Leftists Running a Supermarket Is Like Me Doing Ballet
I always wanted to be a ballet dancer. Anybody who has ever met me takes one look at me and says, “give it up dude”. In the same regard I am telling the Left to give up their thoughts of running a supermarket. You don’t have a chance.
The idea is being brought up in some cities for two reasons. There are in some areas of cities what have begun to be called food deserts. That means because of conditions created in the city by the people who operate the city, an area where all supermarkets have closed because the regional or national operators cannot make a go of it due to crime, danger to employees and city driven costs. The second reason is because of political rhetoric about the costs of things at a grocery store. Who isn’t devastated by the costs after four years of Biden driven inflation making prices on the shelf jump to extraordinary levels.
I can think of three businesses of scale that take extraordinary skill to operate on a major scale. The first is an airline. The orchestration it takes to run a major airline is immense. To coordinate routes, airplanes, and personnel takes immense skill. To have a plane available when another has a problem and getting the passengers to their destination is amazing most times. Just watch when an airplane lands and the teams descend on the plane promptly. The teams roll up to get the passengers off and separately the luggage. Then the team comes to restock the plane with drinks and food while another to clean the interior. As soon as the luggage leaves the plane another team rolls up with the luggage for the next flight, leaving very soon. It is all amazing.
A railroad company has similar challenges that operate with passengers and cargo.
Supermarkets are amazingly complicated operations. We Americans are used to walking into stores that are fully stocked and replenished during the day. Row after row of goods that need to be delivered that we just grab off the shelf and toss into our basket. Then there are the fresh goods that need to be in stock and in quantities that will be there for the customers. Operators need enough of them to fulfill demand, but not too much because they will go to waste, spoil and drive down profit margins or drive-up costs. Getting proper levels of fruits, vegetables, milk and other dairy products is a colossal challenge. There is the meat and fish section that is an extraordinary challenge and takes skilled personnel. Today there is the prepared food section where the staff has to prepare enough of each selection to satisfy customer demands, but not too much that foods need to be disposed of which again hits the bottom line of the store. Then there is bread. Who wants day old bread?
I often wonder why anyone wants to get into this business. As national chains have consolidated new operations have opened. Whole Foods is one. Sprouts is another I can think of. The executives think they can tackle the challenges and be profitable. I don’t know why.
You may have heard that the operating margins are thin in grocery stores. I reviewed the financials of America’s largest traditional grocery chain, Kroger. The profit margins for the last three years are 2022 1.5%, 2023 1.45% and 2024 1.8%. Pretty thin margins. To put that in perspective Google’s profit margins were 2022 20.9%, 2023, 23.8% and 2024 28.6%. You don’t hear the Left crabbing about Google’s profits. Nor do they gripe about Apple’s profits while they run around with their iPhone.
So why do elected officials stake out turf talking about opening city owned stores. You know why. They are PANDERING. Once they get in office, they then have to tackle a lot of challenges, and this one is gargantuan.
I reviewed the cities who have thrust themselves into this realm. St, Paul has. No not that one, the one in Kansas. It has a population of 614 people. Hard to believe the residents cannot drive to another community. Another community in Kansas, Erie with a population of 1,047 tried, but got smart and turned their supermarket over to a private operator.
As for larger cities, one is Madison, Wisconsin, one of the most liberal cities in America. It intends for a private operator but will the residents of the city ever be told the actual and hidden costs of the operation. Baldwin, Florida acquired a market but closed it. They failed.
The Communist and anti-Semite running for Mayor of New York has tossed his hat in the ring for running supermarkets. This is in a city where you don’t have to walk very far to get to the next bodega. Mr. Mamdani might delve into why there are no Walmart stores in the five boroughs and only four Costco stores. They are very cost-effective operators and two of the three largest companies in the business.
Instead of tackling why operators refuse to enter the New York City market, Mamdani is suggesting that the city that does not even effectively collect trash is going to enter a business with miniscule margins which requires significant capital. He wants to make it even more challenging because he wants to increase wages to a minimum of $30 an hour which will kick up wages all up the line. That will drive losses to a new, undefined scale.
And how would the inevitable losses be paid for – you know taxes. He is going to make “The Rich” pay for affordable peaches and almond milk. As I have said before, Broadway and bagels only have so much allure before people leave the city. Good luck, Mr. Mamdani.
P.S. Watch for my coming debut at the New York Ballet.
