Toronto’s plan for city-run grocery stores raises questions over feasibility in a low-margin, supply-driven industry

Toronto is moving ahead with a bold plan to establish city-run, not-for-profit grocery stores to combat rising food prices, but experts warn the initiative could struggle against thin industry margins and the dominance of established retail chains.

“Every dollar you put through into the till, there’s about four cents that’s coming back as profit for each one of the major retailers that’s out there.” said Neil Hetherington, CEO of Toronto’s largest food bank, the Daily Bread Food Bank, according to CTV News website. “That is a very slim margin, you are dependent on scale.”

According to him, the key issue is the city’s ability to compete with established grocery retailers.


“Can they match the purchasing power and efficiency of the for-profit sector and then deliver it without that profit motive to deliver food at a lower cost?” he added. “It it works out that they can deliver at lower cost, then yeah you would go for it, but obviously there’s some skepticism about that.”

According to CTV News website, established grocers benefit from well-developed supply chains built on long-standing relationships, allowing them to purchase goods in bulk at lower costs. As a new entrant, Toronto’s municipally run grocery chain is unlikely to have access to these advantages in its initial phase.

Canada monitors Toronto’s grocery experiment

Momentum behind the idea has grown in recent months, driven by New York City Mayor Zohran Mamdani’s push for city-run grocery stores and Avi Lewis’ proposal for a federal “public option for groceries.”

Toronto’s pilot would open four city-run, not-for-profit grocery stores in downtown, North York, Scarborough and Etobicoke, targeting low-income “food deserts.”

According to Councillor Pete Fry the grocery sector requires specialized expertise in logistics, supply chains and retail operations that municipalities lack. Cities should instead focus on creating conditions for businesses to succeed and ensuring access to affordable options.

Toronto is advancing plans for city-run, not-for-profit grocery stores to address rising food costs, but questions persist over whether the municipality can compete in a low-margin, highly competitive industry.