unaffordability, such as city regulations, high taxes, and crime, won’t resolve the problem,” Huyer explained to The Center Square.
Huyer argued that governments lack the motivation that drives private companies to run efficiently.
“Free markets yield better outcomes for residents,” she said. “They are more adept at managing business complexities, from supply chain management to labor issues. In contrast, the government is supported by taxpayer money and lacks the incentive to manage these stores efficiently or cost-effectively.”
Originally, the seven Chicago stores were reopened with city aid to enhance grocery access in underserved areas. City officials are currently seeking new operators to maintain grocery services in these neighborhoods, and existing redevelopment agreements mandate most locations to reopen as grocery stores within a year if they close.
Huyer contended that government-backed grocery stores can create an unfair competitive environment for independent retailers.
“Smaller grocery stores already operate on a razor-thin margin, about 1% to 3%,” she stated. “Introducing a government competitor that doesn’t face the same costs as a private store and can offer artificially lower prices due to taxpayer subsidies undermines the ability of private-sector grocers to make a profit.”
She highlighted New York City’s proposal to open five city-supported grocery stores with discounted food prices as another instance of government involvement in the grocery sector. Mayor Zohran Mamdani has proposed a reduction in grocery costs by approximately 30%, raising concerns among some local store owners about losing customers to subsidized rivals.
While acknowledging that isolated rural areas might need different solutions, Huyer questioned the appropriateness of government-run grocery stores in large cities.
“If we’re talking about city-owned or operated grocery stores in a big city like Chicago or New York, I have difficulty believing it’s truly a food desert problem,” she said. “The first step should be addressing the root causes of why businesses aren’t setting up in certain locations.”
She suggested that crime, taxes, and regulations could deter grocery operators from investing in specific neighborhoods.
“Rather than the city establishing a city-owned or operated grocery store, the first step should be addressing the root causes,” Huyer said. “Merely funneling millions of dollars into a city-run public option won’t truly solve the issue. It will just waste taxpayer dollars in the process.”
Huyer also mentioned publicly funded grocery ventures in places like Kansas City and Baldwin, Florida, as examples where government involvement has struggled to achieve lasting success.
