The root cause isn’t the lack of grocery stores. It’s the disappearance of the conditions that make grocery stores possible
For years we’ve been told that Chicago suffers from “food deserts.” It’s an interesting phrase. It sounds as though some mysterious force of nature swept across parts of the South and West Sides, drying up grocery stores the way a drought dries up a river. Businesses simply vanished, leaving behind empty storefronts and residents with nowhere to buy fresh food. But deserts don’t simply appear overnight. They have causes. Ironically, this is one case where the Left’s favorite phrase—root causes—actually applies. The latest example came over the weekend when seven Save A Lot stores closed despite receiving more than $13 million in city subsidies as part of a larger $26 million financing package. These stores were supposed to be the solution to Chicago’s food deserts. Instead, they became another chapter in a long history of grocery stores opening with great fanfare and closing in disappointment.
If taxpayer subsidies couldn’t keep them open, perhaps it’s time to ask a different question. Why do grocery stores leave in the first place? The answer isn’t complicated. Nobody opens a grocery store as a hobby. Grocery retailing is one of the toughest businesses in America. Profit margins often run only one or two percent. Owners must cope with spoilage, labor costs, regulations, refrigeration, supply chains, insurance, and intense competition. Every decision is measured against one simple question: will this produce a return on investment? If the answer is no, rational investors go elsewhere. If the answer is that the investment will lose money, only a fool would proceed. That isn’t greed. It’s arithmetic. The phrase “food desert” actually obscures more than it explains. It describes a condition without identifying its cause. It’s like pointing to an abandoned factory or a vacant office building and simply giving it a name instead of asking why the tenants left. Grocery stores do not disappear because corporations suddenly decide they no longer care about neighborhoods. They disappear because the economic conditions that once made those neighborhoods attractive have deteriorated to the point where the business can no longer survive. Calling an area a food desert tells us what happened. It tells us very little about why it happened.
Let’s take one so-called food desert as an example: South Shore. Although it’s hard to believe today, it wasn’t always that way. Multiple grocery stores served the neighborhood, including national chains such as Jewel, A&P, and National Tea, along with numerous neighborhood “mom-and-pop” markets. Residents had choices because retailers believed they could make money serving the community. South Shore was then one of Chicago’s premier neighborhoods. It featured magnificent lakefront property, excellent public transportation, outstanding schools, stable families, thriving commercial districts, and one of the city’s finest beaches. Today the same neighborhood has a vastly different reputation. Crime is dramatically higher. Many businesses have disappeared. National retailers have left. Grocery stores have struggled to survive. The buildings didn’t change. The streets didn’t change. Lake Michigan didn’t dry up. What changed was the economic environment.
Modern grocery companies make investment decisions using sophisticated financial models. They examine expected sales, household income, purchasing patterns, security costs, insurance premiums, theft losses, labor costs, population trends, and overall profitability before deciding whether to open or keep a store. The grocery business itself has changed dramatically over the past half-century. Modern supermarkets operate on extraordinarily thin margins, often just one or two percent. That leaves almost no room for error. Every additional expense—higher insurance premiums, employee turnover, security guards, surveillance equipment, vandalism, lawsuits, or inventory losses that retailers politely call “shrinkage”—comes directly out of an already tiny profit margin. A store that earns a modest profit in one neighborhood can become a money-losing proposition in another simply because the cost of doing business is substantially higher. Corporate site selection today is driven by data, not politics. Those computer models don’t have political opinions. They simply estimate whether a store is likely to earn an acceptable return. If the answer is no, the capital goes somewhere else.
Compare South Shore with Lincoln Park. Both are dense urban neighborhoods with older buildings and limited parking. Both require retailers to adapt to existing infrastructure rather than build sprawling suburban shopping centers. Yet Lincoln Park offers Jewel-Osco, Trader Joe’s, Whole Foods, Fresh Market, and numerous specialty grocers. Why? Because grocery companies expect those stores to make money. Or compare South Shore with Orland Park, where grocery chains compete aggressively along virtually every major commercial corridor because they expect strong customer traffic, lower operating risks, and a reasonable return on investment. This is why the term “disinvestment” is so misleading. Investment is not an act of charity. It is not a government program. Investment occurs because someone believes they can earn a reasonable return while accepting a reasonable level of risk. When that expected return turns negative, capital leaves. It doesn’t matter whether the investor is a Fortune 500 corporation, a family-owned grocery store, or the owner of a neighborhood hardware store. The economic calculation is fundamentally the same.
Businesses follow opportunity and avoid predictable losses. Public safety is a major part of that equation. Every dollar spent replacing stolen merchandise, hiring security guards, installing surveillance systems, repairing vandalism, or paying higher insurance premiums is a dollar that isn’t available for profit. In a business operating on razor-thin margins, those additional costs can determine whether a store survives or closes. None of this means crime is the only factor. Grocery store failures also reflect management decisions, population trends, changing shopping patterns, disposable income, and corporate strategy. The collapse of Yellow Banana itself involved serious company-specific problems, including financial difficulties and the unexpected death of its chief executive. Nevertheless, subsidies alone cannot overcome an environment that investors believe will consistently lose money.
The Save A Lot experiment illustrates the point perfectly. Chicago taxpayers invested more than $13 million in direct assistance as part of a broader $26 million financing package. The buildings were renovated. Politicians held press conferences. Optimistic speeches were delivered. Yet only a short time later the stores closed anyway. Why? Because subsidies can reduce the cost of opening a business, but they cannot permanently eliminate the cost of operating one. If the underlying economics remain unfavorable, eventually the subsidies run out and the marketplace reasserts itself. The laws of economics are remarkably indifferent to political rhetoric. Mayor 6.6’s answer has been to spend more public money subsidizing grocery stores. Democratic socialists have even proposed city-owned grocery stores, as if America suffers from a shortage of people who know how to run grocery stores profitably. Even New York City’s advocates of municipal grocery stores recognize that reality by proposing to contract with private operators rather than have government employees run supermarkets. If private operators cannot make money under existing conditions, however, taxpayers will ultimately be asked to absorb the losses.
That approach mistakes the symptom for the disease. Government can subsidize construction, rent, and even operating losses—for a while. What government cannot subsidize indefinitely is an unsustainable business model. The first responsibility of city government is not running grocery stores. It is creating the conditions under which grocery stores want to operate without subsidies. That means safe streets, reliable law enforcement, economic growth, customers with disposable income, and confidence that businesses can earn a reasonable return on their investment. Restore those conditions and investment follows. Ignore them, and no amount of taxpayer money will permanently reverse disinvestment.
The greatest tragedy is that the people hurt most by this cycle are the very residents politicians claim to be helping. They deserve neighborhoods where businesses compete to open stores, not neighborhoods where City Hall must constantly search for another company willing to accept subsidies. They deserve thriving commercial districts supported by private investment rather than temporary government rescue packages. Food deserts are real, but they are not the disease—they are the symptom. The real question isn’t why grocery stores leave. It’s why the conditions that once made them successful disappeared in the first place.
The answer, in my view, is straightforward. High crime drives paying customers, investment, and taxpayers away while driving up security costs, insurance costs, and shrinkage. Retailers close. Tax revenues fall. Government spending rises. More businesses leave. The cycle feeds on itself until once-vibrant commercial corridors become rows of vacant storefronts. Prosperity has always followed public safety, not the other way around. Businesses invest where they believe customers, employees, and inventory are secure. Restore those conditions and grocery stores will return because entrepreneurs will once again see opportunity instead of risk. Continue treating the symptoms while ignoring the underlying causes, and Chicago will simply repeat the same costly experiment over and over again. Grocery stores do not create prosperity. Prosperity creates grocery stores.
George Shay is a conservative activist and writer. You can follow his Common Sense Substack here.
