A leading free market think tank cautions Canadians against expecting city-run grocery stores to deliver lower food prices. Recent research from the Montreal Economic Institute reveals that public grocery initiatives in North America show a poor track record, offering scant support for pilot projects now underway in Toronto and New York City.

Recent U.S. Failures Highlight Risks

The study examines two Midwest cases: one city-operated store privatized in 2024 and another that shuttered in 2025. In Kansas City, Missouri, Sun Fresh Market consumed $29 million in taxpayer funds over seven years yet faced persistent safety concerns, financial shortfalls, and empty shelves.

Food economist Sylvain Charlebois notes that government-run grocery efforts in North America fail at a rate exceeding 50 percent.

Logistical Challenges in Grocery Operations

Charles Lammam, the study’s author, attributes these outcomes to the grocery sector’s inherent difficulties. “We have to remember that not only are the profit margins relatively low, but grocery stores are really complicated logistical undertakings,” Lammam states. “They require coordinating thousands of perishable products at a time across temperature-sensitive supply chains, where your margins for error and delay are really low.”

He questions whether governments possess the expertise to manage such operations effectively. Typical Canadian retail chains achieve only three to five percent profits on food sales.

Political Drivers and Misdiagnosis

Lammam recognizes the political appeal for progressive municipal leaders pursuing these ventures despite contrary evidence. “What we’re seeing is a sort of policy adventurism where governments are launching these visible and unproven initiatives instead of fixing things they’re already responsible for,” he explains.

Toronto city council approved four city-run stores in March by a 21-3 vote, at an estimated cost to taxpayers yet to be disclosed. Lammam argues this overlooks the core issue: “The problem in Toronto isn’t a lack of grocery stores—it’s that people can’t afford groceries.”

Similar proposals emerge from New York City Council Member Zohran Mamdani and federal NDP leader Avi Lewis.

Simpler Paths to Affordability

To truly reduce prices, Lammam advocates addressing low-hanging issues like agricultural tariffs and interprovincial trade barriers, which inflate food costs annually. Reforming supply management could slash dairy, egg, and poultry prices by up to 300 percent while easing trade disputes.

Targeted aid, such as the new Groceries and Essentials Benefit, provides a more effective way to support households facing high food expenses.