Government grocery stores in the United States take two very different shapes. The larger and older form is the federal military commissary system, a worldwide network of 235 stores that sells food to service members, retirees, and eligible veterans at roughly 25 percent below commercial prices. The newer form is municipal: a small but growing number of cities have opened or funded their own grocery stores in neighborhoods private chains have abandoned. About 18.8 million Americans live in areas the USDA classifies as low-income and low-access, and that gap is what most local experiments are trying to close.
The Military Commissary System
The Defense Commissary Agency runs commissaries on military installations around the world under a federal mandate. The law directs the Secretary of Defense to operate a worldwide system of stores that sell food and merchandise at reduced prices to support quality of life, readiness, recruitment, and retention.1Office of the Law Revision Counsel. 10 U.S.C. 2481 – Defense Commissary and Exchange Systems: Existence and Purpose
The reason commissary prices stay low is the funding model. Operations are paid for mainly through annual congressional appropriations rather than sales revenue. A five percent surcharge is added to every purchase, but that money is legally restricted to building, equipping, and maintaining the stores themselves and cannot be spent on general operations or staff.2Office of the Law Revision Counsel. 10 U.S.C. 2484 – Commissary Stores: Merchandise That May Be Sold; Uniform Surcharges and Pricing Because the defense budget absorbs most of the overhead, shelf prices reflect close to what the government paid for the goods.
Who Can Shop
Access is broader than many people assume. Eligible shoppers include active-duty service members, Guard and Reserve members, military retirees, Medal of Honor recipients, veterans with any VA-documented service-connected disability, Purple Heart recipients, former prisoners of war, and authorized family members of those groups.3Defense Commissary Agency. FAQs – Authorized Shopping The expansion to veterans with service-connected disabilities took effect January 1, 2020.
Shoppers show identification at the entrance or checkout. Traditional military IDs work. Veterans qualifying through a service-connected disability can use a Veterans Health Identification Card or a VA eligibility letter with a passport or driver’s license.4U.S. Department of Veterans Affairs. Commissary and Exchange Privileges for Veterans Veterans and caregivers who qualify solely through the expanded eligibility pay a small user fee when using commercial cards (1.9 percent for credit, 0.5 percent for PIN debit) to offset Treasury processing costs.
What Shoppers Save
Commissaries sell goods at cost and honor manufacturer coupons. For the first quarter of fiscal year 2026, the global average savings rate across all 235 stores was 25.0 percent compared to commercial grocery prices.5Defense Commissary Agency. Patron Savings After the five percent surcharge, most shoppers still save around 20 percent on a typical grocery bill. The math works because commissaries have enormous collective buying power, pay no rent on military land, and cover labor through appropriated funds rather than markups.
Municipal Grocery Stores in Food Deserts
City-run grocery stores are a much newer and smaller category, and they exist for a specific reason: a private grocer closes, residents lose their only convenient source of fresh food, and no replacement retailer is willing to take on the location. Two recent examples show what happens next.
Baldwin, Florida
Baldwin, a town of about 1,400 people in northeast Florida, opened its own grocery store in 2019 after the town’s only private grocer shut down. City employees staffed the aisles and the town covered daily expenses. For a while, Baldwin Market gave residents somewhere to buy fresh produce and meat without driving 10 to 20 miles.
The store never turned a profit. In its first full fiscal year ending September 2020, it lost $61,000. By the year ending September 2022, the loss had grown to $171,000 on about $814,000 in revenue. The core problem was buying power. A standalone store serving 1,400 residents could not negotiate the wholesale prices that chains get through volume purchasing, and the cost disadvantage widened as supply chain pressures grew after 2021. The town council voted to close the store in March 2024. The town’s former administrator said federal subsidies for stores in food deserts could offset that buying-power gap, but no program existed at the scale needed.
New York City’s N.Y.C. Groceries
New York City launched the most ambitious municipal effort to date in 2025, with a program targeting five city-owned stores, one in each borough. The city has committed $70 million in capital funds to develop the sites and will own the land and cover overhead such as rent and construction. Instead of using city employees the way Baldwin did, New York plans to select experienced grocery operators through competitive procurement. Those operators will be contractually required to pass savings directly to customers on a core basket of staples.
The first location identified is La Marqueta in East Harlem. By eliminating rent and property tax while outsourcing daily operations to experienced retailers, the city is trying to sidestep the buying-power trap that sank Baldwin. Whether it works at scale is still open, but the size of the investment makes New York the case other cities are watching.
Federal Money for Public Grocery Projects
Cities looking at a municipal store do not have to pay for the whole thing out of local revenue. The federal Healthy Food Financing Initiative, established by the 2014 Farm Bill and administered by USDA Rural Development in partnership with Reinvestment Fund, provides financial and technical assistance to food retailers entering underserved areas.6USDA Rural Development. Healthy Food Financing Initiative The program has awarded over $25 million to 162 food retail projects through its Targeted Small Grants Program, and in 2024 an additional $40 million went to 16 public-private partnerships through a separate grant track. A new funding opportunity is expected in 2026.
A project has to be located in a USDA-designated low-income, low-access census tract, or an adjacent tract meeting certain income thresholds. USDA defines those tracts by distance: in urban areas, a significant share of the population must live more than one mile from the nearest supermarket; in rural areas, more than ten miles.7USDA Economic Research Service. Food Access Research Atlas – Documentation The Community Development Financial Institutions Fund also makes supplemental awards to CDFIs expanding their healthy food financing activity, which is another channel that can flow to a municipal project.
Accepting SNAP
A publicly owned grocery store is not automatically authorized to accept SNAP benefits. The USDA’s Food and Nutrition Service is the sole agency that can authorize any retailer, public or private, to process SNAP EBT transactions, and a store cannot take EBT until it holds an FNS-issued SNAP Permit.8Food and Nutrition Service. How Do I Apply to Accept SNAP Benefits?
Stocking requirements are specific. A store must carry at least 36 staple food items across four categories: vegetables or fruits, dairy, meat or poultry or fish, and breads or cereals. Each category needs at least three varieties with three stocking units per variety, and at least two categories must include a perishable option. Staple foods also have to account for more than half of the store’s total gross retail sales.9Food and Nutrition Service. Store Eligibility Requirements
Most authorized retailers buy their own EBT point-of-sale equipment and pay for transaction services. Military commissaries and nonprofit food cooperatives qualify for free equipment, but a municipal store would generally need to budget for its own setup unless it operates through a nonprofit structure.8Food and Nutrition Service. How Do I Apply to Accept SNAP Benefits?
Why City-Run Stores Struggle
The grocery business runs on thin margins even for large chains, and a single municipal store faces structural disadvantages that good intentions do not fix. Baldwin’s experience is the clearest illustration. A small-town store cannot negotiate the wholesale prices available to a chain buying for hundreds of locations, and that gap widens during periods of food price inflation because cost increases hit small buyers harder.
Staffing adds another layer. Municipal employees typically earn pension and health benefits that most private grocery workers do not, which is good for the workers but raises the store’s break-even point in a place where the customer base is, by definition, small and often lower-income. The store needs high sales volume to survive in a location that lacks the density to produce it.
Political durability matters too. A store that runs a deficit every year eventually becomes a budget line item council members question when roads need repaving or the fire department needs a truck. Baldwin’s council decided the ongoing losses were unsustainable for a town of 1,400. Larger cities with bigger tax bases can absorb those losses more easily, which is part of why New York’s model, pairing public ownership of the real estate with a private operator handling procurement and staffing, may prove more durable than the small-town approach. Whether it works at scale is the question the next few years of municipal experimentation will start to answer.